BEAR STEARNS ASSET BACKED SECURITIES I LLC,

                                    Depositor

                            EMC MORTGAGE CORPORATION,

                               Seller and Company

                     WELLS FARGO BANK, NATIONAL ASSOCIATION,

                  Master Servicer and Securities Administrator

                                       and

                         U.S. BANK NATIONAL ASSOCIATION,

                                     Trustee

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

                         POOLING AND SERVICING AGREEMENT

                          Dated as of November 1, 2004

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

              BEAR STEARNS ASSET BACKED SECURITIES I TRUST 2004-AC7

                   ASSET-BACKED CERTIFICATES, SERIES 2004-AC7


<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

                                    ARTICLE I

                                   DEFINITIONS
Section 1.01     Defined Terms.................................................4
Section 1.02     Allocation of Certain Interest Shortfalls....................42

                                   ARTICLE II

             CONVEYANCE OF TRUST FUND REPRESENTATIONS AND WARRANTIES
Section 2.01     Conveyance of Trust Fund.....................................44
Section 2.02     Acceptance of the Mortgage Loans.............................46
Section 2.03     Representations, Warranties and Covenants of the Company,
                 the Master Servicer and the Seller...........................48
Section 2.04     Representations and Warranties of the Depositor..............53
Section 2.05     Delivery of Opinion of Counsel in Connection with
                 Substitutions and Repurchases................................55
Section 2.06     Countersignature and Delivery of Certificates................55

                                   ARTICLE III

          ADMINISTRATION AND SERVICING OF EMC MORTGAGE LOANS BY COMPANY
Section 3.01     The Company..................................................57
Section 3.02     Due-on-Sale Clauses; Assumption Agreements...................58
Section 3.03     Subservicers.................................................59
Section 3.04     Documents, Records and Funds in Possession of Company
                 To Be Held for Trustee.......................................60
Section 3.05     Maintenance of Hazard Insurance..............................60
Section 3.06     Presentment of Claims and Collection of Proceeds.............61
Section 3.07     Maintenance of the Primary Mortgage Insurance Policies.......61
Section 3.08     Fidelity Bond, Errors and Omissions Insurance................62
Section 3.09     Realization Upon Defaulted Mortgage Loans;
                 Determination of Excess Liquidation Proceeds
                 and Realized Losses; Repurchases of Certain Mortgage Loans...62
Section 3.10     Servicing Compensation.......................................65
Section 3.11     REO Property.................................................65
Section 3.12     Liquidation Reports..........................................66
Section 3.13     Annual Statement as to Compliance; Annual Certification......66
Section 3.14     Annual Independent Certified Public Accountants'
                 Servicing Report.............................................67
Section 3.15     Books and Records............................................67

                                       i
<PAGE>

                                   ARTICLE IV

    ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS BY MASTER SERVICER
Section 4.01     Master Servicer..............................................68
Section 4.02     REMIC-Related Covenants......................................69
Section 4.03     Monitoring of Company and Servicer...........................69
Section 4.04     Fidelity Bond................................................70
Section 4.05     Power to Act; Procedures.....................................70
Section 4.06     Due-on-Sale Clauses; Assumption Agreements...................71
Section 4.07     Release of Mortgage Files....................................71
Section 4.08     Documents, Records and Funds in Possession of
                 Master Servicer, Company and Servicer To Be Held
                 for Trustee..................................................72
Section 4.09     Standard Hazard Insurance and Flood Insurance Policies.......73
Section 4.10     Presentment of Claims and Collection of Proceeds.............74
Section 4.11     Maintenance of the Primary Mortgage Insurance Policies.......74
Section 4.12     Trustee to Retain Possession of Certain Insurance
                 Policies and Documents.......................................75
Section 4.13     Realization Upon Defaulted Mortgage Loans....................75
Section 4.14     Compensation for the Master Servicer.........................75
Section 4.15     REO Property.................................................76
Section 4.16     Annual Officer's Certificate as to Compliance................76
Section 4.17     Annual Independent Accountant's Servicing Report.............77
Section 4.18     Reports Filed with Securities and Exchange Commission........77
Section 4.19     UCC..........................................................78
Section 4.20     Optional Purchase of Certain Mortgage Loans..................78

                                    ARTICLE V

                                    ACCOUNTS
Section 5.01     Collection of Mortgage Loan Payments; Protected Account......80
Section 5.02     Permitted Withdrawals From the Protected Account.............82
Section 5.03     Reports to Master Servicer...................................83
Section 5.04     Collection of Taxes; Assessments and Similar Items;
                 Escrow Accounts..............................................84
Section 5.05     Servicer Protected Accounts..................................85
Section 5.06     Master Servicer Collection Account...........................86
Section 5.07     Permitted Withdrawals and Transfers from the Master
                 Servicer Collection Account..................................87
Section 5.08     Distribution Account.........................................88
Section 5.09     Permitted Withdrawals and Transfers from the
                 Distribution Account.........................................89

                                   ARTICLE VI

                           DISTRIBUTIONS AND ADVANCES
Section 6.01     Advances.....................................................91

                                       ii
<PAGE>

Section 6.02     Compensating Interest Payments...............................92
Section 6.03     REMIC Distributions..........................................92
Section 6.04     Distributions................................................92
Section 6.05     Allocation of Realized Losses................................96
Section 6.06     Monthly Statements to Certificateholders.....................98
Section 6.07     REMIC Designations and REMIC I Distributions................101
Section 6.08     REMIC II Distributions and Certain REMIC III
                 Distributions...............................................102
Section 6.09     Net WAC Reserve Fund and Class A-2/A-3 Net WAC
                 Pass-Through Amounts........................................103
Section 6.10     Class P Certificate Account.................................104

                                   ARTICLE VII

                                THE CERTIFICATES
Section 7.01     The Certificates............................................105
Section 7.02     Certificate Register; Registration of Transfer and
                 Exchange of Certificates....................................106
Section 7.03     Mutilated, Destroyed, Lost or Stolen Certificates...........109
Section 7.04     Persons Deemed Owners.......................................110
Section 7.05     Access to List of Certificateholders' Names and Addresses...110
Section 7.06     Book-Entry Certificates.....................................110
Section 7.07     Notices to Depository.......................................111
Section 7.08     Definitive Certificates.....................................112
Section 7.09     Maintenance of Office or Agency.............................112

                                  ARTICLE VIII

                       THE COMPANY AND THE MASTER SERVICER
Section 8.01     Liabilities of the Depositor, the Company and the
                 Master Servicer.............................................113
Section 8.02     Merger or Consolidation of the Depositor, the Company
                 or the Master Servicer......................................113
Section 8.03     Indemnification of the Trustee, the Master Servicer
                 and the Securities Administrator............................113
Section 8.04     Limitations on Liability of the Depositor, the Company,
                 the Master Servicer and Others..............................114
Section 8.05     Master Servicer and Company Not to Resign...................115
Section 8.06     Successor Master Servicer...................................116
Section 8.07     Sale and Assignment of Master Servicing.....................116

                                   ARTICLE IX

         DEFAULT; TERMINATION OF MASTER SERVICER; TERMINATION OF COMPANY
Section 9.01     Events of Default...........................................118
Section 9.02     Trustee to Act; Appointment of Successor....................120
Section 9.03     Notification to Certificateholders..........................121
Section 9.04     Waiver of Defaults..........................................121

                                      iii
<PAGE>

Section 9.05     Company Default.............................................122
Section 9.06     Waiver of Company Defaults..................................123

                                    ARTICLE X

             CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 10.01    Duties of Trustee and Securities Administrator..............124
Section 10.02    Certain Matters Affecting the Trustee and the
                 Securities Administrator....................................126
Section 10.03    Trustee and Securities Administrator Not Liable for
                 Certificates or Mortgage Loans. ............................127
Section 10.04    Trustee and Securities Administrator May Own Certificates...128
Section 10.05    Trustee's and Securities Administrator's Fees and Expenses..128
Section 10.06    Eligibility Requirements for Trustee and Securities
                 Administrator...............................................129
Section 10.07    Insurance...................................................129
Section 10.08    Resignation and Removal of Trustee and Securities
                 Administrator...............................................129
Section 10.09    Successor Trustee or Securities Administrator...............130
Section 10.10    Merger or Consolidation of Trustee or Securities
                 Administrator...............................................131
Section 10.11    Appointment of Co-Trustee or Separate Trustee...............131
Section 10.12    Tax Matters.................................................132

                                   ARTICLE XI

                                   TERMINATION
Section 11.01    Termination upon Liquidation or Repurchase of all
                 Mortgage Loans..............................................136
Section 11.02    Final Distribution on the Certificates......................136
Section 11.03    Additional Termination Requirements.........................138

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS
Section 12.01    Amendment...................................................139
Section 12.02    Recordation of Agreement; Counterparts......................140
Section 12.03    Governing Law...............................................140
Section 12.04    Intention of Parties........................................141
Section 12.05    Notices.....................................................141
Section 12.06    Severability of Provisions..................................142
Section 12.07    Assignment..................................................142
Section 12.08    Limitation on Rights of Certificateholders..................142
Section 12.09    Inspection and Audit Rights.................................143
Section 12.10    Certificates Nonassessable and Fully Paid...................144

                                       iv
<PAGE>

Exhibits
Exhibit A-1      Form of Class A-[1]][2][3] Certificates
Exhibit A-2      Form of Class M-[1][2][3] Certificates
Exhibit A-3      Form of Class B-[1][2][3] Certificates
Exhibit A-4      Form of Class C Certificates
Exhibit A-5      Form of Class P Certificates
Exhibit A-6      Form of Class R-[1][2][3] Certificates
Exhibit B        Mortgage Loan Schedule
Exhibit C        Form of Transfer Affidavit
Exhibit D        Form of Transferor Certificate
Exhibit E        Form of Investment Letter (Non-Rule 144A)
Exhibit F        Form of Rule 144A Investment Letter
Exhibit G        Form of Request for Release
Exhibit H        DTC Letter of Representations
Exhibit I        Schedule of Mortgage Loans with Lost Notes
Exhibit J        Form of Custodial Agreement
Exhibit K        Form of Company Certification
Exhibit L        Form of Mortgage Loan Purchase Agreement

                                       v
<PAGE>

         POOLING AND SERVICING AGREEMENT, dated as of November 1, 2004, among
BEAR STEARNS ASSET BACKED SECURITIES I LLC, a Delaware limited liability
company, as depositor (the "Depositor"), EMC MORTGAGE CORPORATION, a Delaware
corporation, as seller (in such capacity, the "Seller") and as company (in such
capacity, the "Company"), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national
banking association, as master servicer (in such capacity, the "Master
Servicer") and as securities administrator (in such capacity, the "Securities
Administrator") and U.S. BANK NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, but solely as trustee (the
"Trustee").

                              PRELIMINARY STATEMENT

         The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates.

                                     REMIC I
                                     -------

         As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as "REMIC I." The Class R-1 Certificates will
represent the sole class of "residual interests" in REMIC I for purposes of the
REMIC Provisions (as defined herein) under federal income tax law. The following
table irrevocably sets forth the designation, the Uncertificated REMIC I
Pass-Through Rate, the initial Uncertificated Principal 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. None
of the REMIC I Regular Interests will be certificated.

<TABLE>
<CAPTION>
      `                   `                    Uncertificated                    `
      `         Initial Uncertificated         REMIC I Pass-               Assumed Final
 Designation      Principal Balance             Through Rate              Maturity Date(1)
-------------  ------------------------   ------------------------   --------------------------
<S>              <C>                             <C>                     <C>
     AA          $     259,040,766.55            Variable (2)            December 25, 2034
     A-1         $       1,831,788.00            Variable (2)            December 25, 2034
     A-2         $         203,532.00            Variable (2)            December 25, 2034
     M-1         $         218,070.00            Variable (2)            December 25, 2034
     M-2         $         163,880.00            Variable (2)            December 25, 2034
     M-3         $          54,190.00            Variable (2)            December 25, 2034
     B-1         $          44,930.00            Variable (2)            December 25, 2034
     B-2         $          39,650.00            Variable (2)            December 25, 2034
     B-3         $          62,120.00            Variable (2)            December 25, 2034
     ZZ          $       2,668,386.26            Variable (2)            December 25, 2034
      P          $             100.00                0.00%               December 25, 2034
</TABLE>

------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month 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 that represents
one or more of the "regular interests" in REMIC I.

(2) Calculated in accordance with the definition of "Uncertificated REMIC I
Pass-Through Rate" herein.


                                      -1-
<PAGE>

                                    REMIC II
                                    --------

         As provided herein, the Trustee will make an election 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-2 Certificates will represent the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions.
The following table irrevocably sets forth the designation, the Uncertificated
REMIC II Pass-Through Rate, the initial Uncertificated Principal 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
II Regular Interests. None of the REMIC II Regular Interests will be
certificated.

<TABLE>
<CAPTION>
                              Initial Uncertificated     Uncertificated REMIC II    Assumed Final Maturity
     Designation                 Principal Balance          Pass-Through Rate               Date(1)
----------------------------------------------------------------------------------------------------------
<S>                         <C>                             <C>                       <C>
         A-1                 $     183,178,800.00              Variable(2)             December 25, 2034
         A-2                 $      20,353,200.00              Variable(2)             December 25, 2034
         M-1                 $      21,807,000.00              Variable(2)             December 25, 2034
         M-2                 $      16,388,000.00              Variable(2)             December 25, 2034
         M-3                 $       5,419,000.00              Variable(2)             December 25, 2034
         B-1                 $       4,493,000.00              Variable(2)             December 25, 2034
         B-2                 $       3,965,000.00              Variable(2)             December 25, 2034
         B-3                 $       6,212,000.00              Variable(2)             December 25, 2034
          C                  $       2,511,312.81            Variable(2) (3)           December 25, 2034
          P                  $             100.00              0.00%(2) (4)            December 25, 2034
----------------------------------------------------------------------------------------------------------
</TABLE>
--------------------
(1)      Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
         regulations, the Distribution Date in the month 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 that represents one or more of the "regular interests" in
         REMIC II.
(2)      Calculated in accordance with the definition of "Uncertificated REMIC
         II Pass-Through Rate" herein.
(3)      REMIC II Regular Interest C will not accrue interest on its
         Uncertificated Principal Balance, but will accrue interest at the
         related Uncertificated REMIC II Pass-Through Rate on its Uncertificated
         Notional Amount which shall equal the aggregate of the Uncertificated
         Principal Balances of the REMIC I Regular Interests other than REMIC I
         Regular Interest P.
(4)      REMIC II Regular Interest P is not entitled to distributions in respect
         of interest.

                                    REMIC III
                                    ---------

         As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III". The Class R-3 Certificates will represent the sole
class of "residual interests" in REMIC III for purposes of the REMIC Provisions.

         The following table irrevocably sets forth the Class designation,
Pass-Through Rate and Initial Certificate Principal Balance for each Class of
Certificates that represents one or more of the "regular interests" in REMIC III
created hereunder.


                                      -2-
<PAGE>

<TABLE>
<CAPTION>
        `             Initial Certificate                                             Assumed Final
Class Designation      Principal Balance               Pass-Through Rate             Maturity Date(1)
-------------------------------------------------------------------------------------------------------
<S>                          <C>                          <C>                                <C> <C>
    Class A-1                $183,178,800.00      Class A-1 Pass-Through Rate       December 25, 2034
    Class A-2                 $20,353,200.00(2)   Class A-2 Pass-Through Rate       December 25, 2034
    Class A-3                 N/A(3) (4)          Class A-3 Pass-Through Rate       December 25, 2034
    Class M-1                 $21,807,000.00      Class M-1 Pass-Through Rate       December 25, 2034
    Class M-2                 $16,388,000.00      Class M-2 Pass-Through Rate       December 25, 2034
    Class M-3                  $5,419,000.00      Class M-3 Pass-Through Rate       December 25, 2034
    Class B-1                  $4,493,000.00      Class B-1 Pass Through Rate       December 25, 2034
    Class B-2                  $3,965,000.00      Class B-2 Pass-Through Rate       December 25, 2034
    Class B-3                  $6,212,000.00      Class B-3 Pass Through Rate       December 25, 2034
     Class C                   $2,511,312.81                N/A(5)                  December 25, 2034
     Class P                         $100.00                N/A(6)                  December 25, 2034
</TABLE>

--------------------
(1)      Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
         regulations, the Distribution Date in the month 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 that represents one or more of the "regular interests" in
         REMIC III.
(2)      The Class A-2 Certificates represent ownership of REMIC III Regular
         Interest A-2, a regular interest in REMIC III, as well as the
         obligation to make payments in respect of the Class A-2/A-3 Net WAC
         Pass-Through Amount to the Net WAC Reserve Fund for distribution in
         respect of the Class A-3 Certificates, which obligation shall not be an
         interest in any REMIC but a contractual obligation of the holders of
         the Class A-2 Certificates.
(3)      The Class A-3 Certificates represent ownership of REMIC III Regular
         Interest A-3, a regular interest in REMIC III, as well as the right to
         receive payments from the Net WAC Reserve Fund in respect of Class
         A-2/A-3 Net WAC Pass-Through Amount, which payments shall not be in
         respect of an interest in any REMIC.
(4)      The Class A-3 Certificates will accrue interest at the Class A-3
         Pass-Through Rate on the Certificate Notional Amount of the Class A-3
         Certificates calculated in accordance with the definition of
         "Certificate Notional Amount" herein. The Class A-3 Certificates will
         not be entitled to distributions in respect of principal.
(5)      The Class C Certificates will not accrue interest on their Certificate
         Principal Balance, but will be entitled to 100% of amounts distributed
         on REMIC II Regular Interest C.
(6)      The Class P Certificates are not entitled to distributions in respect
         of interest.

         The Trust Fund shall be named, and may be referred to as, the "Bear
Stearns Asset Backed Securities I Trust 2004-AC7." The Certificates issued
hereunder may be referred to as "Asset-Backed Certificates Series 2004-AC7"
(including for purposes of any endorsement or assignment of a Mortgage Note or
Mortgage).

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


                                      -3-
<PAGE>


                                   ARTICLE I

                                   DEFINITIONS

         Section 1.01 DEFINED TERMS.

         In addition to those terms defined in Section 1.02, whenever used in
this Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:

         ACCEPTED MASTER SERVICING PRACTICES: With respect to any Mortgage Loan
those customary mortgage 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 Trustee or the Master Servicer (except
in its capacity as successor to the Company or the related Servicer).

         ACCEPTED SERVICING PRACTICES: With respect to each EMC Mortgage Loan,
those mortgage servicing practices (including collection procedures) that are in
accordance with all applicable statutes, regulations and prudent mortgage
banking practices for similar mortgage loans.

         ACCOUNT: The Distribution Account, the Master Servicer Collection
Account, the Net WAC Reserve Fund and any Protected Account.

         ACCRUAL PERIOD: With respect to the Class A-1 Certificates and Class C
Certificates and any Distribution Date, the calendar month immediately preceding
such Distribution Date. With respect to the Class A-2, Class A-3, Class M-1,
Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates and any
Distribution Date, the period from and including the 25th day of the calendar
month preceding the calendar month in which the Distribution Date occurs (or,
with respect to the first Accrual Period for the Class M Certificates and Class
B Certificates, the Closing Date) to and including the 24th day of the calendar
month in which such Distribution Date occurs. All calculations of interest on
the Class A Certificates and Class C Certificates will be made on the basis of a
360-day year consisting of twelve 30-day months. All calculations of interest on
the Class M Certificates and Class B Certificates will be made on the basis of
the actual number of days elapsed in the related Accrual Period.

         ADDITIONAL MASTER SERVICING COMPENSATION: The meaning specified in
Section 4.14.

         ADVANCE: An advance of delinquent payments of principal or interest in
respect of a Mortgage Loan required to be made by the Company as provided in
Section 6.01(a) hereof, by the related Servicer in accordance with the related
Servicing Agreement or by the Master Servicer as provided in Section 6.01(b)
hereof.

         AGREEMENT: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.

                                      -4-
<PAGE>

         AMOUNT HELD FOR FUTURE DISTRIBUTION: As to any Distribution Date, the
aggregate amount held in the Company's or the related Sevicer's Protected
Account at the close of business on the immediately preceding Determination Date
on account of (i) all Scheduled Payments or portions thereof received in respect
of the Mortgage Loans due after the related Due Period and (ii) Principal
Prepayments, Liquidation Proceeds and Insurance Proceeds received in respect of
such Mortgage Loans after the last day of the related Prepayment Period.

         APPLIED REALIZED LOSS AMOUNT: With respect to any Distribution Date and
a Class of Subordinate Certificates the sum of the Realized Losses with respect
to the Mortgage Loans which have been applied in reduction of the Certificate
Principal Balance of that Class of Certificates pursuant to Section 6.05 of this
Agreement, which have not previously been reimbursed.

         APPRAISED VALUE: With respect to any Mortgage Loan originated in
connection with a refinancing, the appraised value of the Mortgaged Property
based upon the appraisal made at the time of such refinancing or, with respect
to any other Mortgage Loan, the lesser of (x) the appraised value of the
Mortgaged Property based upon the appraisal made by a fee appraiser at the time
of the origination of the related Mortgage Loan, and (y) the sales price of the
Mortgaged Property at the time of such origination.

         ASSIGNMENT AGREEMENT: Shall mean any of the Southtrust Assignment
Agreement or the GMACM Assignment Agreement.

         AVAILABLE FUNDS: The sum of Interest Funds and Principal Funds with
respect to the Mortgage Loans.

         BANKRUPTCY CODE: Title 11 of the United States Code.

         BASIC PRINCIPAL DISTRIBUTION AMOUNT: Shall mean, with respect to any
Distribution Date, the lesser of (a) the excess of (i) the Available Funds for
such Distribution Date over (ii) the aggregate Monthly Interest Distributable
Amount for the Certificates (other than the Class P, Class C and Class R
Certificates) for such Distribution Date and (b) the Principal Remittance Amount
for such Distribution Date.

         BOOK-ENTRY CERTIFICATES: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 7.06). As of the Closing
Date, each Class of Regular Certificates constitutes a Class of Book-Entry
Certificates.

         BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in The City of New York, New York,
Minneapolis, Minnesota, Columbia, Maryland or the city in which the Corporate
Trust Office of the Trustee or the principal office of the Company or the Master
Servicer is located are authorized or obligated by law or executive order to be
closed.

                                      -5-
<PAGE>

         CERTIFICATE: Any one of the certificates of any Class executed and
authenticated by the Trustee in substantially the forms attached hereto as
Exhibits A-1 through A-6.

         CERTIFICATE NOTIONAL AMOUNT: As to any Class A-3 Certificate and any
Distribution Date, the Certificate Principal Balance of the Class A-2
Certificates; for federal income tax purposes, however, the equivalent of the
foregoing, expressed as the Uncertificated Principal Balance of REMIC II Regular
Interest A-2. As to the Class C Certificates and any Distribution Date, an
amount equal to the Stated Principal Balance of the Mortgage Loans . The initial
Certificate Notional Amount of the Class C Certificates shall be
$264,327,312.81. For federal income tax purposes, however, the Class C
Certificates will not have a Certificate Notional Amount, but the Class C
Distribution Amount for any Distribution Date will be an amount equal to 100% of
amounts deemed distributed with respect to REMIC II Regular Interest C for such
Distribution Date.

         CERTIFICATE OWNER: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.

         CERTIFICATE PRINCIPAL BALANCE: As to any Certificate (other than any
Class A-3, Class C or Class R Certificate) and as of any Distribution Date, the
Initial Certificate Principal Balance of such Certificate plus any Subsequent
Recoveries added to the Certificate Principal Balance of such Certificate
pursuant to Section 6.05 less the sum of (i) all amounts distributed with
respect to such Certificate in reduction of the Certificate Principal Balance
thereof on previous Distribution Dates pursuant to Section 6.04 and (ii) any
Applied Realized Loss Amounts allocated to such Certificate on previous
Distribution Dates.

         CERTIFICATE REGISTER: The register maintained pursuant to Section 7.02
hereof.

         CERTIFICATEHOLDER OR HOLDER: The person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository, in the case of any Book-Entry Certificates).

         CLASS: All Certificates bearing the same Class designation as set forth
in Section 7.01 hereof.

         CLASS A CERTIFICATES: Any of the Class A-1, Class A-2 and Class A-3
Certificates.

         CLASS A-1 CERTIFICATE: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class A-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS A-1 PASS-THROUGH RATE: Shall mean (i) on any Distribution Date
which occurs on or prior to the Optional Termination Date, 5.500% per annum,
subject to a cap equal to the related Net WAC Rate Cap for such Distribution
Date and (ii) for each Distribution Date thereafter, 6.000% per annum, subject
to a cap equal to the related Net WAC Rate Cap for such Distribution Date; for
federal income tax purposes, however, the equivalent of the foregoing, stated as
the weighted average of the Uncertificated REMIC II Pass-Through Rate for REMIC
II


                                      -6-
<PAGE>

Regular Interest A-1, weighted on the basis of the Uncertificated Principal
Balance thereof immediately prior to such Distribution Date.

         CLASS A-2 CERTIFICATE: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class A-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS A-2/A-3 NET WAC PASS-THROUGH AMOUNT: With respect to any
Distribution Date, the excess, if any, of (A) the amount of interest the Class
A-2 Certificates would have been entitled to receive if the related Net WAC Rate
Cap did not apply, over (B) the amount of interest the Class A-2 Certificates
would have been entitled to receive if reductions under the related Net WAC Rate
Cap were allocated as provided in the definition thereof; provided, however,
that if One-Month LIBOR plus the applicable margin for the Class A-2
Certificates for such Distribution Date is equal to or greater than the rate of
interest for the Class A-2 Certificates determined as if reductions under the
Net WAC Rate Cap allocable to the Class A-2 Certificates and Class A-3
Certificates were allocated to the Class A-2 Certificates, the amount determined
under clause (A) would be determined as if reductions under the Net WAC Rate Cap
allocable to the Class A-2 Certificates and Class A-3 Certificates were
allocated to the Class A-2 Certificates.

         CLASS A-2 PASS-THROUGH RATE: Shall mean One-Month LIBOR plus 0.400% per
annum with a maximum rate of 8.000% per annum and a minimum rate of 0.400% per
annum, in each case subject to a cap equal to the related Net WAC Rate Cap for
such Distribution Date.

         CLASS A-3 CERTIFICATE: Any Certificate designated as a "Class A-3
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class A-3 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS A-3 PASS-THROUGH RATE: Shall mean (i) on any Distribution Date
which occurs on or prior to the Optional Termination Date, 7.600% per annum
minus One-Month LIBOR with a maximum rate of 7.600% per annum and a minimum rate
of 0.000% and (ii) for each Distribution Date thereafter, 8.100% per annum minus
One-Month LIBOR, with a maximum rate of 7.600% per annum on or prior to the
Optional Termination Date and 8.100% per annum after the Optional Termination
Date and a minimum rate of 0.000%, in each case subject to a cap equal to the
related Net WAC Rate Cap for such Distribution Date.

         CLASS B CERTIFICATES: Any of the Class B-1, Class B-2 and Class B-3
Certificates.

         CLASS B-1 CERTIFICATE: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class B-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS B-1 PASS-THROUGH RATE: Shall mean (i) on any Distribution Date
which occurs on or prior to the Optional Termination Date, One-Month LIBOR plus
1.700% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR
plus 2.550% per annum, in each case


                                      -7-
<PAGE>

subject to a cap equal to the related Net WAC Rate Cap for such Distribution
Date; for federal income tax purposes, however, the equivalent of the foregoing,
stated as the weighted average of the Uncertificated REMIC II Pass-Through Rate
for REMIC II Regular Interest B-1, weighted on the basis of the Uncertificated
Principal Balance thereof immediately prior to such Distribution Date.

         CLASS B-2 CERTIFICATE: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class B-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS B-2 PASS-THROUGH RATE: Shall mean (i) on any Distribution Date
which occurs on or prior to the Optional Termination Date, One-Month LIBOR plus
1.800% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR
plus 2.700% per annum, in each case subject to a cap equal to the related Net
WAC Rate Cap for such Distribution Date; for federal income tax purposes,
however, the equivalent of the foregoing, stated as the weighted average of the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest B-2,
weighted on the basis of the Uncertificated Principal Balance thereof
immediately prior to such Distribution Date.

         CLASS B-3 CERTIFICATE: Any Certificate designated as a "Class B-3
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class B-3 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III

         CLASS B-3 PASS-THROUGH RATE: Shall mean (i) on any Distribution Date
which occurs on or prior to the Optional Termination Date, One-Month LIBOR plus
3.000% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR
plus 4.500% per annum, in each case subject to a cap equal to the related Net
WAC Rate Cap for such Distribution Date; for federal income tax purposes,
however, the equivalent of the foregoing, stated as the weighted average of the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest B-3,
weighted on the basis of the Uncertificated Principal Balance thereof
immediately prior to such Distribution Date.

         CLASS C CERTIFICATE: Any Certificate designated as a "Class C
Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class C Certificates herein and evidencing a Regular Interest in REMIC III.

         CLASS C DISTRIBUTION AMOUNT: With respect to any Distribution Date, the
Monthly Interest Distributable Amount for the Class C Certificates for such
Distribution Date; provided, however, that on and after the Distribution Date on
which the Certificate Principal Balance of the Offered Certificates has been
reduced to zero, the Class C Distribution Amount shall include the
Overcollateralized Amount. For federal income tax purposes the Class C
Distribution Amount for the Class C Certificates for any Distribution Date shall
be an amount equal to 100% of the amounts distributed in respect of REMIC II
Regular Interest C on such Distribution Date.

                                      -8-
<PAGE>

         CLASS C PASS-THROUGH RATE: The Class C Certificates will not have a
Pass-Through Rate, but the Class C Distribution Amount for the Class C
Certificates for any Distribution Date shall be an amount equal to 100% of the
amounts distributed in respect of REMIC II Regular Interest C on such
Distribution Date.

         CLASS M CERTIFICATES: Any of the Class M-1, Class M-2 and Class M-3
Certificates.

         CLASS M-1 CERTIFICATE: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class M-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS M-1 PASS-THROUGH RATE: Shall mean (i) on any Distribution Date
which occurs on or prior to the Optional Termination Date, One-Month LIBOR plus
0.620% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR
plus 0.930% per annum, in each case subject to a cap equal to the related Net
WAC Rate Cap for such Distribution Date; for federal income tax purposes,
however, the equivalent of the foregoing, stated as the weighted average of the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest M-1,
weighted on the basis of the Uncertificated Principal Balance thereof
immediately prior to such Distribution Date.

         CLASS M-2 CERTIFICATE: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class M-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS M-2 PASS-THROUGH RATE: Shall mean (i) on any Distribution Date
which occurs on or prior to the Optional Termination Date, One-Month LIBOR plus
1.100% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR
plus 1.650% per annum, in each case subject to a cap equal to the related Net
WAC Rate Cap for such Distribution Date; for federal income tax purposes,
however, the equivalent of the foregoing, stated as the weighted average of the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest M-2,
weighted on the basis of the Uncertificated Principal Balance thereof
immediately prior to such Distribution Date.

         CLASS M-3 CERTIFICATE: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class M-3 Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS M-3 PASS-THROUGH RATE: Shall mean (i) on any Distribution Date
which occurs on or prior to the Optional Termination Date, One-Month LIBOR plus
1.30% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR
plus 1.95% per annum, in each case subject to a cap equal to the related Net WAC
Rate Cap for such Distribution Date; for federal income tax purposes, however,
the equivalent of the foregoing, stated as the weighted average of the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest M-3,
weighted


                                      -9-
<PAGE>

on the basis of the Uncertificated Principal Balance thereof immediately prior
to such Distribution Date.

         CLASS P CERTIFICATE: Any Certificate designated as a "Class P
Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class P Certificates as set forth herein and evidencing a Regular Interest
in REMIC III.

         CLASS P CERTIFICATE ACCOUNT: The account established and maintained by
the Trustee pursuant to Section 6.10 hereof.

         CLASS R CERTIFICATES: Any of the Class R-1, Class R-2 and Class R-3
Certificates.

         CLASS R-1 CERTIFICATE: Any Certificate designated a "Class R-1
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-6 hereto, evidencing the Residual Interest in REMIC I and representing the
right to the Percentage Interest of distributions provided for the Class R-1
Certificates as set forth herein.

         CLASS R-2 CERTIFICATE: Any Certificate designated a "Class R-2
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-6 hereto, evidencing the Residual Interest in REMIC II and representing the
right to the Percentage Interest of distributions provided for the Class R-2
Certificates as set forth herein.

         CLASS R-3 CERTIFICATE: Any Certificate designated a "Class R-3
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-6 hereto, evidencing the Residual Interest in REMIC III and representing the
right to the Percentage Interest of distributions provided for the Class R-3
Certificates as set forth herein.

         CLOSING DATE: November 30, 2004.

         CODE: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.

         COMPANY: EMC.

         COMPENSATING INTEREST: An amount, not to exceed the Servicing Fee, to
be deposited in the Master Servicer Collection Account by the Company or the
related Servicer to the payment of a Prepayment Interest Shortfall on a Mortgage
Loan subject to this Agreement; provided that in the event the Company or the
related Servicer fails to make such payment, the Master Servicer shall be
obligated to do so to the extent provided in Section 6.02(c) hereof.

         CORPORATE TRUST OFFICE: The designated office of the Trustee where at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
Agreement is located at US Bank Corporate Trust Services, One Federal Street,
3rd Floor, Boston, Massachusetts 02110, Attention: Corporate Trust
Services/BSABS I 2004-AC7, or at such other address as the Trustee may designate
from time to time.

                                      -10-
<PAGE>

         CORRESPONDING CERTIFICATE: With respect to each REMIC II Regular
Interest, the Certificate with the corresponding designation.

         CORRESPONDING INTEREST: With respect to each REMIC I Regular Interest
other than REMIC I Regular Interests AA and ZZ, the REMIC II Regular Interest
with the corresponding designation.

         CROSS-OVER DATE: The first Distribution Date on which the aggregate
Certificate Principal Balance of the Subordinate Certificates has been reduced
to zero (giving effect to all distributions on such Distribution Date).

         CUSTODIAL AGREEMENT: An agreement, dated as of November 30, 2004, among
the Depositor, the Seller, the Trustee and the Custodian in substantially the
form of Exhibit J hereto.

         CUSTODIAN: Wells Fargo Bank, National Association, or any successor
custodian appointed pursuant to the provisions hereof and the Custodial
Agreement.

         CUT-OFF DATE: The close of business on November 1, 2004.

         CUT-OFF DATE PRINCIPAL BALANCE: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-off Date after
application of all Principal Prepayments received prior to the Cut-off Date and
scheduled payments of principal due on or before the Cut-off Date, whether or
not received, but without giving effect to any installments of principal
received in respect of Due Dates after the Cut-off Date.

         DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction in a proceeding under the Bankruptcy Code
in the Scheduled Payment for such Mortgage Loan that became final and
non-appealable, except such a reduction resulting from a Deficient Valuation or
any other reduction that results in a permanent forgiveness of principal.

         DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under such Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any Scheduled
Payment that results in a permanent forgiveness of principal, which valuation or
reduction results from an order of such court that is final and non-appealable
in a proceeding under the Bankruptcy Code.

         DEFINITIVE CERTIFICATES: As defined in Section 7.06.

         DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.

         DELINQUENT: A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of business
on the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding


                                      -11-
<PAGE>

the month in which such payment was due, or, if there is no such corresponding
day (e.g., as when a 30-day month follows a 31-day month in which a payment was
due on the 31st day of such month), then on the last day of such immediately
succeeding month. Similarly for "60 days delinquent," "90 days delinquent" and
so on.

         DENOMINATION: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate".

         DEPOSITOR: Bear Stearns Asset Backed Securities I LLC, a Delaware
limited liability company, or its successor in interest.

         DEPOSITORY: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.

         DEPOSITORY AGREEMENT: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of Exhibit
H.

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

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

         DISTRIBUTION ACCOUNT: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 5.08 in the name of the Trustee
for the benefit of the Certificateholders and designated "U.S. Bank National
Association, in trust for registered holders of Bear Stearns Asset Backed
Securities I LLC, Asset-Backed Certificates, Series 2004-AC7" shall be held in
trust for the Certificateholders for the uses and purposes set forth in this
Agreement.

         DISTRIBUTION ACCOUNT DEPOSIT DATE: As to any Distribution Date, on or
before 3:00 p.m. Eastern time on the Business Day immediately preceding such
Distribution Date.

         DISTRIBUTION DATE: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in December 2004.

         DUE DATE: As to any Mortgage Loan, the date in each month on which the
related Scheduled Payment is due, as set forth in the related Mortgage Note.

                                      -12-
<PAGE>

         DUE PERIOD: With respect to any Distribution Date, the period from the
second day of the calendar month preceding the calendar month in which such
Distribution Date occurs through close of business on the first day of the
calendar month in which such Distribution Date occurs.

         ELIGIBLE ACCOUNT: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the debt obligations of such
holding company, so long as Moody's is not a Rating Agency) are rated by each
Rating Agency in one of its two highest long-term and its highest short-term
rating categories respectively, at the time any amounts are held on deposit
therein, or (ii) an account or accounts in a depository institution or trust
company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the corporate trust department of a federal or state chartered depository
institution or trust company having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity or (iv) any other account
acceptable to the Rating Agencies. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with
the Trustee.

         EMC: EMC Mortgage Corporation, a Delaware corporation.

         EMC MORTGAGE LOANS: Shall mean those Mortgage Loans serviced by the
Company pursuant to the terms of this Agreement.

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

         ERISA RESTRICTED CERTIFICATES: Any of the Class C, Class P and Residual
Certificates.

         EVENT OF DEFAULT: As defined in Section 9.01 hereof.

         EXEMPTION: Prohibited Transaction Exemption 90-30, as amended from time
to time.

         EXCESS LIQUIDATION PROCEEDS: To the extent not required by law to be
paid to the related Mortgagor, the excess, if any, of any Liquidation Proceeds
with respect to a Mortgage Loan over the Stated Principal Balance of such
Mortgage Loan and accrued and unpaid interest at the related Mortgage Rate
through the last day of the month in which the Mortgage Loan has been
liquidated.

         EXCESS SPREAD: With respect to any Distribution Date is the excess, if
any, of the Interest Funds for such Distribution Date over the Monthly Interest
Distributable Amounts payable to the Offered Certificates on such Distribution
Date.

                                      -13-
<PAGE>

         EXTRA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution
Date (a) on or prior to the earlier of (1) the 20% Clean-Up Call Date and (2)
the Distribution Date in November 2014, the lesser of (x) the Excess Spread for
such Distribution Date and (y) the Overcollateralization Increase Amount for
such Distribution Date; and (b) thereafter, the Excess Spread for such
Distribution Date.

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

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

         FINAL RECOVERY DETERMINATION: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller or the Class C Certificateholder pursuant to or as contemplated by
Section 2.03(c) or Section 11.01), a determination made by the Company pursuant
to this Agreement or the applicable Servicer pursuant to the related Servicing
Agreement that all Insurance Proceeds, Liquidation Proceeds and other payments
or recoveries which the Company or such Servicer, in its reasonable good faith
judgment, expects to be finally recoverable in respect thereof have been so
recovered. The Master Servicer shall maintain records, based solely on
information provided by each Servicer, of each Final Recovery Determination made
thereby.

         FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989.

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

         GMACM: GMAC Mortgage Corporation, and any successor thereto.

         GMACM ASSIGNMENT AGREEMENT: The Assignment, Assumption and Recognition
Agreement, dated as of November 30, 2004, by and among the Seller, GMACM and the
Trustee evidencing the assignment of the GMACM Servicing Agreement to the Trust.

         GMACM LOANS: Those Mortgage Loans subject to this Agreement which were
purchased by the Seller fromGMACM pursuant to the GMACM Servicing Agreement.

         GMACM SERVICING AGREEMENT: Shall mean the Mortgage Loan Purchase
Agreement, dated as of May 1, 2001, as amended by Amendment No. 1, dated as of
December 1, 2002 (as amended, the "MLPA"), by and between the Seller and GMACM
as modified by them GMACM Assignment Agreement.

         INDEMNIFIED PERSONS: The Trustee, the Master Servicer, the Company, the
Trust Fund and the Securities Administrator and their officers, directors,
agents and employees and, with respect to the Trustee, any separate co-trustee
and its officers, directors, agents and employees.

         INITIAL CERTIFICATE PRINCIPAL BALANCE: With respect to any Certificate
(other than the Class A-3 Certificate), the Certificate Principal Balance of
such Certificate or any predecessor Certificate on the Closing Date.

                                      -14-
<PAGE>

         INSURANCE POLICY: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy or LPMI Policy, including all riders and
endorsements thereto in effect with respect to such Mortgage Loan, including any
replacement policy or policies for any Insurance Policies.

         INSURANCE PROCEEDS: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Company, the related Servicer or the trustee under the deed of
trust and are not applied to the restoration of the related Mortgaged Property
or released to the Mortgagor in accordance with the procedures that the Company
or the related Servicer would follow in servicing mortgage loans held for its
own account, in each case other than any amount included in such Insurance
Proceeds in respect of Insured Expenses.

         INSURED EXPENSES: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.

         INTEREST DETERMINATION DATE: Shall mean the second LIBOR Business Day
preceding the commencement of each Accrual Period.

         INTEREST FUNDS: For any Distribution Date, (i) the sum, without
duplication, of (a) all scheduled interest during the related Due Period with
respect to the related Mortgage Loans less the Servicing Fee, the Master
Servicing Fee and the LPMI Fee, if any, (b) all Advances relating to interest
with respect to the related Mortgage Loans made on or prior to the related
Distribution Account Deposit Date, (c) all Compensating Interest with respect to
the related Mortgage Loans required to be remitted by the Company or the Master
Servicer pursuant to this Agreement or the related Servicer pursuant to the
related Servicing Agreement with respect to such Distribution Date, (d)
Liquidation Proceeds and Subsequent Recoveries with respect to the related
Mortgage Loans collected during the related Prepayment Period (to the extent
such Liquidation Proceeds and Subsequent Recoveries relate to interest), (e) all
amounts relating to interest with respect to each Mortgage Loan repurchased by
the Seller pursuant to Sections 2.02 and 2.03 and by EMC pursuant to Section
4.20 and (f) all amounts in respect of interest paid by the Master Servicer
pursuant to Section 11.01, in each case to the extent remitted by the Company or
the related Servicer, as applicable, to the Distribution Account pursuant to
this Agreement or the related Servicing Agreement minus (ii) all amounts
relating to interest required to be reimbursed pursuant to Sections 5.02, 5.05,
5.07 and 5.09 or as otherwise set forth in this Agreement.

         INTEREST SHORTFALL: With respect to any Distribution Date, means the
aggregate shortfall, if any, in collections of interest (adjusted to the related
Net Mortgage Rates) on Mortgage Loans resulting from (a) Principal Prepayments
in full received during the related Prepayment Period, (b) the partial Principal
Prepayments received during the related Prepayment Period to the extent applied
prior to the Due Date in the month of the Distribution Date and (c) interest
payments on certain of the Mortgage Loans being limited pursuant to the
provisions of the Relief Act or similar state laws.

         LAST SCHEDULED DISTRIBUTION DATE: December 25, 2034.

                                      -15-
<PAGE>

         LATEST POSSIBLE MATURITY DATE: The Distribution Date following the
final scheduled maturity date of the Mortgage Loan in the Trust Fund having the
latest scheduled maturity date as of the Cut-off Date. For purposes of the
Treasury Regulations under Code section 860A through 860G, the latest possible
maturity date of each regular interest issued by REMIC I, REMIC II and REMIC III
shall be the Latest Possible Maturity Date.

         LIBOR BUSINESS DAY: Shall mean a day on which banks are open for
dealing in foreign currency and exchange in London and New York City.

         LIQUIDATED LOAN: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Company or the related Servicer has made a Final
Recovery Determination with respect thereto.

         LIQUIDATION PROCEEDS: Amounts, other than Insurance Proceeds, received
in connection with the partial or complete liquidation of a Mortgage Loan,
whether through trustee's sale, foreclosure sale or otherwise, or in connection
with any condemnation or partial release of a Mortgaged Property and any other
proceeds received with respect to an REO Property, less the sum of related
unreimbursed Advances, Servicing Fees and Servicing Advances and all expenses of
liquidation, including property protection expenses and foreclosure and sale
costs, including court and reasonable attorneys fees.

         LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Appraised Value of the related
Mortgaged Property.

         LOSS ALLOCATION LIMITATION: The meaning specified in Section 6.05(c)
hereof.

         LPMI FEE: Shall mean the fee payable to the insurer for each Mortgage
Loan subject to an LPMI Policy as set forth in such LPMI Policy.

         LPMI POLICY: A policy of mortgage guaranty insurance issued by an
insurer meeting the requirements of Fannie Mae and Freddie Mac in which the
Company or the related Servicer of the related Mortgage Loan is responsible for
the payment of the LPMI Fee thereunder from collections on the related Mortgage
Loan.

         MAJORITY CLASS C CERTIFICATEHOLDER: Shall mean the Holder of a 50.01%
or greater Percentage Interest in the Class C Certificates.

         MARKER RATE: With respect to REMIC II Regular Interest C and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the Uncertificated REMIC I Pass-Through Rates for REMIC I Regular Interest
A-1, REMIC I Regular Interest A-2, REMIC I Regular Interest A-3, REMIC I Regular
Interest M-1, REMIC I Regular Interest M-2, REMIC I Regular Interest M-3, REMIC
I Regular Interest B-1, REMIC I Regular Interest B-2, REMIC I Regular Interest
B-3 and REMIC I Regular Interest ZZ, with the rate on such REMIC I Regular
Interests (other than REMIC I Regular Interest ZZ) subject to a cap equal to the
Uncertificated

                                      -16-
<PAGE>

REMIC II Pass-Through Rate for the Corresponding Interest and with the rate on
REMIC I Regular Interest ZZ subject to a cap of zero for the purpose of this
calculation; provided, however, that for this purpose, the calculation of the
Uncertificated REMIC I Pass-Through Rate and the related cap with respect to
REMIC I Regular Interest M-1, REMIC I Regular Interest M-2, REMIC I Regular
Interest M-3, REMIC I Regular Interest B-1, REMIC I Regular Interest B-2 and
REMIC I Regular Interest B-3 shall be multiplied by a fraction, the numerator of
which is the actual number of days in the Accrual Period and the denominator of
which is 30.

         MASTER SERVICER: Wells Fargo Bank, National Association, in its
capacity as master servicer, and its successors and assigns.

         MASTER SERVICER CERTIFICATION: A written certification covering
servicing of the Mortgage Loans by the Company and all Servicers 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 superceded 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 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 COLLECTION ACCOUNT: The trust accounts or accounts
created and maintained pursuant to Section 5.06 hereof, which shall be entitled
"U.S. Bank National Association, as Trustee f/b/o holders of Bear Stearns Asset
Backed Securities I LLC, Asset Backed Certificates, Series 2004-AC7 - Master
Servicer Collection Account".

         MASTER SERVICING COMPENSATION: For any Distribution Date, the sum of
the Master Servicing Fee and the Additional Master Servicing Compensation for
such Distribution Date.

         MASTER SERVICING FEE: As to each Mortgage Loan and any Distribution
Date, an amount equal to 1/12th of the Master Servicing Fee Rate multiplied by
the Stated Principal Balance of such Mortgage Loan as of the last day of the
related Due Period.

         MASTER SERVICING FEE RATE: 0.02% per annum.

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

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

                                      -17-
<PAGE>

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

         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 INTEREST DISTRIBUTABLE AMOUNT: With respect to the Certificates
(other than the Class P Certificates and Class R Certificates) for any
Distribution Date, means an amount equal to the interest accrued during the
related Accrual Period at the applicable Pass-Through Rate on the Certificate
Principal Balance (or Certificate Notional Amount) of such Certificate
immediately prior to such Distribution Date less such Certificate's share of any
Unpaid Interest Shortfall and the interest portion of any Realized Losses on the
Mortgage Loans allocated to such Certificate pursuant to Section 1.02. The
Monthly Interest Distributable Amount with respect to the Senior Certificates is
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The Monthly Interest Distributable Amount with respect to the Subordinate
Certificates is calculated on the basis of a 360-day year and the actual number
of days elapsed during the related Accrual Period. No Monthly Interest
Distributable Amount will be payable with respect to any Class of Certificates
after the Distribution Date on which the outstanding Certificate Principal
Balance (or Certificate Notional Amount) of such Certificate has been reduced to
zero.

         MONTHLY STATEMENT: The statement delivered to the Certificateholders
pursuant to Section 6.06.

         MOODY'S: Moody's Investors Service, Inc.

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

         MORTGAGE FILE: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.

         MORTGAGE LOANS: Such of the Mortgage Loans transferred and assigned to
the Trustee pursuant to the provisions hereof, as from time to time are held as
a part of the Trust Fund (including any REO Property), the mortgage loans so
held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure
or other acquisition of title of the related Mortgaged Property. Any mortgage
loan that was intended by the parties hereto to be transferred to the Trust Fund
as indicated by such Mortgage Loan Schedule which is in fact not so transferred
for any reason including, without limitation, a breach of the representation
contained in Section 2.03(b)(v) hereof, shall continue to be a Mortgage Loan
hereunder until the Purchase Price with respect thereto has been paid to the
Trust Fund.

         MORTGAGE LOAN PURCHASE AGREEMENT: Shall mean the Mortgage Loan Purchase
Agreement, dated as of November 30, 2004, between the Seller, as seller and the
Depositor, as purchaser.

                                      -18-
<PAGE>

         MORTGAGE LOAN PURCHASE PRICE: The price, calculated as set forth in
Section 11.01, to be paid in connection with the repurchase of the Mortgage
Loans pursuant to Section 11.01.

         MORTGAGE LOAN SCHEDULE: The list of Mortgage Loans (as from time to
time amended by the Company or the Master Servicer to reflect the deletion of
Deleted Mortgage Loans and the addition of Replacement Mortgage Loans pursuant
to the provisions of this Agreement) transferred to the Trustee as part of the
Trust Fund and from time to time subject to this Agreement, the initial Mortgage
Loan Schedule being attached hereto as Exhibit B, setting forth the following
information with respect to each Mortgage Loan:

                  (i) the loan number;

                  (ii) the Mortgage Rate in effect as of the Cut-off Date;

                  (iii) the Servicer (or the Company, if it services the
                        Mortgage Loan), the Servicing Fee Rate and the Master
                        Servicing Fee Rate;

                  (iv)  the LPMI Fee, if applicable;

                  (v)   the Net Mortgage Rate in effect as of the Cut-off Date;

                  (vi)  the maturity date;

                  (vii) the original principal balance;

                  (viii) the Cut-off Date Principal Balance;

                  (ix)  the original term;

                  (x)   the remaining term;

                  (xi)  the property type; and

                  (xii) the MIN with respect to each Mortgage Loan.

Such schedule shall also set forth the aggregate Cut-off Date Principal Balance
for all of the Mortgage Loans.

         MORTGAGE NOTE: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.

         MORTGAGE RATE: The annual rate of interest borne by a Mortgage Note.

         MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan.

         MORTGAGOR: The obligors on a Mortgage Note.

                                      -19-
<PAGE>

         NET INTEREST SHORTFALLS: Shall mean Interest Shortfalls net of payments
by the Company, the Servicer or the Master Servicer in respect of Compensating
Interest.

         NET MONTHLY EXCESS CASHFLOW: With respect to any Distribution Date, the
Remaining Excess Spread for such Distribution Date.

         NET MORTGAGE RATE: As to each Mortgage Loan, and at any time, the per
annum rate equal to the related Mortgage Rate less the sum of (i) the Servicing
Fee Rate, (ii) the Master Servicing Fee Rate and (iii) the rate at which the
LPMI Fee is calculated, if any.

         NET WAC RATE CAP: With respect to the Class A-1 Certificates shall mean
(i) on any Distribution Date which occurs on or prior to the Optional
Termination Date, the product of (x) the weighted average of the Net Mortgage
Rates of the Mortgage Loans for such Distribution Date and (y) 95.6521739130%
and (ii) for each Distribution Date thereafter, the product of (x) the weighted
average of the Net Mortgage Rates of the Mortgage Loans for such Distribution
Date and (y) 96.0000000000%.

         With respect to the Class A-2 Certificates and Class A-3 Certificates
will be calculated based on an assumed certificate with a principal balance
equal to the Certificate Principal Balance of the Class A-2 Certificates and a
fixed pass-through rate of (i) on any Distribution Date which occurs on or prior
to the Optional Termination Date, 8.00% per annum, subject to a cap equal to the
product of (x) the weighted average of the Net Mortgage Rates of the Mortgage
Loans and (y) 139.1304347826% and (ii) for each Distribution Date thereafter,
8.50% per annum, subject to a cap equal to the product of (x) the weighted
average of the Net Mortgage Rates of the Mortgage Loans and (y) 136.0000000000%.
If the weighted average of the Net Mortgage Rates of the Mortgage Loans is less
than 5.75% per annum (or, after the Optional Termination Date, 6.25% per annum),
the amount of the shortfall which would occur with respect to the assumed
certificate as a result of the cap will be allocated between the Class A-2
Certificates and Class A-3 Certificates in proportion to their current
entitlements to interest calculated without regard to this cap. Accordingly, in
such event the Net WAC Rate Cap for the Class A-2 Certificates would be equal to
the Class A-2 Pass-Through Rate (determined without regard to the Net WAC Rate
Cap) less the amount allocable to the Class A-2 Certificates pursuant to the
preceding sentence, and the Net WAC Rate Cap for the Class A-3 Certificates
would be equal to the Class A-3 Pass-Through Rate (determined without regard to
the Net WAC Rate Cap) less the amount allocable to the Class A-2 Certificates
pursuant to the preceding sentence.

         With respect to the Class M Certificates and Class B Certificates shall
mean the lesser of (i) 11.00% per annum and (ii) the weighted average of the Net
Mortgage Rates of the Mortgage Loans.

         For federal income tax purposes, the Net WAC Rate Cap shall equal (i)
with respect to each of the Class M Certificates and Class B Certificates, the
weighted average of the Uncertificated REMIC II Pass-Through Rate on the REMIC
II Regular Interest for which such Certificate is the Corresponding Certificate,
(ii) with respect to the Class A-1 Certificates, if the weighted average of the
Net Mortgage Rates of the Mortgage Loans is less than 5.75% per annum (or, after
the Optional Termination Date, 6.25% per annum), the equivalent of the rates


                                      -20-
<PAGE>

determined in the third preceding paragraph, calculated using the weighted
average of the Uncertificated REMIC II Pass-Through Rate on REMIC II Regular
Interest A-1 in place of the weighted average of the Net Mortgage Rates of the
Mortgage Loans (iii) with respect to the Class A-2 Certificates and Class A-3
Certificates, if the weighted average of the Net Mortgage Rates of the Mortgage
Loans is less than 5.75% per annum (or, after the Optional Termination Date,
6.25% per annum), the equivalent of the rates determined in the second preceding
paragraph, calculated using the weighted average of the Uncertificated REMIC II
Pass-Through Rate on REMIC II Regular Interest A-2 in place of the weighted
average of the Net Mortgage Rates of the Mortgage Loans.

         NET WAC RATE CARRYOVER AMOUNT: With respect any Class of Offered
Certificates and any Distribution Date on which the related Pass-Through Rate is
reduced by the Net WAC Rate Cap, 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 Pass-Through Rate applicable to such Class would
not have been reduced by the Net WAC Rate Cap on such Distribution Date over (y)
the amount of interest paid to such Class on such Distribution Date 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
Accrual Period.

         NET WAC RESERVE FUND: Shall mean the separate trust account created and
maintained by the Trustee pursuant to Section 6.09 hereof.

         NON-BOOK-ENTRY CERTIFICATE: Any Certificate other than a Book-Entry
Certificate.

         NONRECOVERABLE ADVANCE: Any portion of an Advance previously made or
proposed to be made by the Company or the Master Servicer pursuant to this
Agreement or the related Servicer pursuant to the related Servicing Agreement,
that, in the good faith judgment of the Company, the Master Servicer or the
related Servicer, will not or, in the case of a proposed advance, would not, be
ultimately recoverable by it from the related Mortgagor, related Liquidation
Proceeds, Insurance Proceeds or otherwise.

         OFFERED CERTIFICATES: Any of the Class A-1, Class A-2, Class A-3, Class
M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates.

         OFFICER'S CERTIFICATE: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor or the
Master Servicer (or any other officer customarily performing functions similar
to those performed by any of the above designated officers and also to whom,
with respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with a particular subject) or (ii), if
provided for in this Agreement, signed by a Servicing Officer, as the case may
be, and delivered to the Depositor, the Seller, the Securities Administrator,
the Master Servicer and/or the Trustee, as the case may be, as required by this
Agreement.

                                      -21-
<PAGE>

         ONE-MONTH LIBOR: With respect to any Accrual Period, the rate
determined by the Securities Administrator on the related Interest Determination
Date on the basis of the rate for U.S. dollar deposits for one month that
appears on Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such
Interest Determination Date; provided that the parties hereto acknowledge that
One-Month LIBOR for the first Accrual Period shall equal 2.18% per annum. If
such rate does not appear on such page (or such other page as may replace that
page on that service, or if such service is no longer offered, such other
service for displaying One-Month LIBOR or comparable rates as may be reasonably
selected by the Securities Administrator), One-Month LIBOR for the applicable
Accrual Period will be the Reference Bank Rate. If no such quotations can be
obtained by the Securities Administrator and no Reference Bank Rate is
available, One-Month LIBOR will be One-Month LIBOR applicable to the preceding
Accrual Period. The establishment of One-Month LIBOR on each Interest
Determination Date by the Securities Administrator and the Securities
Administrator's calculation of the rate of interest applicable to the Class A-2,
Class A-3, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3
Certificates for the related Accrual Period shall, in the absence of manifest
error, be final and binding.

         OPINION OF COUNSEL: A written opinion of counsel, who may be counsel
for the Seller, the Depositor, the Company or the Master Servicer, reasonably
acceptable to each addressee of such opinion; provided that with respect to
Section 2.05, 8.05, 8.07 or 12.01, or the interpretation or application of the
REMIC Provisions, such counsel must (i) in fact be independent of the Seller,
Depositor, the Company and the Master Servicer, (ii) not have any direct
financial interest in the Seller, Depositor, the Company or the Master Servicer
or in any affiliate of either, and (iii) not be connected with the Seller,
Depositor, the Company or the Master Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.

         OPTIONAL TERMINATION: The termination of the Trust Fund created
hereunder as a result of the purchase of all of the Mortgage Loans and any REO
Property pursuant to the last sentence of Section 11.01 hereof.

         OPTIONAL TERMINATION DATE: The first Distribution Date on which the
Trust Fund may be terminated at the option of the Majority Class C
Certificateholder as described under Section 11.01.

         ORIGINAL VALUE: The value of the property underlying a Mortgage Loan
based, in the case of the purchase of the underlying Mortgaged Property, on the
lower of an appraisal or the sales price of such property or, in the case of a
refinancing, on an appraisal.

         ORIGINATOR: With respect to each Mortgage Loan, shall mean the
originator set forth in the Mortgage Loan Schedule for such Mortgage Loan.

         OTS: The Office of Thrift Supervision.

         OUTSTANDING: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:

                                      -22-
<PAGE>

                  (a) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and

                  (b) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.

         OUTSTANDING MORTGAGE LOAN: As of any date of determination, a Mortgage
Loan with a Stated Principal Balance greater than zero that was not the subject
of a Principal Prepayment in full, and that did not become a Liquidated Loan,
prior to the end of the related Prepayment Period.

         OVERCOLLATERALIZATION INCREASE AMOUNT: As of any Distribution Date, the
excess, if any, of (a) the Overcollateralization Target Amount over (b) the
Overcollateralized Amount on such Distribution Date (after taking into account
payments to the Offered Certificates of the Basic Principal Distribution Amount
on such Distribution Date).

         OVERCOLLATERALIZATION TARGET AMOUNT: With respect to any Distribution
Date, $2,511,312.

         OVERCOLLATERALIZED AMOUNT: With respect to any Distribution Date, is
the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans as of the last day of the related Due Period over (b) the
aggregate Certificate Principal Balance of the Offered Certificates (other than
the Class A-3 Certificates) on such Distribution Date (after taking into account
the payment of principal other than any Extra Principal Distribution Amount on
such Certificates).

         OWNERSHIP INTEREST: As to any Certificate, any ownership 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.

         PASS-THROUGH RATE: With respect to each Class of Certificates (other
than the Class C Certificates), the applicable Pass-Through Rate for each such
Class as set forth in the Preliminary Statement.

         PERCENTAGE INTEREST: With respect to any Certificate of a specified
Class, the Percentage Interest set forth on the face thereof or the percentage
obtained by dividing the Denomination of such Certificate by the aggregate of
the Denominations of all Certificates of the such Class.

         PERMITTED INVESTMENTS: At any time, any one or more of the following
obligations and securities:

                  (i) obligations of the United States or any agency thereof,
         provided such obligations are backed by the full faith and credit of
         the United States;

                  (ii) general obligations of or obligations guaranteed by any
         state of the United States or the District of Columbia receiving the
         highest long-term debt rating of each Rating Agency, or such lower
         rating as will not result in the downgrading or withdrawal of the
         ratings then assigned to the Certificates by each Rating Agency;

                                      -23-
<PAGE>

                  (iii) commercial or finance company paper which is then
         receiving the highest commercial or finance company paper rating of
         each Rating Agency, or such lower rating as will not result in the
         downgrading or withdrawal of the ratings then assigned to the
         Certificates by each Rating Agency;

                  (iv) certificates of deposit, demand or time deposits, or
         bankers' acceptances issued by any depository institution or trust
         company incorporated under the laws of the United States or of any
         state thereof and subject to supervision and examination by federal
         and/or state banking authorities (including the Trustee in its
         commercial banking capacity), provided that the commercial paper and/or
         long term unsecured debt obligations of such depository institution or
         trust company are then rated one of the two highest long-term and the
         highest short-term ratings of each such Rating Agency for such
         securities, or such lower ratings as will not result in the downgrading
         or withdrawal of the rating then assigned to the Certificates by any
         Rating Agency;

                  (v) demand or time deposits or certificates of deposit issued
         by any bank or trust company or savings institution to the extent that
         such deposits are fully insured by the FDIC;

                  (vi) guaranteed reinvestment agreements issued by any bank,
         insurance company or other corporation containing, at the time of the
         issuance of such agreements, such terms and conditions as will not
         result in the downgrading or withdrawal of the rating then assigned to
         the Certificates by any such Rating Agency;

                  (vii) repurchase obligations with respect to any security
         described in clauses (i) and (ii) above, in either case entered into
         with a depository institution or trust company (acting as principal)
         described in clause (iv) above;

                  (viii) securities (other than stripped bonds, stripped coupons
         or instruments sold at a purchase price in excess of 115% of the face
         amount thereof) bearing interest or sold at a discount issued by any
         corporation incorporated under the laws of the United States or any
         state thereof which, at the time of such investment, have one of the
         two highest long term ratings of each Rating Agency (except if the
         Rating Agency is Moody's, such rating shall be the highest commercial
         paper rating of Moody's for any such securities), or such lower rating
         as will not result in the downgrading or withdrawal of the rating then
         assigned to the Certificates by any Rating Agency, as evidenced by a
         signed writing delivered by each Rating Agency;

                  (ix) interests in any money market fund (including any such
         fund managed or advised by the Trustee or Master Servicer or any
         affiliate thereof) which at the date of acquisition of the interests in
         such fund and throughout the time such interests are held in such fund
         has the highest applicable long term rating by each Rating Agency or
         such lower rating as will not result in the downgrading or withdrawal
         of the ratings then assigned to the Certificates by each Rating Agency;

                  (x) short term investment funds sponsored by any trust company
         or banking association incorporated under the laws of the United States
         or any state thereof

                                      -24-
<PAGE>

         (including any such fund managed or advised by the Trustee or any
         affiliate thereof) which on the date of acquisition has been rated by
         each Rating Agency in their respective highest applicable rating
         category or such lower rating as will not result in the downgrading or
         withdrawal of the ratings then assigned to the Certificates by each
         Rating Agency; and

                  (xi) such other investments having a specified stated maturity
         and bearing interest or sold at a discount acceptable to each Rating
         Agency as will not result in the downgrading or withdrawal of the
         rating then assigned to the Certificates by any Rating Agency, as
         evidenced by a signed writing delivered by each Rating Agency;

provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no such
instrument shall be a Permitted Investment (A) if such instrument evidences
principal and interest payments derived from obligations underlying such
instrument and the interest payments with respect to such instrument provide a
yield to maturity of greater than 120% of the yield to maturity at par of such
underlying obligations, or (B) if it may be redeemed at a price below the
purchase price (the foregoing clause (B) not to apply to investments in units of
money market funds pursuant to clause (vi) above); provided further that no
amount beneficially owned by any REMIC may be invested in investments (other
than money market funds) treated as equity interests for federal income tax
purposes, unless the Master Servicer shall receive an Opinion of Counsel, at the
expense of the Master Servicer, to the effect that such investment will not
adversely affect the status of any such REMIC as a REMIC under the Code or
result in imposition of a tax on any such REMIC. Permitted Investments that are
subject to prepayment or call may not be purchased at a price in excess of par.

         PERMITTED TRANSFEREE: Any person other than (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, (ii) a foreign
government, International Organization or any agency or instrumentality of
either of the foregoing, (iii) an organization (except certain farmers'
cooperatives described in section 521 of the Code) that is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by section 511 of
the Code on unrelated business taxable income) on any excess inclusions (as
defined in section 860E(c)(1) of the Code) with respect to any Residual
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership (other than a partnership that has any
direct or indirect foreign partners) or other entity (treated as a corporation
or a partnership for federal income tax purposes), created or organized in or
under the laws of the United States, any state thereof or the District of
Columbia, an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States, 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 authority to control all substantial decisions
of the trustor and (vi) any other Person so designated by the Trustee based upon
an Opinion of Counsel addressed to the Trustee (which shall not be an expense of
the Trustee) that states that the Transfer of an

                                      -25-
<PAGE>

Ownership Interest in a Residual Certificate to such Person may cause REMIC I,
REMIC II or REMIC III to fail to qualify as a REMIC at any time that any
Certificates are Outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in section 7701
of the Code or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and, with
the exception of Freddie Mac, a majority of its board of directors is not
selected by such government unit.

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

         PREPAYMENT ASSUMPTION: The applicable rate of prepayment, as described
in the Prospectus Supplement relating to each Class of Offered Certificates.

         PREPAYMENT CHARGE: 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 INTEREST EXCESS: With respect to any Distribution Date, for
each EMC 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 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 which interest is
collected from the related Mortgagor.

         PREPAYMENT INTEREST SHORTFALL: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment, a
Principal Prepayment in full, or that became a Liquidated Loan during the
related Prepayment Period, (other than a Principal Prepayment in full resulting
from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03, 4.20 or
11.01 hereof), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan immediately prior to such prepayment (or liquidation) or in the case of a
partial Principal Prepayment on the amount of such prepayment (or liquidation
proceeds) exceeds (ii) the amount of interest paid or collected in connection
with such Principal Prepayment or such liquidation proceeds less the sum of (a)
the related Servicing Fee, (b) the Master Servicing Fee and (c) the LPMI Fee, if
any.

         PREPAYMENT PERIOD: As to any Distribution Date and (i) each EMC
Mortgage Loan, the period commencing on the 16th day of the month prior to the
month in which the related Distribution Date occurs and ending on the 15th day
of the month in which such Distribution Date occurs and (ii) any other Mortgage
Loan, the period set forth in the related Servicing Agreement.

                                      -26-
<PAGE>

         PRIMARY MORTGAGE INSURANCE POLICY: Any primary mortgage guaranty
insurance policy issued in connection with a Mortgage Loan which provides
compensation to a Mortgage Note holder in the event of default by the obligor
under such Mortgage Note or the related security instrument, if any or any
replacement policy therefor through the related Accrual Period for such Class
relating to a Distribution Date.

         PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Distribution Date,
is equal to the sum of the Basic Principal Distribution Amount for such
Distribution Date, plus any Extra Principal Distribution Amount for such
Distribution Date.

         PRINCIPAL FUNDS: With respect to any Distribution Date, (i) the sum,
without duplication, of (a) all scheduled principal collected during the related
Due Period, (b) all Advances relating to principal made on or prior to the
Distribution Account Deposit Date, (c) Principal Prepayments exclusive of
Prepayment Charges or penalties collected during the related Prepayment Period,
(d) the Stated Principal Balance of each Mortgage Loan that was repurchased by
the Seller pursuant to Sections 2.02 or 2.03 or by EMC pursuant to Section 4.20,
(e) the aggregate of all Substitution Adjustment Amounts for the related
Determination Date in connection with the substitution of Mortgage Loans
pursuant to Section 2.03(c), (e) all Liquidation Proceeds and Subsequent
Recoveries collected during the related Prepayment Period (to the extent such
Liquidation Proceeds and Subsequent Recoveries relate to principal) and remitted
by the Company or the related Servicer to the Distribution Account pursuant to
this Agreement or the related Servicing Agreement and (f) amounts in respect of
principal paid by the Majority Class C Certificateholder pursuant to Section
11.01 minus (ii) all amounts required to be reimbursed pursuant to Sections
5.02, 5.05, 5.07 and 5.09 or as otherwise set forth in this Agreement.

         PRINCIPAL REMITTANCE AMOUNT: With respect to each Distribution Date,
the sum of the amounts listed in clauses (a) through (e) of the definition of
Principal Funds.

         PRINCIPAL PREPAYMENT: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 4.20 and 11.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Company or the related Servicer, as
appropriate, in accordance with the terms of the related Mortgage Note.

         PRIVATE CERTIFICATES: Any of the Class P, Class C and Residual
Certificates.

         PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated November 23,
2004 relating to the public offering of the Offered Certificates.

         PROTECTED ACCOUNT: Each account established and maintained by the
Company with respect to receipts on the Mortgage Loans and REO Property in
accordance with Section 5.01 hereof or by the related Servicer in accordance
with the related Servicing Agreement.

         PUD: A Planned Unit Development.

                                      -27-
<PAGE>

         PURCHASE PRICE: With respect to any Mortgage Loan required to be
repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof, an amount
equal to the sum of (i) 100% of the outstanding principal balance of the
Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon
at the applicable Mortgage Rate through the first day of the month in which the
Purchase Price is to be distributed to Certificateholders, reduced by any
portion of the Servicing Fee, Servicing Advances and Advances payable to the
purchaser of the Mortgage Loan plus and (iii) any costs and damages (if any)
incurred by the Trust in connection with any violation of such Mortgage Loan of
any predatory lending laws.

         RATING AGENCY: Each of Moody's and S&P. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.

         REALIZED LOSS: With respect to each Mortgage Loan as to which a Final
Recovery Determination has been made, an amount (not less than zero) 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, minus (v) 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 Company pursuant to this Agreement or the applicable
Servicer pursuant to the related Servicing 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, minus (iv)
the aggregate of all unreimbursed Advances and Servicing Advances.

         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

                                      -28-
<PAGE>

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.

         In addition, to the extent the Master Servicer receives Subsequent
Recoveries with respect to any Mortgage Loan, the amount of the Realized Loss
with respect to that Mortgage Loan will be reduced to the extent such Subsequent
Recoveries are applied to reduce the Certificate Principal Balance of any Class
of Certificates on any Distribution Date.

         RECORD DATE: With respect to the Class A-1, Class C, Class P and Class
R Certificates and any Distribution Date, the close of business on the last
Business Day of the month preceding the month in which such Distribution Date
occurs. With respect to any Distribution Date and the Class A-2, Class A-3,
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3
Certificates, so long as such Certificates are Book-Entry Certificates, the
Business Day preceding such Distribution Date, and otherwise, the close of
business on the last Business Day of the month preceding the month in which such
Distribution Date occurs.

         REFERENCE BANKS: Shall mean leading banks selected by the Securities
Administrator and engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) which have been designated as such by the Securities Administrator
and (iii) which are not controlling, controlled by, or under common control
with, the Depositor, the Seller or the Master Servicer.

         REFERENCE BANK RATE: With respect to any Accrual Period shall mean the
arithmetic mean, rounded upwards, if necessary, to the nearest whole multiple of
0.03125%, of the offered rates for United States dollar deposits for one month
that are quoted by the Reference Banks as of 11:00 a.m., New York City time, on
the related Interest Determination Date to prime banks in the London interbank
market for a period of one month in an amount approximately equal to the
aggregate Certificate Principal Balance of the Class A-2, Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2 and Class B-3 Certificates for such Accrual
Period, provided that at least two such Reference Banks provide such rate. If
fewer than two offered rates appear, the Reference Bank Rate will be the
arithmetic mean, rounded upwards, if necessary, to the nearest whole multiple of
0.03125%, of the rates quoted by one or more major banks in New York City,
selected by the Securities Administrator, as of 11:00 a.m., New York City time,
on such date for loans in United States dollars to leading European banks for a
period of one month in amounts approximately equal to the aggregate Certificate
Principal Balance of the Class A-2, Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2 and Class B-3 Certificates for such Accrual Period.

         REGULAR CERTIFICATE: Any Certificate other than a Residual Certificate.

         RELIEF ACT: The Servicemembers Civil Relief Act, formerly known as the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended or any similar state
law.

                                      -29-
<PAGE>

         REMAINING EXCESS SPREAD: With respect to any Distribution Date is the
Excess Spread less the any Extra Principal Distribution Amount, in each case for
such Distribution Date.

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

         REMIC I: The segregated pool of assets described in Section 6.07(a).

         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 AA
minus the Marker Rate, divided by (b) 12.

         REMIC I INTERESTS: The REMIC I Regular Interests and the Class R-1
Certificates.

         REMIC I OVERCOLLATERALIZATION AMOUNT: With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC I Regular Interests minus (ii) the aggregate of the Uncertificated
Principal Balances of REMIC I Regular Interest A-1, REMIC I Regular Interest
A-2, REMIC I Regular Interest M-1, REMIC I Regular Interest M-2, REMIC I Regular
Interest M-3, REMIC I Regular Interest B-1, REMIC I Regular Interest B-2 and
REMIC I Regular Interest B-3, in each case as of such date of determination.

         REMIC I OVERCOLLATERALIZATION TARGET AMOUNT: 1% of the
Overcollateralization Target Amount.

         REMIC I PRINCIPAL 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) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Principal Balances of REMIC I Regular Interest
A-1, REMIC I Regular Interest A-2, REMIC I Regular Interest M-1, REMIC I Regular
Interest M-2, REMIC I Regular Interest M-3, REMIC I Regular Interest B-1, REMIC
I Regular Interest B-2 and REMIC I Regular Interest B-3 and the denominator of
which is the aggregate of the Uncertificated Principal Balances of REMIC I
Regular Interest A-1, REMIC I Regular Interest A-2, REMIC I Regular Interest
M-1, REMIC I Regular Interest M-2, REMIC I Regular Interest M-3, REMIC I Regular
Interest B-1, REMIC I Regular Interest B-2, REMIC I Regular Interest B-3 and
REMIC I Regular Interest ZZ.

         REMIC I REGULAR INTEREST ZZ MAXIMUM INTEREST DEFERRAL AMOUNT: With
respect to any Distribution Date, the excess of (i) accrued interest at the
Uncertificated REMIC I Pass-Through Rate applicable to REMIC I Regular Interest
ZZ for such Distribution Date on a balance equal to the Uncertificated Principal
Balance of REMIC I Regular Interest ZZ minus the REMIC I Overcollateralization
Amount, in each case for such Distribution Date, over (ii) Uncertificated
Accrued Interest on REMIC I Regular Interest A-1, REMIC I Regular Interest A-2,
REMIC I Regular Interest M-1, REMIC I Regular Interest M-2, REMIC I Regular
Interest M-3, REMIC I Regular Interest B-1, REMIC I Regular Interest B-2 and
REMIC I Regular Interest B-3 for such Distribution Date, with the rate on each
such REMIC I Regular Interest subject to a cap equal to the Pass-Through Rate
for the Corresponding Certificate.

                                      -30-
<PAGE>

         REMIC I REGULAR INTERESTS: REMIC I Regular Interest AA, REMIC I Regular
Interest A-1, REMIC I Regular Interest A-2, REMIC I Regular Interest M-1, REMIC
I Regular Interest M-2, REMIC I Regular Interest M-3, REMIC I Regular Interest
B-1, REMIC I Regular Interest B-2, REMIC I Regular Interest B-3, REMIC I Regular
Interest ZZ and REMIC I Regular Interest P.

         REMIC I REGULAR INTEREST AA: 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 AA shall accrue interest
at the related Uncertificated REMIC I Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST A-1: 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 A-1 shall accrue interest
at the related Uncertificated REMIC I Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST A-2: 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 A-2 shall accrue interest
at the related Uncertificated REMIC I Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST B-1: 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 B-1 shall accrue interest
at the related Uncertificated REMIC I Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST B-2: 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 B-2 shall accrue interest
at the related Uncertificated REMIC I Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST B-3: 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 B-3 shall accrue interest
at the related Uncertificated REMIC I Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

                                      -31-
<PAGE>

         REMIC I REGULAR INTEREST M-1: 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 M-1 shall accrue interest
at the related Uncertificated REMIC I Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST M-2: 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 M-2 shall accrue interest
at the related Uncertificated REMIC I Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST M-3: 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 M-3 shall accrue interest
at the related Uncertificated REMIC I Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC I REGULAR INTEREST P: 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 P will not accrue interest
and shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Principal Balance as set forth in the Preliminary Statement hereto.

         REMIC I REGULAR INTEREST ZZ: 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 ZZ shall accrue interest
at the related Uncertificated REMIC I Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC II: The segregated pool of assets described in the Preliminary
Statement, consisting of the REMIC I Regular Interests.

         REMIC II INTERESTS: The REMIC II Regular Interests and the Class R-2
Certificates.

         REMIC II REGULAR INTERESTS: REMIC II Regular Interest A-1, REMIC II
Regular Interest A-2, REMIC II Regular Interest M-1, REMIC II Regular Interest
M-2, REMIC II Regular Interest M-3, REMIC II Regular Interest B-1, REMIC II
Regular Interest B-2, REMIC II Regular Interest B-3, REMIC II Regular Interest C
and REMIC II Regular Interest P.

         REMIC II REGULAR INTEREST A-1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest A-1 shall accrue
interest at the related Uncertificated


                                      -32-
<PAGE>

REMIC II Pass-Through 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 Principal Balance as set
forth in the Preliminary Statement hereto.

         REMIC II REGULAR INTEREST A-2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest A-2 shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC II REGULAR INTEREST B-1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest B-1 shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC II REGULAR INTEREST B-2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest B-2 shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC II REGULAR INTEREST B-3: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest B-3 shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC II REGULAR INTEREST C: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest C shall accrue interest
at the related Uncertificated REMIC II Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC II REGULAR INTEREST C DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the Uncertificated Accrued Interest for REMIC II Regular
Interest C for such Distribution Date; provided, however, that on and after the
Distribution Date on which the Certificate Principal Balance of the Offered
Certificates has been reduced to zero, the REMIC II Regular Interest C
Distribution Amount shall include the Overcollateralized Amount.

         REMIC II REGULAR INTEREST M-1: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in


                                      -33-
<PAGE>

REMIC II. REMIC II Regular Interest M-1 shall accrue interest at the related
Uncertificated REMIC II Pass-Through 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 Principal
Balance as set forth in the Preliminary Statement hereto.

         REMIC II REGULAR INTEREST M-2: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest M-2 shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC II REGULAR INTEREST M-3: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest M-3 shall accrue
interest at the related Uncertificated REMIC II Pass-Through 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 Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC II REGULAR INTEREST P: One of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
Regular Interest in REMIC II. REMIC II Regular Interest P will not accrue
interest and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         REMIC III: The segregated pool of assets described in the Preliminary
Statement, consisting of the REMIC II Regular Interests.

         REMIC III CERTIFICATES: The Regular Certificates and the Class R-3
Certificates.

         REMIC III REGULAR INTEREST A-2: One of the separate non-certificated
beneficial ownership interests in REMIC III issued hereunder and designated as a
Regular Interest in REMIC III. REMIC III Regular Interest A-2 shall accrue
interest at the related Uncertificated REMIC III Pass-Through Rate in effect
from time to time, and shall be deemed to receive distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto, as such amounts are distributed in respect of the Class A-2
Certificates.

         REMIC III REGULAR INTEREST A-3: One of the separate non-certificated
beneficial ownership interests in REMIC III issued hereunder and designated as a
Regular Interest in REMIC III. REMIC III Regular Interest A-3 shall accrue
interest at the related Uncertificated REMIC III Pass-Through Rate in effect
from time to time, and shall not be entitled to distributions of principal.

         REMIC OPINION: Shall mean an Opinion of Counsel to the effect that the
proposed action will not have an adverse affect on any REMIC created hereunder.

                                      -34-
<PAGE>

         REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 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 as well as provisions of applicable state laws.

         REMIC REGULAR INTEREST: A REMIC I Regular Interest, REMIC II Regular
Interest, REMIC III Regular Interest A-2, REMIC III Regular Interest A-3 or
Regular Certificate.

         REMITTANCE DATE: Shall mean (i) with respect to the Company, the
Business Day immediately preceding the Distribution Account Deposit Date and
(ii) with respect to the related Servicer, the date specified in the related
Servicing Agreement.

         REMITTANCE REPORT: As defined in Section 6.04(d).

         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.

         REO PROPERTY: A Mortgaged Property acquired by the Company or the
related Servicer through foreclosure or deed-in-lieu of foreclosure in
connection with a defaulted Mortgage Loan.

         REPLACEMENT MORTGAGE LOAN: A Mortgage Loan or Mortgage Loans in the
aggregate substituted by the Seller for a Deleted Mortgage Loan, which must, on
the date of such substitution, as confirmed in a Request for Release, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of, the Stated Principal Balance of the Deleted Mortgage Loan;
(ii) have a fixed Mortgage Rate not less than or more than 1% per annum higher
than the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same or
higher credit quality characteristics than that of the Deleted Mortgage Loan;
(iv) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage
Loan; (v) have a remaining term to maturity no greater than (and not more than
one year less than) that of the Deleted Mortgage Loan; (vi) not permit
conversion of the Mortgage Rate from a fixed rate to a variable rate; (vii) have
the same lien priority as the Deleted Mortgage Loan; (viii) constitute the same
occupancy type as the Deleted Mortgage Loan or be owner occupied; and (ix)
comply with each representation and warranty set forth in Section 2.03 hereof.

         REPURCHASE PRICE: With respect to each Mortgage Loan, a price equal to
(i) the outstanding principal balance of such Mortgage Loan, plus (ii) interest
on such outstanding principal balance at the Mortgage Rate (net of the Servicing
Fee Rate) from the last date through which interest has been paid to the end of
the month of repurchase, less (iii) amounts advanced by the Company or the
related Servicer in respect of such repurchased Mortgage Loan which are being
held in the Master Servicer Collection Account for remittance to the Trustee
plus (iv) any costs and damages (if any) incurred by the Trust in connection
with any violation of such Mortgage Loan of any predatory lending laws.

                                      -35-
<PAGE>

         REQUEST FOR RELEASE: The Request for Release to be submitted by the
Seller, the Company, the related Servicer or the Master Servicer to the
Custodian substantially in the form of Exhibit G. Each Request for Release
furnished to the Custodian by the Seller, the Company, the related Servicer or
the Master Servicer shall be in duplicate and shall be executed by an officer of
such Person or a Servicing Officer (or, if furnished electronically to the
Custodian, shall be deemed to have been sent and executed by an officer of such
Person or a Servicing Officer) of the Company or the related Servicer, as
applicable.

         REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement or the related Servicing Agreement.

         RESIDUAL CERTIFICATES: Any of the Class R-1, Class R-2 and Class R-3
Certificates, each evidencing the sole class of "residual interests" (within the
meaning of Section 860G(a)(2) of the Code) in the related REMIC.

         RESPONSIBLE OFFICER: With respect to the Trustee, any Vice President,
any Assistant Vice President, the Secretary, any Assistant Secretary, or any
Trust Officer with specific responsibility for the transactions contemplated
hereby, any other officer customarily performing functions similar to those
performed by any of the above designated officers or other officers of the
Trustee specified by the Trustee, as to whom, with respect to a particular
matter, such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.

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

         SCHEDULED PAYMENT: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.

         SECURITIES ACT: The Securities Act of 1933, as amended.

         SECURITIES ADMINISTRATOR: Wells Fargo Bank, National Association, in
its capacity as securities administrator hereunder, and its successors and
assigns.

         SELLER: EMC Mortgage Corporation, a Delaware corporation, and its
successors and assigns, in its capacity as seller of the Mortgage Loans to the
Depositor.

         SENIOR CERTIFICATES: Any of the Class A-1, Class A-2 and Class A-3
Certificates.

         SERVICER: Shall mean either GMACM or SouthTrust.

         SERVICING ADVANCES: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable legal fees) incurred in the
performance by the Company or the related Servicer of its servicing obligations
hereunder or under the related Servicing Agreement, 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 foreclosures,
and including any expenses incurred in relation to any such proceedings that
result from the Mortgage Loan being registered in the MERS(R) System, (iii) the
management and liquidation of


                                      -36-
<PAGE>

any REO Property (including, without limitation, realtor's commissions) and (iv)
compliance with any obligations under Section 3.07 hereof to cause insurance to
be maintained.

         SERVICING AGREEMENT: Shall mean either the GMACM Servicing Agreement or
SouthTrust Servicing Agreement.

         SERVICING FEE: As to each Mortgage Loan and any Distribution Date, an
amount equal to 1/12th of the Servicing Fee Rate multiplied by the Stated
Principal Balance of such Mortgage Loan as of the last day of the related Due
Period.

         SERVICING FEE RATE: 0.250% per annum.

         SERVICING MODIFICATION: With respect to any Mortgage Loan that is in
default or, in the reasonable judgment of the Company or the related Servicer,
as to which default is reasonably foreseeable, any modification which is
effected by the Company or the related Servicer in accordance with the terms of
this Agreement or the related Servicing Agreement which results in any change in
the outstanding Stated Principal Balance, any change in the Mortgage Rate or any
extension of the term of such Mortgage Loan.

         SERVICING OFFICER: Any officer of the Company or the related Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans (i) in the case of the Company, whose name and facsimile
signature appear on a list of servicing officers furnished to the Trustee by the
Company on the Closing Date pursuant to this Agreement, as such list may from
time to time be amended and (ii) in the case of the related Servicer, as to
which evidence reasonably acceptable to the Trustee, as applicable, of due
authorization, by such party has been furnished from time to time to the
Trustee.

         SOUTHTRUST: SouthTrust Mortgage Corporation, and any successor thereto.

         SOUTHTRUST ASSIGNMENT AGREEMENT: The Assignment, Assumption and
Recognition Agreement, dated as of November 30, 2004, by and among the Seller,
SouthTrust and the Trustee evidencing the assignment of the SouthTrust Servicing
Agreement to the Trust.

         SOUTHTRUST LOANS: Those Mortgage Loans subject to this Agreement which
were purchased by the Seller from SouthTrust pursuant to the SouthTrust
Servicing Agreement.

         SOUTHTRUST SERVICING AGREEMENT: Shall mean the Purchase, Warranties and
Servicing Agreement, dated as of November 1, 2002, by and between the Seller and
SouthTrust, as modified by the SouthTrust Assignment Agreement.

         STARTUP DAY: The Startup Day for each REMIC formed hereunder shall be
the Closing Date.

         STATED PRINCIPAL BALANCE: With respect to any Mortgage Loan or related
REO Property and any Distribution Date, the Cut-off Date Principal Balance
thereof minus the sum of (i) the principal portion of the Scheduled Payments due
with respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date (and irrespective of any delinquency in


                                      -37-
<PAGE>

their payment), (ii) all Principal Prepayments with respect to such Mortgage
Loan received prior to or during the related Prepayment Period, and all
Liquidation Proceeds to the extent applied by the Company or the related
Servicer as recoveries of principal in accordance with Section 3.09 or the
related Servicing Agreement with respect to such Mortgage Loan, that were
received by the Company or the related Servicer as of the close of business on
the last day of the Prepayment Period related to such Distribution Date and
(iii) any Realized Losses on such Mortgage Loan incurred during the related
Prepayment Period. The Stated Principal Balance of a Liquidated Loan equals
zero.

         SUBORDINATE CERTIFICATES: Any of the Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2 and Class B-3 Certificates.

         SUBSEQUENT RECOVERIES: As of any Distribution Date, amounts received by
the Master Servicer during the related Due Period or surplus amounts held by the
Master Servicer to cover estimated expenses (including, but not limited to,
recoveries in respect of the representations and warranties made by the Seller
pursuant to the Mortgage Loan Purchase Agreement) specifically related to a
Liquidated 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 Mortgage Loan.

         SUBSERVICING AGREEMENT: Any agreement entered into between the Company
and a subservicer with respect to the subservicing of any Mortgage Loan
hereunder by such subservicer.

         SUBSTITUTION ADJUSTMENT AMOUNT: The meaning ascribed to such term
pursuant to Section 2.03(c).

         SUCCESSOR MASTER SERVICER: The meaning ascribed to such term pursuant
to Section 9.01.

         TAX MATTERS PERSON: The person designated as "tax matters person" in
the manner provided under Treasury regulation ss. 1.860F-4(d) and temporary
Treasury regulation ss. 301.6231(a)(7)-1T. The holder of the greatest Percentage
Interest in a Class of Residual Certificates shall be the Tax Matters Person for
the related REMIC. The Securities Administrator, or any successor thereto or
assignee thereof shall serve as tax administrator hereunder and as agent for the
related Tax Matters Person.

         TRANSFER AFFIDAVIT: As defined in Section 7.02(c).

         TRANSFER: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.

         TRUST FUND: The corpus of the trust created hereunder consisting of (i)
the Mortgage Loans and all interest accruing and principal due with respect
thereto after the Cut-off Date to the extent not applied in computing the
Cut-off Date Principal Balance thereof; (ii) the Class P Certificate Account,
the Net WAC Reserve Fund, the Distribution Account, the Master Servicer
Collection Account maintained by the Master Servicer and the Protected Accounts
maintained by the Company and the Servicers and all amounts deposited therein
pursuant to the applicable provisions of this Agreement and the Servicing
Agreements; (iii) property that secured a


                                      -38-
<PAGE>

Mortgage Loan and has been acquired by foreclosure, deed in lieu of foreclosure
or otherwise; (iv) the mortgagee's rights under the Insurance Policies with
respect to the Mortgage Loans; (v) the Servicing Agreement and the Assignment
Agreements; (vi) the rights under the Mortgage Loan Purchase Agreement, and
(vii) all proceeds of the foregoing, including proceeds of conversion, voluntary
or involuntary, of any of the foregoing into cash or other liquid property. The
Net WAC Reserve Fund shall constitute an asset of the Trust Fund but will not be
included in REMIC I, REMIC II or REMIC III.

         TRUSTEE: U.S. Bank National Association, a national banking
association, not in its individual capacity, but solely in its capacity as
trustee for the benefit of the Certificateholders under this Agreement, and any
successor thereto, and any corporation or national banking association resulting
from or surviving any consolidation or merger to which it or its successors may
be a party and any successor trustee as may from time to time be serving as
successor trustee hereunder.

         20% CLEAN-UP CALL DATE: Shall mean the first Distribution Date upon
which the Stated Principal Balance of the Mortgage Loans as of the end of the
related Due Period is less than or equal to 20% of the aggregate Cut-off Date
Principal Balance of the Mortgage Loans.

         UNCERTIFICATED ACCRUED INTEREST: With respect to each Uncertificated
REMIC Regular Interest on each Distribution Date, an amount equal to one month's
interest at the related Uncertificated Pass-Through Rate on the Uncertificated
Principal Balance or Uncertificated Notional Amount, as applicable, of such
REMIC Regular Interest. In each case, Uncertificated Accrued Interest will be
reduced by any Prepayment Interest Shortfalls and shortfalls resulting from
application of the Relief Act (allocated to such REMIC Regular Interests as set
forth in Sections 1.02 and 6.08).

         UNCERTIFICATED NOTIONAL AMOUNT: With respect to REMIC II Regular
Interest C, the aggregate Uncertificated Principal Balance of the REMIC I
Regular Interests (other than REMIC I Regular Interest P). With respect to REMIC
III Regular Interest A-3, the aggregate Uncertificated Principal Balance of
REMIC II Regular Interest A-2.

         UNCERTIFICATED PASS-THROUGH RATE: Any of the Uncertificated REMIC I
Pass-Through Rate, Uncertificated REMIC II Pass-Through Rate or Uncertificated
REMIC III Pass-Through Rate, as applicable.

         UNCERTIFICATED PRINCIPAL BALANCE: With respect to each REMIC Regular
Interest, the principal amount of such REMIC Regular Interest outstanding as of
any date of determination. As of the Closing Date, the Uncertificated Principal
Balance of each REMIC Regular Interest shall equal the amount set forth in the
Preliminary Statement hereto as its initial Uncertificated Principal Balance. On
each Distribution Date, the Uncertificated Principal Balance of each REMIC
Regular Interest shall be reduced by all distributions of principal made on such
REMIC Regular Interest on such Distribution Date pursuant to Sections 6.07 and
6.08 and, if and to the extent necessary and appropriate, shall be further
reduced on such Distribution Date by Realized Losses as provided in Sections
6.07 and 6.08. The Uncertificated Principal Balance of each REMIC Regular
Interest shall never be less than zero.

                                      -39-
<PAGE>

         UNCERTIFICATED REMIC I PASS-THROUGH RATE: With respect to any REMIC I
Regular Interest other than REMIC I Regular Interest P and any Distribution
Date, a per annum rate equal to the average of the Net Mortgage Rates of the
Mortgage Loans as of the first day of the related Due Period, weighted on the
basis of the Stated Principal Balances as of the first day of the related Due
Period. With respect to REMIC I Regular Interest P and any Distribution Date,
0.00%.

         UNCERTIFICATED REMIC II PASS-THROUGH RATE:

         With respect to REMIC II Regular Interest A-1 and (i) any Distribution
Date which occurs on or prior to the Optional Termination Date, the lesser of
(a) 5.50% per annum and (b) the product of (x) 95.6521739130% and (y) the
weighted average of the REMIC I Pass-Through Rates on the REMIC I Regular
Interests, weighted on the basis of the Uncertificated Principal Balance of each
such REMIC I Regular Interest and (ii) for each Distribution Date thereafter,
the lesser of (a) 6.00% per annum and (b) the product of (x) 96.0000000000% and
(y) the weighted average of the REMIC I Pass-Through Rates on the REMIC I
Regular Interests, weighted on the basis of the Uncertificated Principal Balance
of each such REMIC I Regular Interest.

         With respect to REMIC II Regular Interest A-2 and (i) any Distribution
Date which occurs on or prior to the Optional Termination Date, the lesser of
(a) 8.00% per annum and (b) the product of (x) 139.1304347826% and (y) the
weighted average of the REMIC I Pass-Through Rates on the REMIC I Regular
Interests, weighted on the basis of the Uncertificated Principal Balance of each
such REMIC I Regular Interest and (ii) for each Distribution Date thereafter,
the lesser of (a) 8.50% per annum and (b) the product of (x) 136.0000000000% and
(y) the weighted average of the REMIC I Pass-Through Rates on the REMIC I
Regular Interests, weighted on the basis of the Uncertificated Principal Balance
of each such REMIC I Regular Interest.

         With respect to REMIC II Regular Interest M-1 and (i) any Distribution
Date which occurs on or prior to the Optional Termination Date, One-Month LIBOR
plus 0.62% per annum and (ii) for each Distribution Date thereafter, One-Month
LIBOR plus 0.93% per annum, in each case subject to the related Net WAC Rate
Cap.

         With respect to REMIC II Regular Interest M-2 and (i) any Distribution
Date which occurs on or prior to the Optional Termination Date, One-Month LIBOR
plus 1.10% per annum and (ii) for each Distribution Date thereafter, One-Month
LIBOR plus 1.65% per annum, in each case subject to the related Net WAC Rate
Cap.

         With respect to REMIC II Regular Interest M-3 and (i) any Distribution
Date which occurs on or prior to the Optional Termination Date, One-Month LIBOR
plus 1.30% per annum and (ii) for each Distribution Date thereafter, One-Month
LIBOR plus 1.95% per annum, in each case subject to the related Net WAC Rate
Cap.

         With respect to REMIC II Regular Interest B-1 and (i) any Distribution
Date which occurs on or prior to the Optional Termination Date, One-Month LIBOR
plus 1.70% per annum and (ii) for each Distribution Date thereafter, One-Month
LIBOR plus 2.55% per annum, in each case subject to the related Net WAC Rate
Cap.

                                      -40-
<PAGE>

         With respect to REMIC II Regular Interest B-2 and (i) any Distribution
Date which occurs on or prior to the Optional Termination Date, One-Month LIBOR
plus 1.80% per annum and (ii) for each Distribution Date thereafter, One-Month
LIBOR plus 2.70% per annum, in each case subject to the related Net WAC Rate
Cap.

         With respect to REMIC II Regular Interest B-3 and (i) any Distribution
Date which occurs on or prior to the Optional Termination Date, One-Month LIBOR
plus 3.00% per annum and (ii) for each Distribution Date thereafter, One-Month
LIBOR plus 4.500% per annum, in each case subject to the related Net WAC Rate
Cap.

         With respect to REMIC II Regular Interest P, 0.00%.

         With respect to REMIC II Regular Interest C, a per annum rate equal to
the percentage equivalent of a fraction, the numerator of which is (x) the sum
of the amounts calculated pursuant to clauses (A) through (J) below, and the
denominator of which is (y) the aggregate of the Uncertificated Principal
Balances of the REMIC I Regular Interests (other than REMIC I Regular Interest
P). For purposes of calculating the Uncertificated REMIC II Pass-Through Rate
for REMIC II Regular Interest C, the numerator is equal to the sum of the
following components:

                  (A) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest AA minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest AA;

                  (B) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest A-1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest A-1;

                  (C) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest A-2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest A-2;

                  (D) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest M-1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest M-1;

                  (E) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest M-2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest M-2;

                  (F) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest M-3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest M-3;

                  (G) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest B-1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest B-1;

                                      -41-
<PAGE>

                  (H) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest B-2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest B-2;

                  (I) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest B-3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest B-3; and

                  (J) the Uncertificated REMIC I Pass-Through Rate for REMIC I
Regular Interest ZZ minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest ZZ.

         UNCERTIFICATED REMIC III PASS-THROUGH RATE:

         With respect to REMIC III Regular Interest A-2, One-Month LIBOR plus
0.40% per annum, subject to a cap equal to the weighted average of the
Uncertificated REMIC II Pass-Through Rate with respect to REMIC II Regular
Interest A-2, weighted on the basis of the Uncertificated Principal Balance
thereof immediately prior to such Distribution Date.

         With respect to REMIC III Regular Interest A-3, on any Distribution
Date, the excess, if any, of (A) the Uncertificated REMIC II Pass-Through Rate
with respect to REMIC II Regular Interest A-2 over (B) the lesser of (x)
One-Month LIBOR plus 0.40% per annum, and (y) an amount equal to the weighted
average of the Uncertificated REMIC II Pass-Through Rate with respect to REMIC
II Regular Interest A-2, weighted on the basis of the Uncertificated Principal
Balance thereof immediately prior to such Distribution Date.

         UNCERTIFICATED REMIC REGULAR INTEREST: The REMIC I Regular Interests,
the REMIC II Regular Interests, REMIC III Regular Interest A-2 and REMIC III
Regular Interest A-3.

         UNPAID INTEREST SHORTFALLS: Shall mean Interest Shortfalls net of
payments by the Company, the related Servicer or the Master Servicer in respect
of Compensating Interest.

         VOTING RIGHTS: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions
hereunder. Voting Rights shall be allocated (i) 94.50% to the Certificates
(other than the Class C, Class P and the Residual Certificates), (ii) 1% to the
Class P Certificates, (iii) 3% to the Class C Certificates and (iv) 0.50% to
each Class of Residual Certificates, with the allocation among the Certificates
other than the Class C, Class P and Residual Certificates to be in proportion to
the Certificate Principal Balance of each Class relative to the Certificate
Principal Balance of all other such Classes. Voting Rights will be allocated
among the Certificates of each such Class in accordance with their respective
Percentage Interests.

         Section 1.02 ALLOCATION OF CERTAIN INTEREST SHORTFALLS.

         For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class A-1, Class A-2, Class A-3, Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class C Certificates for any
Distribution Date, (1) the aggregate amount of any


                                      -42-
<PAGE>

Unpaid Interest Shortfalls in respect of the Mortgage Loans for any Distribution
Date shall be allocated first, in reduction of amounts otherwise distributable
to the Class C Certificates and Class R Certificates, AND THEREAFTER among the
Offered Certificates in proportion to the amount of the Monthly Interest
Distributable Amount that would have been allocated to such Certificates in the
absence of such Unpaid Interest Shortfalls and (2) the interest portion of
Realized Losses for the Mortgage Loans will be allocated first, to the Class C
Certificates based on, and to the extent of, one month's interest at the then
applicable Pass-Through Rate on the Certificate Notional Amount thereof, second
to the Class B-3 Certificates, third to the Class B-2 Certificates, fourth to
the Class B-1 Certificates, fifth to the Class M-3 Certificates, sixth to the
Class M-2 Certificates, seventh to the Class M-1 Certificates and following the
Cross-Over Date to the Senior Certificates, on a pro rata basis.

         For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Unpaid Interest Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated first, to
Uncertificated Accrued Interest payable to REMIC I Regular Interest AA and REMIC
I Regular Interest ZZ up to an aggregate amount equal to the REMIC I Interest
Loss Allocation Amount, 98% and 2%, respectively, and thereafter among REMIC I
Regular Interest A-1, REMIC I Regular Interest A-2, REMIC I Regular Interest
M-1, REMIC I Regular Interest M-2, REMIC I Regular Interest M-3, REMIC I Regular
Interest B-1, REMIC I Regular Interest B-2, REMIC I Regular Interest B-3 and
REMIC I Regular Interest ZZ, pro rata, based on, and to the extent of, one
month's interest at the then applicable respective Uncertificated REMIC I
Pass-Through Rate on the respective Uncertificated Principal Balance of each
such REMIC I Regular Interest.

         For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC II Regular Interests for any Distribution Date, the
aggregate amount of any Unpaid Interest Shortfalls incurred in respect of the
Mortgage Loans for any Distribution Date shall be allocated first to REMIC II
Regular Interest C, and then, pro rata, to REMIC II Regular Interest A-1, REMIC
II Regular Interest A-2, REMIC II Regular Interest M-1, REMIC II Regular
Interest M-2, REMIC II Regular Interest M-3, REMIC II Regular Interest B-1,
REMIC II Regular Interest B-2 and REMIC II Regular Interest B-3, in each case to
the extent of one month's interest at the then applicable respective
Uncertificated REMIC II Pass-Through Rate on the respective Uncertificated
Principal Balance of each such REMIC II Regular Interest.


                                      -43-
<PAGE>

                                   ARTICLE II

                            CONVEYANCE OF TRUST FUND
                         REPRESENTATIONS AND WARRANTIES

         Section 2.01 CONVEYANCE OF TRUST FUND.

         Pursuant to the Mortgage Loan Purchase Agreement, the Seller sold,
transferred, assigned, set over and otherwise conveyed to the Depositor, without
recourse, all the right, title and interest of the Seller in and to the assets
in the Trust Fund.

         The Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor pursuant to the Mortgage Loan
Purchase Agreement and has agreed to take the actions specified herein.

         The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee
for the use and benefit of the Certificateholders, without recourse, all the
right, title and interest of the Depositor in and to the Trust Fund.

         In connection with such sale, the Depositor has delivered to, and
deposited with, the Trustee or the Custodian, as its agent, the following
documents or instruments with respect to each Mortgage Loan so assigned: (i) the
original Mortgage Note, including any riders thereto, endorsed without recourse
to the order of "U.S. Bank National Association, as Trustee for
certificateholders of Bear Stearns Asset Backed Securities I LLC, Asset Backed
Certificates, Series 2004-AC7," and showing to the extent available to the
Seller an unbroken chain of endorsements from the original payee thereof to the
Person endorsing it to the Trustee, (ii) the original Mortgage and, if the
related Mortgage Loan is a MOM Loan, noting the presence of the MIN and language
indicating that such Mortgage Loan is a MOM Loan, which shall have been recorded
(or if the original is not available, a copy), with evidence of such recording
indicated thereon (or if clause (x) in the proviso below applies, shall be in
recordable form), (iii) unless the Mortgage Loan is a MOM Loan, the assignment
(either an original or a copy, which may be in the form of a blanket assignment
if permitted in the jurisdiction in which the Mortgaged Property is located) to
the Trustee of the Mortgage with respect to each Mortgage Loan in the name of
"U.S. Bank National Association, as Trustee for certificateholders of Bear
Stearns Asset Backed Securities I LLC, Asset Backed Certificates, Series
2004-AC7," which shall have been recorded (or if clause (x) in the proviso below
applies, shall be in recordable form) (iv) an original or a copy of all
intervening assignments of the Mortgage, if any, to the extent available to the
Seller, with evidence of recording thereon, (v) the original policy of title
insurance or mortgagee's certificate of title insurance or commitment or binder
for title insurance, if available, or a copy thereof, or, in the event that such
original title insurance policy is unavailable, a photocopy thereof, or in lieu
thereof, a current lien search on the related Mortgaged Property and (vi)
originals or copies of all available assumption, modification or substitution
agreements, if any; provided, however, that in lieu of the foregoing, the Seller
may deliver the following documents, under the circumstances set forth below:
(x) if any Mortgage, assignment thereof to the Trustee or intervening
assignments thereof have been delivered or are being delivered to recording
offices for recording and have not been returned in time to permit their
delivery as specified


                                      -44-
<PAGE>

above, the Depositor may deliver a true copy thereof with a certification by the
Seller or the title company issuing the commitment for title insurance, on the
face of such copy, substantially as follows: "Certified to be a true and correct
copy of the original, which has been transmitted for recording"; and (y) in lieu
of the Mortgage Notes relating to the Mortgage Loans identified in the list set
forth in Exhibit I, the Depositor may deliver a lost note affidavit and
indemnity and a copy of the original note, if available; and provided, further,
however, that in the case of Mortgage Loans which have been prepaid in full
after the Cut-Off Date and prior to the Closing Date, the Depositor, in lieu of
delivering the above documents, may deliver to the Trustee and its Custodian a
certification of a Servicing Officer to such effect and in such case shall
deposit all amounts paid in respect of such Mortgage Loans, in the Master
Servicer Collection Account or in the Distribution Account on the Closing Date.
In the case of the documents referred to in clause (x) above, the Depositor
shall deliver such documents to the Trustee or its Custodian promptly after they
are received. The Seller shall cause, at its expense, the Mortgage and
intervening assignments, if any, and to the extent required in accordance with
the foregoing, the assignment of the Mortgage to the Trustee to be submitted for
recording promptly after the Closing Date; provided that the Seller need not
cause to be recorded any assignment (a) in any jurisdiction under the laws of
which, as evidenced by an Opinion of Counsel addressed to the Trustee delivered
by the Seller to the Trustee and the Rating Agencies, the recordation of such
assignment is not necessary to protect the Trustee's interest in the related
Mortgage Loan or (b) if MERS is identified on the Mortgage or on a properly
recorded assignment of the Mortgage as mortgagee of record solely as nominee for
Seller and its successors and assigns. In the event that the Seller, the
Depositor or the Master Servicer gives written notice to the Trustee that a
court has recharacterized the sale of the Mortgage Loans as a financing, the
Seller shall submit or cause to be submitted for recording as specified above
or, should the Seller fail to perform such obligations, the Master Servicer
shall cause each such previously unrecorded assignment to be submitted for
recording as specified above at the expense of the Trust. In the event a
Mortgage File is released to the Company or the Servicer as a result of such
Person having completed a Request for Release, the Custodian shall, if not so
completed, complete the assignment of the related Mortgage in the manner
specified in clause (iii) above.

         In connection with the assignment of any Mortgage Loan registered on
the MERS(R) System, the Seller further agrees that it will cause, at the
Seller's own expense, within 30 days after the Closing Date, the MERS(R) System
to indicate that such Mortgage Loans have been assigned by the Seller to the
Depositor and by the Depositor to the Trustee in accordance with this Agreement
for the benefit of the Certificateholders by including (or deleting, in the case
of Mortgage Loans which are repurchased in accordance with this Agreement) in
such computer files (a) the code in the field which identifies the specific
Trustee and (b) the code in the field "Pool Field" which identifies the series
of the Certificates issued in connection with such Mortgage Loans. The Seller
further agrees that it will not, and will not permit the Company, any Servicer
or the Master Servicer to, and the Master Servicer agrees that it will not,
alter the codes referenced in this paragraph with respect to any Mortgage Loan
during the term of this Agreement unless and until such Mortgage Loan is
repurchased in accordance with the terms of this Agreement or the Mortgage Loan
Purchase Agreement.

                                      -45-
<PAGE>

         Section 2.02 ACCEPTANCE OF THE MORTGAGE LOANS.

                  (a) Based on the Initial Certification received by it from the
Custodian, the Trustee acknowledges receipt of, subject to the further review
and exceptions reported by the Custodian pursuant to the procedures described
below, the documents (or certified copies thereof) delivered to the Trustee or
the Custodian on its behalf pursuant to Section 2.01 and declares that it holds
and will continue to hold directly or through a custodian those documents and
any amendments, replacements or supplements thereto and all other assets of the
Trust Fund delivered to it in trust for the use and benefit of all present and
future Holders of the Certificates. On the Closing Date, the Trustee or the
Custodian on its behalf will deliver an Initial Certification confirming whether
or not it has received the Mortgage File for each Mortgage Loan, but without
review of such Mortgage File, except to the extent necessary to confirm whether
such Mortgage File contains the original Mortgage Note or a lost note affidavit
and indemnity in lieu thereof. No later than 90 days after the Closing Date, the
Trustee or the Custodian on its behalf shall, for the benefit of the
Certificateholders, review each Mortgage File delivered to it and execute and
deliver to the Seller and, if reviewed by the Custodian, the Trustee, an Interim
Certification. In conducting such review, the Trustee or the Custodian on its
behalf will ascertain whether all required documents have been executed and
received and whether those documents relate, determined on the basis of the
Mortgagor name, original principal balance and loan number, to the Mortgage
Loans identified in Exhibit B to this Agreement, as supplemented (provided,
however, that with respect to those documents described in subclauses (iv) and
(vi) of Section 2.01, such obligations shall extend only to documents actually
delivered pursuant to such subclauses). In performing any such review, the
Trustee and the Custodian may conclusively rely on the purported due execution
and genuineness of any such document and on the purported genuineness of any
signature thereon. If the Trustee or the Custodian on its behalf finds any
document constituting part of the Mortgage File not to have been executed or
received, or to be unrelated to the Mortgage Loans identified in Exhibit B or to
appear to be defective on its face, the Trustee or the Custodian on its behalf
shall include such information in the exception report. The Seller shall correct
or cure any such defect or, if prior to the end of the second anniversary of the
Closing Date, the Seller may substitute for the related Mortgage Loan a
Replacement Mortgage Loan, which substitution shall be accomplished in the
manner and subject to the conditions set forth in Section 2.03 or shall deliver
to the Trustee an Opinion of Counsel addressed to the Trustee to the effect that
such defect does not materially or adversely affect the interests of the
Certificateholders in such Mortgage Loan within 60 days from the date of notice
from the Trustee of the defect and if the Seller fails to correct or cure the
defect or deliver such opinion within such period, the Seller will, subject to
Section 2.03, within 90 days from the notification of the Trustee purchase such
Mortgage Loan at the Purchase Price; provided, however, that if such defect
relates solely to the inability of the Seller to deliver the Mortgage,
assignment thereof to the Trustee, or intervening assignments thereof with
evidence of recording thereon because such documents have been submitted for
recording and have not been returned by the applicable jurisdiction, the Seller
shall not be required to purchase such Mortgage Loan if the Seller delivers such
documents promptly upon receipt, but in no event later than 360 days after the
Closing Date.

                  (b) No later than 180 days after the Closing Date, the Trustee
or the Custodian on its behalf will review, for the benefit of the
Certificateholders, the Mortgage Files and will


                                      -46-
<PAGE>

execute and deliver or cause to be executed and delivered to the Seller and, if
reviewed by the Custodian, the Trustee, a Final Certification. In conducting
such review, the Trustee or the Custodian on its behalf will ascertain whether
each document required to be recorded has been returned from the recording
office with evidence of recording thereon and the Trustee or the Custodian on
its behalf has received either an original or a copy thereof, as required in
Section 2.01 (provided, however, that with respect to those documents described
in subclauses (iv) and (vi) of Section 2.01, such obligations shall extend only
to documents actually delivered pursuant to such subclauses). If the Trustee or
the Custodian on its behalf finds any document with respect to a Mortgage Loan
has not been received, or to be unrelated, determined on the basis of the
Mortgagor name, original principal balance and loan number, to the Mortgage
Loans identified in Exhibit B or to appear defective on its face, the Trustee or
the Custodian on its behalf shall note such defect in the exception report
attached to the Final Certification and shall promptly notify the Seller. The
Seller shall correct or cure any such defect or, if prior to the end of the
second anniversary of the Closing Date, the Seller may substitute for the
related Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03 or shall deliver to the Trustee an Opinion of Counsel addressed to the
Trustee to the effect that such defect does not materially or adversely affect
the interests of Certificateholders in such Mortgage Loan within 60 days from
the date of notice from the Trustee of the defect and if the Seller is unable
within such period to correct or cure such defect, or to substitute the related
Mortgage Loan with a Replacement Mortgage Loan or to deliver such opinion, the
Seller shall, subject to Section 2.03, within 90 days from the notification of
the Trustee, purchase such Mortgage Loan at the Purchase Price; provided,
however, that if such defect relates solely to the inability of the Seller to
deliver the Mortgage, assignment thereof to the Trustee or intervening
assignments thereof with evidence of recording thereon, because such documents
have not been returned by the applicable jurisdiction, the Seller shall not be
required to purchase such Mortgage Loan, if the Seller delivers such documents
promptly upon receipt, but in no event later than 360 days after the Closing
Date.

                  (c) In the event that a Mortgage Loan is purchased by the
Seller in accordance with subsections 2.02(a) or (b) above or Section 2.03, the
Seller shall remit the applicable Purchase Price to the Master Servicer for
deposit in the Master Servicer Collection Account and shall provide written
notice to the Trustee detailing the components of the Purchase Price, signed by
a Servicing Officer. Upon deposit of the Purchase Price in the Master Servicer
Collection Account and upon receipt of a Request for Release with respect to
such Mortgage Loan, the Trustee or the Custodian will release to the Seller the
related Mortgage File and the Trustee shall execute and deliver all instruments
of transfer or assignment, without recourse, representation or warranty
furnished to it by the Seller, as are necessary to vest in the Seller title to
and rights under the Mortgage Loan. Such purchase shall be deemed to have
occurred on the date on which the deposit into the Master Servicer Collection
Account was made. The Trustee shall promptly notify the Rating Agencies of such
repurchase. The obligation of the Seller to cure, repurchase or substitute for
any Mortgage Loan as to which a defect in a constituent document exists shall be
the sole remedies respecting such defect available to the Certificateholders or
to the Trustee on their behalf.

                  (d) The Seller shall deliver to the Trustee or the Custodian
on its behalf, and Trustee agrees to accept the Mortgage Note and other
documents constituting the Mortgage File


                                      -47-
<PAGE>

with respect to any Replacement Mortgage Loan, which the Trustee or the
Custodian will review as provided in subsections 2.02(a) and 2.02(b), provided,
that the Closing Date referred to therein shall instead be the date of delivery
of the Mortgage File with respect to each Replacement Mortgage Loan.

         Section 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY,
THE MASTER SERVICER AND THE SELLER.

                  (a) The Company hereby represents and warrants to the Master
Servicer, the Depositor, the Securities Administrator and the Trustee as
follows, as of the Closing Date:

                  (i) It is duly organized and is validly existing and in good
         standing under the laws of the State of Delaware and is duly authorized
         and qualified to transact any and all business contemplated by this
         Agreement to be conducted by it in any state in which a Mortgaged
         Property related to an EMC Mortgage Loan 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 EMC
         Mortgage Loan, to service the EMC Mortgage Loans in accordance with the
         terms of this Agreement and to perform any of its other obligations
         under this Agreement in accordance with the terms hereof.

                  (ii) It has the full corporate power and authority to service
         each EMC Mortgage Loan, and to execute, deliver and perform, and to
         enter into and consummate the transactions contemplated by this
         Agreement and has duly authorized by all necessary corporate action on
         its part the execution, delivery and performance of this Agreement; and
         this Agreement, assuming the due authorization, execution and delivery
         hereof by the other parties hereto, constitutes its legal, valid and
         binding obligation, enforceable against it in accordance with its
         terms, except that (a) the enforceability hereof may be limited by
         bankruptcy, insolvency, moratorium, receivership and other similar laws
         relating to creditors' rights generally and (b) the remedy of specific
         performance and injunctive and other forms of equitable relief may be
         subject to equitable defenses and to the discretion of the court before
         which any proceeding therefor may be brought.

                  (iii) The execution and delivery of this Agreement by it, the
         servicing of the EMC Mortgage Loans by it under this Agreement, the
         consummation of any other of the transactions contemplated by this
         Agreement, and the fulfillment of or compliance with the terms hereof
         are in its ordinary course of business and will not (A) result in a
         material breach of any term or provision of its charter or by-laws or
         (B) materially conflict with, result in a material breach, violation or
         acceleration of, or result in a material default under, the terms of
         any other material agreement or instrument to which it is a party or by
         which it may be bound, or (C) constitute a material violation of any
         statute, order or regulation applicable to it of any court, regulatory
         body, administrative agency or governmental body having jurisdiction
         over it; and it is not in breach or violation of any material indenture
         or other material agreement or instrument, or in violation of any
         statute, order or regulation of any court, regulatory body,
         administrative agency or governmental body having jurisdiction over it
         which breach or violation may materially impair its ability to perform
         or meet any of its obligations under this Agreement.

                                      -48-
<PAGE>

                  (iv) It is an approved servicer of conventional mortgage loans
         for Fannie Mae or Freddie Mac and is a mortgagee approved by the
         Secretary of Housing and Urban Development pursuant to sections 203 and
         211 of the National Housing Act.

                  (v) No litigation is pending or, to the best of its knowledge,
         threatened, against it that would materially and adversely affect the
         execution, delivery or enforceability of this Agreement or its ability
         to service the EMC Mortgage Loans or to perform any of its other
         obligations under this Agreement in accordance with the terms hereof.

                  (vi) No consent, approval, authorization or order of any court
         or governmental agency or body is required for its execution, delivery
         and performance of, or compliance with, this Agreement or the
         consummation of the transactions contemplated hereby, or if any such
         consent, approval, authorization or order is required, it has obtained
         the same.

                  (b) Wells Fargo Bank, National Association, in its capacity as
Master Servicer and Securities Administrator hereby represents and warrants to
the Seller, the Depositor and the Trustee as follows, as of the Closing Date:

                  (i) It 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 and the Securities Administrator 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,
         to service the Mortgage Loans in accordance with the terms of this
         Agreement and to perform any of its other obligations under this
         Agreement in accordance with the terms hereof;

                  (ii) It has the full corporate power and authority to execute,
         deliver and perform, and to enter into and consummate the transactions
         contemplated by this Agreement and has duly authorized by all necessary
         corporate action on its part the execution, delivery and performance of
         this Agreement; and this Agreement, assuming the due authorization,
         execution and delivery hereof by the other parties hereto, constitutes
         its legal, valid and binding obligation, enforceable against it in
         accordance with its terms, except that (a) the enforceability hereof
         may be limited by bankruptcy, insolvency, moratorium, receivership and
         other similar laws relating to creditors' rights generally and (b) the
         remedy of specific performance and injunctive and other forms of
         equitable relief may be subject to equitable defenses and to the
         discretion of the court before which any proceeding therefor may be
         brought.

                  (iii) The execution and delivery of this Agreement by it, the
         consummation of any other of the transactions contemplated by this
         Agreement, and the fulfillment of or compliance with the terms hereof
         are in its ordinary course of business and will not (A) result in a
         material breach of any term or provision of its charter or by-laws or
         (B) materially conflict with, result in a material breach, violation or
         acceleration of, or result


                                      -49-
<PAGE>

         in a material default under, the terms of any other material agreement
         or instrument to which it is a party or by which it may be bound, or
         (C) constitute a material violation of any statute, order or regulation
         applicable to it of any court, regulatory body, administrative agency
         or governmental body having jurisdiction over it; and it is not in
         breach or violation of any material indenture or other material
         agreement or instrument, or in violation of any statute, order or
         regulation of any court, regulatory body, administrative agency or
         governmental body having jurisdiction over it which breach or violation
         may materially impair its ability to perform or meet any of its
         obligations under this Agreement.

                  (iv) No litigation is pending or, to the best of its
         knowledge, threatened, against it that would materially and adversely
         affect the execution, delivery or enforceability of this Agreement or
         its ability to perform any of its other obligations under this
         Agreement in accordance with the terms hereof.

                  (v) No consent, approval, authorization or order of any court
         or governmental agency or body is required for its execution, delivery
         and performance of, or compliance with, this Agreement or the
         consummation of the transactions contemplated hereby, or if any such
         consent, approval, authorization or order is required, it has obtained
         the same.

                  (c) The Seller hereby represents and warrants to the
Depositor, the Securities Administrator, the Master Servicer and the Trustee as
follows, as of the Closing Date:

                  (i) The Seller is duly organized as a Delaware corporation and
         is validly existing and in good standing under the laws of the State of
         Delaware and is duly authorized and qualified to transact any and all
         business contemplated by this Agreement to be conducted by the Seller
         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, to sell the Mortgage Loans in accordance with the terms
         of this Agreement and to perform any of its other obligations under
         this Agreement in accordance with the terms hereof.

                  (ii) The Seller has the full corporate power and authority to
         sell each Mortgage Loan, and to execute, deliver and perform, and to
         enter into and consummate the transactions contemplated by this
         Agreement and has duly authorized by all necessary corporate action on
         the part of the Seller the execution, delivery and performance of this
         Agreement; and this Agreement, assuming the due authorization,
         execution and delivery hereof by the other parties hereto, constitutes
         a legal, valid and binding obligation of the Seller, enforceable
         against the Seller in accordance with its terms, except that (a) the
         enforceability hereof may be limited by bankruptcy, insolvency,
         moratorium, receivership and other similar laws relating to creditors'
         rights generally and (b) the remedy of specific performance and
         injunctive and other forms of equitable relief may be subject to
         equitable defenses and to the discretion of the court before which any
         proceeding therefor may be brought.

                                      -50-
<PAGE>

                  (iii) The execution and delivery of this Agreement by the
         Seller, the sale of the Mortgage Loans by the Seller under the Mortgage
         Loan Purchase Agreement, the consummation of any other of the
         transactions contemplated by this Agreement, and the fulfillment of or
         compliance with the terms hereof and thereof are in the ordinary course
         of business of the Seller and will not (A) result in a material breach
         of any term or provision of the charter or by-laws of the Seller or (B)
         materially conflict with, result in a material breach, violation or
         acceleration of, or result in a material default under, the terms of
         any other material agreement or instrument to which the Seller is a
         party or by which it may be bound, or (C) constitute a material
         violation of any statute, order or regulation applicable to the Seller
         of any court, regulatory body, administrative agency or governmental
         body having jurisdiction over the Seller; and the Seller is not in
         breach or violation of any material indenture or other material
         agreement or instrument, or in violation of any statute, order or
         regulation of any court, regulatory body, administrative agency or
         governmental body having jurisdiction over it which breach or violation
         may materially impair the Seller's ability to perform or meet any of
         its obligations under this Agreement.

                  (iv) The Seller is an approved seller of conventional mortgage
         loans for Fannie Mae or Freddie Mac and is a mortgagee approved by the
         Secretary of Housing and Urban Development pursuant to sections 203 and
         211 of the National Housing Act.

                  (v) No litigation is pending or, to the best of the Seller's
         knowledge, threatened, against the Seller that would materially and
         adversely affect the execution, delivery or enforceability of this
         Agreement or the ability of the Seller to sell the Mortgage Loans or to
         perform any of its other obligations under this Agreement in accordance
         with the terms hereof.

                  (vi) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution, delivery
         and performance by the Seller of, or compliance by the Seller with,
         this Agreement or the consummation of the transactions contemplated
         hereby, or if any such consent, approval, authorization or order is
         required, the Seller has obtained the same.

                  (vii) As of the Closing Date, the representations and
         warranties concerning the Mortgage Loans set forth in Section 7 of the
         Mortgage Loan Purchase Agreement are true and correct in all material
         respects.

                  (d) Upon discovery by any of the parties hereto of a breach of
a representation or warranty set forth in Section 7 of the Mortgage Loan
Purchase Agreement that materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach shall
give prompt written notice thereof to the other parties. The Seller hereby
covenants with respect to the representations and warranties set forth in
Section 7 of the Mortgage Loan Purchase Agreement, that within 90 days of the
discovery of a breach of any representation or warranty set forth therein that
materially and adversely affects the interests of the Certificateholders in any
Mortgage Loan, it shall cure such breach in all material respects and, if such
breach is not so cured, (i) if such 90-day period expires prior to the second
anniversary of the Closing Date, remove such Mortgage Loan (a "Deleted Mortgage
Loan") from


                                      -51-
<PAGE>

the Trust Fund and substitute in its place a Replacement Mortgage Loan, in the
manner and subject to the conditions set forth in this Section; or (ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the Trustee at the
Purchase Price in the manner set forth below; provided that any such
substitution pursuant to (i) above or repurchase pursuant to (ii) above shall
not be effected prior to the delivery to the Trustee of an Opinion of Counsel if
required by Section 2.05 hereof and any such substitution pursuant to (i) above
shall not be effected prior to the additional delivery to the Trustee of a
Request for Release. The Seller shall promptly reimburse the Master Servicer and
the Trustee for any expenses reasonably incurred by the Master Servicer or the
Trustee in respect of enforcing the remedies for such breach. To enable the
Securities Administrator to amend the Mortgage Loan Schedule, the Seller shall,
unless it cures such breach in a timely fashion pursuant to this Section 2.03,
promptly notify the Securities Administrator whether it intends either to
repurchase, or to substitute for, the Mortgage Loan affected by such breach.
With respect to the representations and warranties in Section 7 of the Mortgage
Loan Purchase Agreement that are made to the best of the Seller's knowledge, if
it is discovered by any of the Depositor, the Master Servicer, the Seller, the
Securities Administrator or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan, notwithstanding the
Seller's lack of knowledge with respect to the substance of such representation
or warranty, the Seller shall nevertheless be required to cure, substitute for
or repurchase the affected Mortgage Loan in accordance with the foregoing.

         With respect to any Replacement Mortgage Loan or Loans, the Seller
shall deliver to the Trustee for the benefit of the Certificateholders such
documents and agreements as are required by Section 2.01. No substitution will
be made in any calendar month after the Determination Date for such month.
Scheduled Payments due with respect to Replacement Mortgage Loans in the Due
Period related to the Distribution Date on which such proceeds are to be
distributed shall not be part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders will
include the Scheduled Payment due on any Deleted Mortgage Loan for the related
Due Period and thereafter the Seller shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The Securities Administrator
shall amend the Mortgage Loan Schedule for the benefit of the Certificateholders
to reflect the removal of such Deleted Mortgage Loan and the substitution of the
Replacement Mortgage Loan or Loans and the Securities Administrator shall
deliver the amended Mortgage Loan Schedule to the Trustee and the Custodian.
Upon such substitution, the Replacement Mortgage Loan or Loans shall be subject
to the terms of this Agreement in all respects, and the Seller shall be deemed
to have made with respect to such Replacement Mortgage Loan or Loans, as of the
date of substitution, the representations and warranties set forth in Section 7
of the Mortgage Loan Purchase Agreement with respect to such Mortgage Loan. Upon
any such substitution and the deposit into the Master Servicer Collection
Account of the amount required to be deposited therein in connection with such
substitution as described in the following paragraph and receipt by the Trustee
of a Request for Release for such Mortgage Loan, the Trustee or the Custodian
shall release to the Seller the Mortgage File relating to such Deleted Mortgage
Loan and held for the benefit of the Certificateholders and the Trustee shall
execute and deliver at the Seller's direction such instruments of transfer or
assignment as have been prepared by the Seller, in each case without recourse,
representation or warranty as shall be necessary to vest in the Seller, or its


                                      -52-
<PAGE>

respective designee, title to the Trustee's interest in any Deleted Mortgage
Loan substituted for pursuant to this Section 2.03.

         For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for a Deleted Mortgage Loan, the Master Servicer will determine
the amount (if any) by which the aggregate principal balance of all the
Replacement Mortgage Loans as of the date of substitution is less than the
Stated Principal Balance (after application of the principal portion of the
Scheduled Payment due in the month of substitution) of such Deleted Mortgage
Loan. An amount equal to the aggregate of such deficiencies, described in the
preceding sentence for any Distribution Date (such amount, the "Substitution
Adjustment Amount") shall be deposited into the Master Servicer Collection
Account, by the Seller delivering such Replacement Mortgage Loan on the
Determination Date for the Distribution Date relating to the Prepayment Period
during which the related Mortgage Loan became required to be purchased or
replaced hereunder.

         In the event that the Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited into the Master Servicer
Collection Account maintained by the Master Servicer, on the Determination Date
for the Distribution Date in the month following the month during which the
Seller became obligated to repurchase or replace such Mortgage Loan and upon
such deposit of the Purchase Price, the delivery of an Opinion of Counsel if
required by Section 2.05 and the receipt of a Request for Release, the Trustee
or the Custodian shall release the related Mortgage File held for the benefit of
the Certificateholders to the Seller, and the Trustee shall execute and deliver
at such Person's direction the related instruments of transfer or assignment
prepared by the Seller, in each case without recourse, representation or
warranty as shall be necessary to transfer title from the Trustee for the
benefit of the Certificateholders and transfer the Trustee's interest to the
Seller to any Mortgage Loan purchased pursuant to this Section 2.03. It is
understood and agreed that the obligation under this Agreement of the Seller to
cure, repurchase or replace any Mortgage Loan as to which a breach has occurred
and is continuing shall constitute the sole remedies against the Seller
respecting such breach available to Certificateholders, the Depositor or the
Trustee.

(e) The representations and warranties set forth in Section 2.03 hereof shall
survive delivery of the respective Mortgage Loans and Mortgage Files to the
Trustee or the Custodian for the benefit of the Certificateholders.

         Section 2.04 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.

         The Depositor hereby represents and warrants to the Master Servicer,
the Securities Administrator and the Trustee as follows, as of the date hereof
and as of the Closing Date:

                  (i) The Depositor is duly organized and is validly existing as
         limited liability company in good standing under the laws of the State
         of Delaware and has full power and authority necessary to own or hold
         its properties and to conduct its business as now conducted by it and
         to enter into and perform its obligations under this Agreement.

                  (ii) The Depositor has the full power and authority to
         execute, deliver and perform, and to enter into and consummate the
         transactions contemplated by, this Agreement and has duly authorized,
         by all necessary action on its part, the execution,


                                      -53-
<PAGE>

         delivery and performance of this Agreement; and this Agreement,
         assuming the due authorization, execution and delivery hereof by the
         other parties hereto, constitutes a legal, valid and binding obligation
         of the Depositor, enforceable against the Depositor in accordance with
         its terms, subject, as to enforceability, to (i) bankruptcy,
         insolvency, reorganization, moratorium and other similar laws affecting
         creditors' rights generally and (ii) general principles of equity,
         regardless of whether enforcement is sought in a proceeding in equity
         or at law.

                  (iii) The execution and delivery of this Agreement by the
         Depositor, the consummation of the transactions contemplated by this
         Agreement, and the fulfillment of or compliance with the terms hereof
         are in the ordinary course of business of the Depositor and will not
         (A) result in a material breach of any term or provision of the
         organizational documents of the Depositor or (B) materially conflict
         with, result in a material breach, violation or acceleration of, or
         result in a material default under, the terms of any other material
         agreement or instrument to which the Depositor is a party or by which
         it may be bound or (C) constitute a material violation of any statute,
         order or regulation applicable to the Depositor of any court,
         regulatory body, administrative agency or governmental body having
         jurisdiction over the Depositor; and the Depositor is not in breach or
         violation of any material indenture or other material agreement or
         instrument, or in violation of any statute, order or regulation of any
         court, regulatory body, administrative agency or governmental body
         having jurisdiction over it which breach or violation may materially
         impair the Depositor's ability to perform or meet any of its
         obligations under this Agreement.

                  (iv) No litigation is pending, or, to the best of the
         Depositor's knowledge, threatened, against the Depositor that would
         materially and adversely affect the execution, delivery or
         enforceability of this Agreement or the ability of the Depositor to
         perform its obligations under this Agreement in accordance with the
         terms hereof.

                  (v) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution, delivery
         and performance by the Depositor of, or compliance by the Depositor
         with, this Agreement or the consummation of the transactions
         contemplated hereby, or if any such consent, approval, authorization or
         order is required, the Depositor has obtained the same.

         The Depositor hereby represents and warrants to the Trustee as of the
Closing Date, following the transfer of the Mortgage Loans to it by the Seller,
the Depositor had good title to the Mortgage Loans and the related Mortgage
Notes were subject to no offsets, claims, defenses or counterclaims.

         It is understood and agreed that the representations and warranties set
forth in the immediately preceding paragraph shall survive delivery of the
Mortgage Files to the Trustee or the Custodian for the benefit of the
Certificateholders. Upon discovery by the Depositor or the Trustee of a breach
of such representations and warranties, the party discovering such breach shall
give prompt written notice to the others and to each Rating Agency.

                                      -54-
<PAGE>

         Section 2.05 DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH
SUBSTITUTIONS AND REPURCHASES.

                  (a) Notwithstanding any contrary provision of this Agreement,
with respect to any Mortgage Loan that is not in default or as to which default
is not imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03
shall be made unless the Seller delivers to the Trustee an Opinion of Counsel,
addressed to the Trustee, to the effect that such repurchase or substitution
would not (i) result in the imposition of the tax on "prohibited transactions"
of REMIC I, REMIC II or REMIC III or contributions after the Closing Date, as
defined in sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii)
cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any
time that any Certificates are outstanding. Any Mortgage Loan as to which
repurchase or substitution was delayed pursuant to this paragraph shall be
repurchased or the substitution therefor shall occur (subject to compliance with
Sections 2.02 or 2.03) upon the earlier of (a) the occurrence of a default or
imminent default with respect to such Mortgage Loan and (b) receipt by the
Trustee of an Opinion of Counsel addressed to the Trustee to the effect that
such repurchase or substitution, as applicable, will not result in the events
described in clause (i) or clause (ii) of the preceding sentence.

                  (b) Upon discovery by the Depositor, the Seller or the Master
Servicer 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 promptly (and in any event within 5 Business Days of discovery) give
written notice thereof to the other parties and the Trustee. In connection
therewith, the Trustee shall require the Seller, at the Seller's option, to
either (i) substitute, if the conditions in Section 2.03(c) with respect to
substitutions are satisfied, a Replacement Mortgage Loan for the affected
Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90 days of
such discovery in the same manner as it would a Mortgage Loan for a breach of
representation or warranty contained in Section 2.03. The Trustee shall reconvey
to the Seller the Mortgage Loan to be released pursuant hereto (and the
Custodian shall deliver the related Mortgage File) 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 contained in Section 2.03.

         Section 2.06 COUNTERSIGNATURE AND DELIVERY OF CERTIFICATES.

                  (a) The Trustee acknowledges the sale, transfer and assignment
to it of the Trust Fund and, concurrently with such transfer and assignment, has
executed, countersigned and delivered, to or upon the order of the Depositor,
the Certificates in authorized denominations evidencing the entire ownership of
the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform the duties set forth in this Agreement in
accordance with its terms.

                  (b) The Depositor, concurrently with the execution and
delivery hereof, does hereby transfer, assign, set over and otherwise convey in
trust to the Trustee without recourse all the right, title and interest of the
Depositor in and to the REMIC I Regular Interests, and the other assets of REMIC
II for the benefit of the holders of the REMIC II Interests. The Trustee
acknowledges receipt of the REMIC I Regular Interests (which are uncertificated)
and the other


                                      -55-
<PAGE>

assets of REMIC II and declares that it holds and will hold the same in trust
for the exclusive use and benefit of the holders of the REMIC II Interests.

                  (c) The Depositor, concurrently with the execution and
delivery hereof, does hereby transfer, assign, set over and otherwise convey in
trust to the Trustee without recourse all the right, title and interest of the
Depositor in and to the REMIC II Regular Interests, and the other assets of
REMIC III for the benefit of the holders of the REMIC III Certificates. The
Trustee acknowledges receipt of the REMIC II Regular Interests (which are
uncertificated) and the other assets of REMIC III and declares that it holds and
will hold the same in trust for the exclusive use and benefit of the holders of
the REMIC III Certificates.


                                      -56-
<PAGE>


                                  ARTICLE III

          ADMINISTRATION AND SERVICING OF EMC MORTGAGE LOANS BY COMPANY

         Section 3.01 THE COMPANY.

         The Company shall service and administer the EMC Mortgage Loans in
accordance with customary and usual standards of practice of prudent mortgage
loan servicers in the respective states in which the related Mortgaged
Properties are located. In connection with such servicing and administration,
the Company shall have full power and authority, acting alone and/or through
subservicers as provided in Section 3.03, to do or cause to be done any and all
things that it may deem necessary or desirable in connection with such servicing
and administration, including but not limited to, the power and authority,
subject to the terms hereof (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 related Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided herein), (iii) to collect any Insurance Proceeds and
other Liquidation Proceeds, and (iv) subject to Section 3.09, to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any EMC Mortgage Loan; provided that the Company shall take no action
that is inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any EMC Mortgage Loan or the rights and interests of the
Depositor and the Trustee under this Agreement.

         Without limiting the generality of the foregoing, the Company, in its
own name or in the name of the Trust, the Depositor or the Trustee, is hereby
authorized and empowered by the Trust, the Depositor and the Trustee, when the
Company believes it appropriate in its reasonable judgment, to execute and
deliver, on behalf of the Trustee, the Depositor, the Certificateholders or any
of them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge and all other comparable instruments, with respect
to the EMC Mortgage Loans, and with respect to the related Mortgaged Properties
held for the benefit of the Certificateholders. The Company shall prepare and
deliver to the Depositor and/or the Trustee such documents requiring execution
and delivery by any or all of them as are necessary or appropriate to enable the
Company to service and administer the EMC Mortgage Loans. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Company.

         In accordance with the standards of the first paragraph of this Section
3.01, the Company shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties relating to the EMC Mortgage Loans, which advances shall be
reimbursable in the first instance from related collections from the Mortgagors
pursuant to Section 5.04, and further as provided in Section 5.02. All costs
incurred by the Company, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties relating to the EMC Mortgage Loans and
related insurance premiums shall not, for the purpose of calculating monthly
distributions to the Certificateholders, be added

                                      -57-
<PAGE>

to the Stated Principal Balance under the related EMC Mortgage Loans,
notwithstanding that the terms of such Mortgage Loans so permit.

         Section 3.02 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.

                  (a) Except as otherwise provided in this Section 3.02, when
any property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Company shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Company is not required to exercise such
rights with respect to an EMC Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Company is prohibited by law from enforcing
any such due-on-sale clause, or if coverage under any Required Insurance Policy
would be adversely affected, or if nonenforcement is otherwise permitted
hereunder, the Company is authorized, subject to Section 3.02(b), to take or
enter into an assumption and modification agreement from or with the person to
whom such property has been or is about to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, unless prohibited by
applicable state law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Company
enters such agreement) by the applicable Required Insurance Policies. The
Company, subject to Section 3.02(b), is also authorized with the prior approval
of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Company shall not be deemed to be in default under this Section
3.02(a) by reason of any transfer or assumption that the Company reasonably
believes it is restricted by law from preventing.

                  (b) Subject to the Company's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.02(a), in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption agreement or modification agreement or supplement
to the Mortgage Note or Mortgage that requires the signature of the Trustee, or
if an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the related EMC Mortgage Loan, the Company shall
prepare and deliver or cause to be prepared and delivered to the Trustee for
signature and shall direct, in writing, the Trustee to execute the assumption
agreement with the Person to whom the Mortgaged Property is to be conveyed and
such modification agreement or supplement to the Mortgage Note or Mortgage or
other instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the Scheduled
Payment and any other term affecting the


                                      -58-
<PAGE>

amount or timing of payment on the EMC Mortgage Loan) may be changed. In
addition, the substitute Mortgagor and the Mortgaged Property must be acceptable
to the Company in accordance with its servicing standards as then in effect. The
Company shall notify the Trustee that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement, which in the case of the original 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. Any fee collected by the Company for
entering into an assumption or substitution of liability agreement will be
retained by the Company as additional servicing compensation.

         Section 3.03 SUBSERVICERS.

         The Company shall perform all of its servicing responsibilities
hereunder or may cause a subservicer to perform any such servicing
responsibilities on its behalf, but the use by the Company of a subservicer
shall not release the Company from any of its obligations hereunder and the
Company shall remain responsible hereunder for all acts and omissions of each
subservicer as fully as if such acts and omissions were those of the Company.
The Company shall pay all fees of each subservicer from its own funds, and a
subservicer's fee shall not exceed the Servicing Fee payable to the Company
hereunder.

         At the cost and expense of the Company, without any right of
reimbursement from its Protected Account, the Company shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange for any
servicing responsibilities to be performed by a successor subservicer; provided,
however, that nothing contained herein shall be deemed to prevent or prohibit
the Company, at the Company's option, from electing to service the related EMC
Mortgage Loans itself. In the event that the Company's responsibilities and
duties under this Agreement are terminated pursuant to Section 9.03, the Company
shall at its own cost and expense terminate the rights and responsibilities of
each subservicer effective as of the date of termination of the Company. The
Company shall pay all fees, expenses or penalties necessary in order to
terminate the rights and responsibilities of each subservicer from the Company's
own funds without reimbursement from the Trust Fund.

         Notwithstanding the foregoing, the Company shall not be relieved of its
obligations hereunder and shall be obligated to the same extent and under the
same terms and conditions as if it alone were servicing and administering the
EMC Mortgage Loans. The Company shall be entitled to enter into an agreement
with a subservicer for indemnification of the Company by the subservicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.

         Any subservicing agreement and any other transactions or services
relating to the EMC Mortgage Loans involving a subservicer shall be deemed to be
between such subservicer and the Company alone, and neither the Master Servicer
nor the Trustee shall have any obligations, duties or liabilities with respect
to such subservicer including any obligation, duty or liability of either the
Master Servicer or the Trustee to pay such subservicer's fees and expenses. For
purposes of remittances to the Master Servicer pursuant to this Agreement, the
Company shall be deemed to have received a payment on an EMC Mortgage Loan when
a subservicer has received such payment.

                                      -59-
<PAGE>

         Section 3.04 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF COMPANY TO
BE HELD FOR TRUSTEE.

         Notwithstanding any other provisions of this Agreement, the Company
shall transmit to the Trustee as required by this Agreement all documents and
instruments in respect of an EMC Mortgage Loan coming into the possession of the
Company from time to time and shall account fully to the Trustee for any funds
received by the Company or that otherwise are collected by the Company as
Liquidation Proceeds or Insurance Proceeds in respect of any such Mortgage Loan.
All Mortgage Files and funds collected or held by, or under the control of, the
Company in respect of any EMC Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds, including but not
limited to, any funds on deposit in the Protected Account maintained by the
Company, shall be held by the Company for and on behalf of the Trustee and shall
be and remain the sole and exclusive property of the Trustee, subject to the
applicable provisions of this Agreement. The Company also agrees that it shall
not create, incur or subject any Mortgage File or any funds that are deposited
in the Protected Account maintained by the Company or the Master Servicer
Collection Account or in any Escrow Account, or any funds that otherwise are or
may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, an EMC Mortgage Loan, except, however, that the Company
shall be entitled to set off against and deduct from any such funds any amounts
that are properly due and payable to the Company under this Agreement.

         Section 3.05 MAINTENANCE OF HAZARD INSURANCE.

         The Company shall cause to be maintained, for each EMC Mortgage Loan,
hazard insurance on buildings upon, or comprising part of, the Mortgaged
Property against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the related Mortgaged Property is
located with an insurer which is licensed to do business in the state where the
related Mortgaged Property is located. Each such policy of standard hazard
insurance shall contain, or have an accompanying endorsement that contains, a
standard mortgagee clause. The Company shall also cause flood insurance to be
maintained on property acquired upon foreclosure or deed in lieu of foreclosure
of any EMC Mortgage Loan, to the extent described below. Pursuant to Section
5.01, any amounts collected by the Company under any such policies (other than
the amounts to be applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with the Company's normal servicing procedures) shall be deposited in
the Protected Account maintained by the Company. Any cost incurred by the
Company in maintaining any such insurance shall not, for the purpose of
calculating monthly distributions to the Certificateholders or remittances to
the Trustee for their benefit, be added to the principal balance of the Mortgage
Loan, notwithstanding that the terms of the EMC Mortgage Loan so permit. Such
costs shall be recoverable by the Company out of late payments by the related
Mortgagor or out of Liquidation Proceeds to the extent permitted by Section
5.02. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage other than pursuant to such applicable laws and
regulations as


                                      -60-
<PAGE>

shall at any time be in force and as shall require such additional insurance. If
the Mortgaged Property is located at the time of origination of the related EMC
Mortgage Loan in a federally designated special flood hazard area and such area
is participating in the national flood insurance program, the Company shall
cause flood insurance to be maintained with respect to such EMC Mortgage Loan.
Such flood insurance shall be in an amount equal to the least of (i) the Stated
Principal Balance of the related EMC Mortgage Loan, (ii) minimum amount required
to compensate for damage or loss on a replacement cost basis or (iii) the
maximum amount of such insurance available for the related Mortgaged Property
under the Flood Disaster Protection Act of 1973, as amended.

         In the event that the Company shall obtain and maintain a blanket
policy insuring against hazard losses on all of the EMC Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.05, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Company shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.05, and there shall have
been a loss that would have been covered by such policy, deposit in the
Protected Account maintained by the Company the amount not otherwise payable
under the blanket policy because of such deductible clause. Such deposit shall
be from the Company's own funds without reimbursement therefor. In connection
with its activities as administrator and servicer of the EMC Mortgage Loans, the
Company agrees to present, on behalf of itself, the Depositor and the Trustee
for the benefit of the Certificateholders, claims under any such blanket policy.

         Section 3.06 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.

         The Company shall prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies relating to the EMC
Mortgage Loans 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 Insurance Policies. Any proceeds disbursed to the
Company in respect of such Insurance Policies shall be promptly deposited in the
Protected Account maintained by the Company 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 EMC Mortgage Loan to the insurer under any applicable
Insurance Policy need not be so deposited (or remitted).

         Section 3.07 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.

                  (a) The Company 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 Company would have been covered thereunder.
The Company shall use its best efforts to keep in force and effect (to the
extent that the EMC Mortgage Loan requires the Mortgagor to maintain such
insurance), Primary Mortgage Insurance applicable to each EMC Mortgage Loan. The
Company 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.

                                      -61-
<PAGE>

                  (b) The Company agrees to present on behalf of the Trustee and
the Certificateholders, claims to the insurer under any Primary Mortgage
Insurance Policies relating to the EMC Mortgage Loans and, in this regard, to
take such reasonable action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policies respecting defaulted EMC Mortgage Loans.
Pursuant to Section 5.01, any amounts collected by the Company under any Primary
Mortgage Insurance Policies shall be deposited in the Protected Account
maintained by the Company, subject to withdrawal pursuant to Section 5.02
hereof.

         Section 3.08 FIDELITY BOND, ERRORS AND OMISSIONS INSURANCE.

         The Company shall maintain, at its own expense, a blanket fidelity bond
and an errors and omissions insurance policy, with broad coverage with
responsible companies on all officers, employees or other persons acting in any
capacity with regard to the EMC Mortgage Loans and who handle funds, money,
documents and papers relating to the EMC Mortgage Loans. The fidelity bond and
errors and omissions insurance shall be in the form of the Mortgage Banker's
Blanket Bond and shall protect and insure the Company against losses, including
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of
such persons. Such fidelity bond shall also protect and insure the Company
against losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of an EMC
Mortgage Loan which is not in accordance with Accepted Servicing Practices. No
provision of this Section 3.08 requiring the fidelity bond and errors and
omissions insurance shall diminish or relieve the Company from its duties and
obligations as set forth in this Agreement. The minimum coverage under any such
bond and insurance policy shall be at least equal to the corresponding amounts
required by Accepted Servicing Practices. The Company shall deliver to the
Master Servicer a certificate from the surety and the insurer as to the
existence of the fidelity bond and errors and omissions insurance policy and
shall obtain a statement from the surety and the insurer that such fidelity bond
or insurance policy shall in no event be terminated or materially modified
without thirty days prior written notice to the Master Servicer and the Trustee.
The Company shall notify the Master Servicer and the Trustee within five
business days of receipt of notice that such fidelity bond or insurance policy
will be, or has been, materially modified or terminated. The Trustee for the
benefit of the Certificateholders must be named as loss payees on the fidelity
bond and as additional insured on the errors and omissions policy.

         Section 3.09 REALIZATION UPON DEFAULTED MORTGAGE LOANS; DETERMINATION
                      OF EXCESS LIQUIDATION PROCEEDS AND REALIZED LOSSES;
                      REPURCHASES OF CERTAIN MORTGAGE LOANS.

                  (a) The Company shall use reasonable efforts to foreclose upon
or otherwise comparably convert the ownership of properties securing such of the
EMC Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Company shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided that
the Company shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration of


                                      -62-
<PAGE>

any property unless it shall determine (i) that such restoration and/or
foreclosure will increase the proceeds of liquidation of the EMC Mortgage Loan
after reimbursement to itself of such expenses and (ii) that such expenses will
be recoverable to it through Insurance Proceeds or Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Protected Account maintained by the Company pursuant to Section 5.02). If the
Company reasonably believes that Liquidation Proceeds with respect to any such
EMC Mortgage Loan would not be increased as a result of such foreclosure or
other action, such EMC Mortgage Loan will be charged-off and will become a
Liquidated Loan. The Company will give notice of any such charge-off to the
Trustee and the Securities Administrator. The Company shall be responsible for
all other costs and expenses incurred by it in any such proceedings; provided
that such costs and expenses shall be Servicing Advances and that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 5.02. If the Company has
knowledge that a Mortgaged Property that the Company is contemplating acquiring
in foreclosure or by deed- in-lieu of foreclosure is located within a one-mile
radius of any site with environmental or hazardous waste risks known to the
Company, the Company will, prior to acquiring the related Mortgaged Property,
consider such risks and only take action in accordance with its established
environmental review procedures.

         With respect to any REO Property relating to an EMC Mortgage Loan, the
deed or certificate of sale shall be taken in the name of the Trustee for the
benefit of the Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such REO
Property solely as the Trustee hereunder and not in its individual capacity. The
Company shall ensure that the title to such REO Property references this
Agreement and the Trustee's capacity hereunder. Pursuant to its efforts to sell
such REO Property, the Company shall either itself or through an agent selected
by the Company protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Company deems to
be in the best interest of the Company and the Certificateholders for the period
prior to the sale of such REO Property. The Company shall prepare for and
deliver to the Trustee and the Securities Administrator a statement with respect
to each such REO Property that has been rented showing the aggregate rental
income received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Trustee to comply with the reporting requirements of the REMIC Provisions. The
net monthly rental income, if any, from such REO Property shall be deposited in
the Protected Account maintained by the Company no later than the close of
business on each Determination Date. The Company shall perform the tax reporting
and withholding related to foreclosures, abandonments and cancellation of
indebtedness income as specified by Sections 1445, 6050J and 6050P of the Code
by preparing and filing such tax and information returns, as may be required.

         In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on an
EMC Mortgage Loan, the Company shall dispose of such Mortgaged Property prior to
three years after its acquisition by the Trust Fund or, at the expense of the
Trust Fund, request more than 60 days prior to the day on which such three-year
period would otherwise expire, an extension of the three-year grace period
unless the Trustee shall have been supplied with an Opinion of Counsel addressed
to the Trustee


                                      -63-
<PAGE>

(such opinion not to be an expense of the Trustee) to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of REMIC I, REMIC II or REMIC III as defined in section 860F of
the Code or cause either REMIC I, REMIC II or REMIC III 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). Notwithstanding any other provision of
this Agreement, no Mortgaged Property acquired by the Trust Fund shall be rented
(or allowed to continue to be rented) or otherwise used for the production of
income by or on behalf of the Trust Fund in such a manner or pursuant to any
terms that would (i) cause such Mortgaged Property to fail to qualify as
"foreclosure property" within the meaning of section 860G(a)(8) of the Code or
(ii) subject any of REMIC I, REMIC II or REMIC III to the imposition of any
federal, state or local income taxes on the income earned from such Mortgaged
Property under section 860G(c) of the Code or otherwise, unless the Company has
agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.

         The decision of the Company to foreclose on a defaulted EMC Mortgage
Loan shall be subject to a determination by the Company that the proceeds of
such foreclosure would exceed the costs and expenses of bringing such a
proceeding. The income earned from the management of any Mortgaged Properties
acquired through foreclosure or other judicial proceeding, net of reimbursement
to the Company for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted EMC Mortgage
Loans (with interest accruing as though such Mortgage Loans were still current)
and all such income shall be deemed, for all purposes in the Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into the Protected Account maintained by the Company. To the
extent the income received during a Prepayment Period is in excess of the amount
attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related EMC Mortgage Loan, such excess shall be considered
to be a partial Principal Prepayment for all purposes hereof.

         The Liquidation Proceeds from any liquidation of an EMC Mortgage Loan,
net of any payment to the Company as provided above, shall be deposited in the
Protected Account maintained by the Company on the next succeeding Determination
Date following receipt thereof for distribution on the related Distribution
Date, except that any Excess Liquidation Proceeds shall be retained by the
Company as additional servicing compensation.

         The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds or any income from an REO
Property, will be applied in the following order of priority: first, to
reimburse the Company for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 5.02 or this Section 3.09; second, to
reimburse the Company for any unreimbursed Advances, pursuant to Section 5.02 or
this Section 3.09; third, to accrued and unpaid interest (to the extent no
Advance has been made for such amount) on the EMC Mortgage Loan or related REO
Property, at the Net Mortgage Rate to the


                                      -64-
<PAGE>

first day of the month in which such amounts are required to be distributed; and
fourth, as a recovery of principal of the EMC Mortgage Loan.

                  (b) On each Determination Date, the Company shall determine
the respective aggregate amounts of Excess Liquidation Proceeds and Realized
Losses, if any, for the related Prepayment Period.

                  (c) The Company has no intent to foreclose on any EMC Mortgage
Loan based on the delinquency characteristics as of the Closing Date; provided,
that the foregoing does not prevent the Company from initiating foreclosure
proceedings on any date hereafter if the facts and circumstances of such EMC
Mortgage Loans including delinquency characteristics in the Company's discretion
so warrant such action.

         Section 3.10 SERVICING COMPENSATION.

         As compensation for its activities hereunder, the Company shall be
entitled to retain or withdraw from its Protected Account out of each payment of
interest on an EMC Mortgage Loan included in the Trust Fund an amount equal to
the Servicing Fee.

         Additional servicing compensation in the form of any Excess Liquidation
Proceeds, assumption fees, late payment charges, all Prepayment Interest Excess
on any EMC Mortgage Loan, all income and gain net of any losses realized from
Permitted Investments with respect to funds in or credited to the Protected
Account maintained by the Company shall be retained by the Company to the extent
not required to be deposited in the Protected Account maintained by the Company
pursuant to Section 5.02. The Company shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder (including
payment of any premiums for hazard insurance, as required by Section 3.05 and
maintenance of the other forms of insurance coverage required by Section 3.07)
and shall not be entitled to reimbursement therefor except as specifically
provided in Section 5.02.

         EMC will be entitled to retain any Prepayment Interest Excess pursuant
to Section 5.07(e).

         Section 3.11 REO PROPERTY.

                  (a) In the event the Trust Fund acquires ownership of any REO
Property in respect of any related EMC 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 Company shall sell any such REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement. Pursuant to its efforts to sell such REO Property, the Company shall
protect and conserve such REO Property in the manner and to the extent required
herein, in accordance with the REMIC Provisions.

                  (b) The Company shall deposit all funds collected and received
in connection with the operation of any REO Property in respect of any EMC
Mortgage Loan into the Protected Account maintained by the Company.

                                      -65-
<PAGE>

                  (c) The Company, upon the final disposition of any REO
Property in respect of any EMC Mortgage Loan, shall be entitled to reimbursement
for any related unreimbursed Advances, unreimbursed Servicing Advances or
Servicing Fees from Liquidation Proceeds received in connection with the final
disposition of such REO Property; provided, that any such unreimbursed Advances
or Servicing Fees as well as any unpaid Servicing Fees may be reimbursed or
paid, as the case may be, prior to final disposition, out of any net rental
income or other net amounts derived from such REO Property.

         Section 3.12 LIQUIDATION REPORTS.

         Upon the foreclosure of any Mortgaged Property relating to an EMC
Mortgage Loan or the acquisition thereof by the Trust Fund pursuant to a
deed-in-lieu of foreclosure, the Company shall submit a liquidation report to
the Master Servicer containing such information as shall be mutually acceptable
to the Company and the Master Servicer with respect to such Mortgaged Property.

         Section 3.13 ANNUAL STATEMENT AS TO COMPLIANCE; ANNUAL CERTIFICATION.

                  (a) The Company will deliver to the Master Servicer not later
than March 1, 2005 and not later than March 1 of each year thereafter, a
certificate of a Servicing Officer stating, as to each signatory thereof, that
(i) a review of the activities of the Company during the preceding calendar year
and of performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Company 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 officers and the
nature and status thereof except for such defaults as such officer in its good
faith judgment believe to be immaterial.

                  (b) (i) The Company will deliver to the Master Servicer, on or
before March 1 of each year beginning March 1, 2005 (or, if any such day is not
a Business Day, the immediately preceding Business Day), or on any alternative
date specified by the Master Servicer upon thirty (30) days written request, a
certification containing the information set forth in Exhibit K. Such
certification shall be signed by the senior officer in charge of servicing of
the Company. In addition, the Company shall provide such other information with
respect to the EMC Mortgage Loans and the servicing and administration thereof
within the control of the Company 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.

                  (ii) The Company shall indemnify and hold harmless the Master
         Servicer and its 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 Company or any of its
         officers, directors, agents or affiliates of its obligations under this
         Section 3.13(b) or the Company's negligence, bad faith or willful
         misconduct in connection therewith. If the indemnification provided for
         herein is unavailable or insufficient to hold harmless the Master
         Servicer, then the Company agrees that it shall contribute to the
         amount paid or payable by the Master Servicer as a result of the
         losses, claims, damages or liabilities of


                                      -66-
<PAGE>

         the Master Servicer in such proportion as is appropriate to reflect the
         relative fault of the Master Servicer on the one hand and the Company
         on the other in connection with a breach of the Company's obligations
         under this Section 3.13(b).

         Section 3.14 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' SERVICING
REPORT.

         The Company at its expense shall cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish not later than March 1, 2005 and not later than March 1
of each year thereafter a statement, in a form acceptable for filing with the
Commission on an Exhibit to Form 10-K, to the Master Servicer to the effect
that, with respect to the preceding calendar year such firm has examined certain
documents and records relating to the Company's servicing of mortgage loans of
the same type as the EMC Mortgage Loans pursuant to servicing agreements
substantially similar to this Agreement, which agreements may include this
Agreement, and that, on the basis of such an examination, conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the opinion that the Company's servicing has
been conducted in compliance with the agreements examined pursuant to this
Section 3.14, except for (i) such exceptions as such firm shall believe to be
immaterial,(ii) such other exceptions as shall be set forth in such statement
and (iii) such exceptions that the Uniform Single Attestation Program for
Mortgage Bankers requires it to report.

         Section 3.15 BOOKS AND RECORDS.

         The Company shall be responsible for maintaining, and shall maintain, a
complete set of books and records for the EMC Mortgage Loans which shall be
appropriately identified in the Company's computer system to clearly reflect the
ownership of the EMC Mortgage Loans by the Trust. In particular, the Company
shall maintain in its possession, available for inspection by the Master
Servicer and the Trustee and shall deliver to Master Servicer and the Trustee
upon demand, evidence of compliance with all federal, state and local laws,
rules and regulations. To the extent that original documents are not required
for purposes of realization of Liquidation Proceeds or Insurance Proceeds,
documents maintained by the Company may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including, but not limited to, optical imagery techniques so long as the Company
complies with the requirements of Accepted Servicing Practices.

         The Company shall maintain with respect to each EMC Mortgage Loan and
shall make available for inspection by the Master Servicer and the Trustee the
related servicing file during the time such EMC Mortgage Loan is subject to this
Agreement and thereafter in accordance with applicable law.

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                                   ARTICLE IV

    ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS BY MASTER SERVICER

         Section 4.01 MASTER SERVICER. The Master Servicer shall, beginning on
the Closing Date, supervise, monitor and oversee the obligation of the Company
and the related Servicer to service and administer their respective Mortgage
Loans in accordance with the terms of this Agreement and the related Servicing
Agreement 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 Company and
the related Servicer 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
Company and the related Servicer and shall cause the Company and related
Servicer to perform and observe the covenants, obligations and conditions to be
performed or observed by such Person under this Agreement and the related
Servicing Agreement. The Master Servicer shall independently and separately
monitor the Company and the related 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 Company's, the related Servicer's and
Master Servicer's records, and based on such reconciled and corrected
information, the Master Servicer shall provide such information to the
Securities Administrator as shall be necessary in order for it to prepare the
statements specified in Section 6.06 and any other information and statements
required hereunder. The Master Servicer shall reconcile the results of its
Mortgage Loan monitoring with the actual remittances of the Company and each
Servicer pursuant to this Agreement and the related Servicing Agreement.

         The Trustee shall furnish the Company, the Servicers and the Master
Servicer with any powers of attorney and other documents in form as provided to
it necessary or appropriate to enable the Company, the Servicer and the Master
Servicer to service and administer the related Mortgage Loans and REO Property.

         The Trustee and the Securities Administrator shall provide access to
the records and documentation in possession of the Trustee 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 access being afforded only upon
reasonable prior written request and during normal business hours at the office
of the Trustee or the Securities Administrator; provided, however, that, unless
otherwise required by law, neither the Trustee nor 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 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 or the
Securities Administrator's actual costs.

                                      -68-
<PAGE>

         The Trustee shall execute and deliver to the Company or the related
Servicer and the Master Servicer 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
Security Instrument; (iii) obtain a deficiency judgment against the Mortgagor;
or (iv) enforce any other rights or remedies provided by the Mortgage Note or
Security Instrument 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 assure continuing treatment of such REMIC as a REMIC, and the
Trustee and the Securities Administrator shall comply with any directions of the
Seller, the Company, the Servicers 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 addressed to the Trustee 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 2.04 of this Agreement, as applicable, accept any
contribution to any REMIC after the Startup Day without receipt of a REMIC
Opinion.

         Section 4.03 MONITORING OF COMPANY AND SERVICER. (a) The Master
Servicer shall be responsible for reporting to the Trustee and the Seller the
compliance by the Company and the related Servicer with its duties under this
Agreement and the related Servicing Agreement. In the review of the Company's
and the related Servicer's activities, the Master Servicer may rely upon an
Officer's Certificate of the Company and the related Servicer with regard to
such Person's compliance with the terms of this Agreement or the related
Servicing Agreement. In the event that the Master Servicer, in its judgment,
determines that the Company or the related Servicer should be terminated in
accordance with this Agreement or the related Servicing Agreement, or that a
notice should be sent pursuant to this Agreement or the related Servicing
Agreement with respect to the occurrence of an event that, unless cured, would
constitute grounds for such termination, the Master Servicer shall notify the
Seller and the Trustee thereof and the Master Servicer 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 Company under this
Agreement and the related Servicer under the related Servicing Agreement, and
shall, in the event that the Company or the related Servicer fails to perform
its obligations in accordance with this Agreement or the related Servicing
Agreement, subject to the preceding paragraph, terminate the rights and
obligations of such Person thereunder and act as servicer of the related
Mortgage Loans or to cause the Trustee to enter into a new Servicing Agreement
with a successor Servicer selected by the Master Servicer; provided, however, 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 such successor Servicer. Such enforcement, including,
without limitation, the legal prosecution of claims, termination of the related
Servicing Agreement 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,

                                      -69-
<PAGE>

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, subject to
its right of reimbursement pursuant to the provisions of this Agreement or the
related Servicing Agreement, 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) To the extent that the costs and expenses of the Master
Servicer related to any termination of the Company or the related Servicer,
appointment of a successor Servicer or the transfer and assumption of servicing
by the Master Servicer with respect to this Agreement or the related Servicing
Agreement (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 Company or the related Servicer as a result of an
event of default by such Person and (ii) all costs and expenses associated with
the complete transfer of 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 servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
service to service the Mortgage Loans in accordance with this Agreement or the
related Servicing Agreement) are not fully and timely reimbursed by the Company
or the terminated Servicer, the Master Servicer shall be entitled to
reimbursement of such costs and expenses from the Master Servicer Collection
Account.

                  (d) The Master Servicer shall require the Company and the
related Servicer to comply with the remittance requirements and other
obligations set forth in this Agreement or the related Servicing Agreement, as
applicable.

                  (e) If the Master Servicer acts as a servicer, it will not
assume liability for the representations and warranties of the Company or the
related Servicer, if any, that it replaces.

         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 hereof, to do any and all
things that it may deem necessary or desirable in connection with the master
servicing 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


                                      -70-
<PAGE>

Mortgaged Property securing any Mortgage Loan, in each case, in accordance with
the provisions of this Agreement and the related Servicing Agreement, as
applicable; provided, however, that the Master Servicer shall not (and,
consistent with its responsibilities under Section 4.03, shall not permit the
Company or the related 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, REMIC II or REMIC III 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 would
cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC or result in
the imposition of a tax upon REMIC I, REMIC II or REMIC III, as the case may be.
The Trustee shall furnish the Master Servicer, upon written request from a
Servicing Officer, with any powers of attorney empowering the Master Servicer,
the Company or the related 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 the related Servicing Agreement and this
Agreement, and the Trustee shall execute and deliver such other documents, as
the Master 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 Company or the related Servicer). 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 10.11 hereof. 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
provided in this Agreement or the related Servicing Agreement, to the extent
Mortgage Loans contain enforceable due-on-sale clauses, the Master Servicer
shall cause the Company and the related Servicer 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 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 RELEASE OF MORTGAGE FILES. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by the Company or the
related 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 Company or the related Servicer will, if


                                      -71-
<PAGE>

required under the related Servicing Agreement (or if the Company or the related
Servicer does not, the Master Servicer may), promptly furnish to the Custodian,
on behalf of the Trustee, two copies of a certification substantially in the
form of Exhibit G hereto 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 Protected Account maintained by
the Company or the Servicer pursuant to Article V or by the related Servicer
pursuant to the related Servicing Agreement have been or will be so deposited)
and shall request that the Custodian, on behalf of the Trustee, deliver to the
Company or the related Servicer the related Mortgage File. Upon receipt of such
certification and request, the Custodian, on behalf of the Trustee, shall
promptly release the related Mortgage File to the Company or the related
Servicer and the Trustee and Custodian shall have no further responsibility with
regard to such Mortgage File. Upon any such payment in full, the Company or the
related 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 without recourse, representation or
warranty) 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 Protected Account.

                  (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with this Agreement or the
related Servicing Agreement, the Trustee shall execute such documents as shall
be prepared and furnished to the Trustee by the Company, the related Servicer or
the Master 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 Company, the related Servicer or
the Master 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 of Exhibit G (or in a mutually agreeable electronic format which
will, in lieu of a signature on its face, originate from a Servicing Officer),
release the related Mortgage File held in its possession or control to the
Company, the related Servicer or the Master Servicer, as applicable. Such trust
receipt shall obligate the Company, the related Servicer or the Master Servicer
to return the Mortgage File to the Custodian on behalf of the Trustee, when the
need therefor by such Person 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 Company, the related Servicer or
the Master Servicer.

         Section 4.08 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER
SERVICER, COMPANY AND SERVICER TO BE HELD FOR TRUSTEE.

                  (a) The Master Servicer shall transmit and the Company or the
related Servicer (to the extent required by this Agreement or the related
Servicing Agreement) shall transmit to the Trustee or Custodian such documents
and instruments coming into the possession of such Person from time to time as
are required by the terms hereof, or in the case of the related


                                      -72-
<PAGE>

Servicer, the related Servicing Agreement, to be delivered to the Trustee or
Custodian. Any funds received by the Master Servicer, the Company or by the
related Servicer in respect of any Mortgage Loan or which otherwise are
collected by the Master Servicer, the Company or by the related Servicer as
Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall
be held for the benefit of the Trustee and the Certificateholders subject to the
Master Servicer's right to retain or withdraw from the Master Servicer
Collection Account, the Master Servicing Compensation and other amounts provided
in this Agreement, and to the right of the Company and the related Servicer to
retain its Servicing Fee and other amounts as provided in this Agreement or the
related Servicing Agreement. The Master Servicer shall, and (to the extent
provided in this Agreement or the related Servicing Agreement) shall cause the
Company and the related 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 held by the Master Servicer
for and on behalf of the Trustee and the Certificateholders and shall be and
remain the sole and exclusive property of the Trustee; provided, however, that
the Master Servicer, the Company and the related Servicer shall be entitled to
setoff against, and deduct from, any such funds any amounts that are properly
due and payable to the Master Servicer or such Servicer under this Agreement or
the related Servicing Agreement.

         Section 4.09 STANDARD HAZARD INSURANCE AND FLOOD INSURANCE POLICIES.

                  (a) For each Mortgage Loan, the Master Servicer shall enforce
any obligation of the Company and the related Servicer under this Agreement or
the related 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 this Agreement and
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.

                  (b) Pursuant to Sections 5.01, 5.04 and 5.05 any amounts
collected by the Company, the Servicers or the Master Servicer, or by the
Company or the Servicers, under any insurance policies (other than amounts to be
applied to the restoration or repair of the property


                                      -73-
<PAGE>

subject to the related Mortgage or released to the Mortgagor in accordance with
this Agreement or the Servicing Agreements) shall be deposited by the Company in
its Protected Account or by the related Servicer or the Master Servicer into the
Master Servicer Collection Account, subject to withdrawal pursuant to Sections
5.02, 5.04, 5.05 and 5.07, as applicable. Any cost incurred by the Master
Servicer, the Company or the related Servicer in maintaining any such insurance
if the Mortgagor defaults in its obligation to do so shall be added to the
amount owing under the Mortgage Loan where the terms of the Mortgage Loan so
permit; provided, however, that the addition of any such cost shall not be taken
into account for purposes of calculating the distributions to be made to
Certificateholders and shall be recoverable by the Master Servicer, the Company
or the related Servicer pursuant to Sections 5.02, 5.04, 5.05 and 5.07, as
applicable.

         Section 4.10 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.

         The Master Servicer shall (to the extent provided in this Agreement and
the related Servicing Agreement) cause the Company or the Servicer 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. Any proceeds disbursed to the
Master Servicer (or disbursed to the Company or the related Servicer and
remitted to the Master Servicer) in respect of such policies, bonds or contracts
shall be promptly deposited in the Master Servicer Collection 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 deposited (or remitted).

         Section 4.11 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.

                  (a) The Master Servicer shall not take, or permit the Company
or the related Servicer (to the extent such action is prohibited under this
Agreement or the related Servicing Agreement) to 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 Master Servicer, the Company or the
related Servicer, would have been covered thereunder. The Master Servicer shall
use its best reasonable efforts to cause the Company and the related Servicer
(to the extent required under this Agreement and the related Servicing
Agreement) 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 (including any LPMI Policy) in accordance with
the provisions of this Agreement and the related Servicing Agreement, as
applicable. The Master Servicer shall not, and shall not permit the Company or
the related Servicer (to the extent required under this Agreement or the related
Servicing Agreement) to, cancel or refuse to renew any such 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 and the related Servicing Agreement, as
applicable.

                  (b) The Master Servicer agrees to cause the Company and the
related Servicer (to the extent required under this Agreement and the related
Servicing Agreement) to present, on behalf of the Trustee and the
Certificateholders, claims to the insurer under any Primary


                                      -74-
<PAGE>

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 Sections 5.01, 5.04
and 5.05, any amounts collected by the Company or the related Servicer under any
Primary Mortgage Insurance Policies shall be deposited by the Company in its
Protected Account or by the related Servicer in the Master Servicer Collection
Account, subject to withdrawal pursuant to Section 5.04 or 5.05, as applicable.

         Section 4.12 TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE POLICIES
AND DOCUMENTS.

         The Trustee (or the Custodian, as directed by the Trustee), 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 otherwise has fulfilled its obligations under this Agreement, the
Trustee (or its Custodian, if any, as directed by the Trustee) shall also retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement. The Master Servicer shall promptly
deliver or cause to be delivered to the Trustee (or the Custodian, as directed
by the Trustee), 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 portions of the Mortgage File that come
into the possession of the Master Servicer from time to time.

         Section 4.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS.

         The Master Servicer shall cause the Company and the related Servicer
(to the extent required under this Agreement and the related Servicing
Agreement) 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 which no satisfactory arrangements can be
made for collection of delinquent payments, all in accordance with this
Agreement or the related Servicing Agreement.

         Section 4.14 COMPENSATION FOR THE MASTER SERVICER.

         The Master Servicer shall be entitled to the Master Servicing Fee on
each Distribution Date as compensation for the performance of its obligations
hereunder. In addition, the Master Servicer shall be entitled to (i) all income
and gain realized from any investment of funds on Permitted Investments in the
Master Servicer Collection Account and Distribution Account as compensation for
the performance of its obligations hereunder and (ii) any interest remitted by
the related Servicer in connection with a Principal Prepayment in full or
otherwise in excess of amounts required to be remitted to the Master Servicer
Collection Account ("Additional Master Servicering Compensation"). 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.

                                      -75-
<PAGE>

         Section 4.15 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, to the extent provided in this
Agreement or the related Servicing Agreement, cause the Company or the related
Servicer to sell, any REO Property as expeditiously as possible and in
accordance with the provisions of this Agreement and the related Servicing
Agreement, as applicable. Pursuant to its efforts to sell such REO Property, the
Master Servicer shall cause the Company or the related 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, to the extent required by this
Agreement or the related Servicing Agreement, cause the Company or the related
Servicer to deposit all funds collected and received in connection with the
operation of any REO Property in the Protected Account.

                  (c) The Master Servicer and the Company or the related
Servicer, upon the final disposition of any REO Property, shall be entitled to
reimbursement for any related unreimbursed Advances and other unreimbursed
advances as well as any unpaid Master Servicing Fees and Servicing Fees from
Liquidation Proceeds received in connection with the final disposition of such
REO Property; provided, that any such unreimbursed Monthly Advances as well as
any unpaid Master Servicing Fees and Servicing Fees may be reimbursed or paid,
as the case may be, prior to final disposition, out of any net rental income or
other net amounts derived from such REO Property.

                  (d) To the extent provided in this Agreement or the related
Servicing Agreement, the Liquidation Proceeds from the final disposition of the
REO Property, net of any payment to the Master Servicer and the Company or the
related Servicer as provided above shall be deposited in the Protected Account
on or prior to the Determination Date in the month following receipt thereof and
be remitted by wire transfer in immediately available funds to the Master
Servicer for deposit into the related Master Servicer Collection Account on the
next succeeding Remittance Date.

         Section 4.16 ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.

                  (a) The Master Servicer shall deliver to the Securities
Administrator, the Trustee and the Rating Agencies on or before March 1 of each
year, commencing on March 1, 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 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


                                      -76-
<PAGE>

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 Company or any Servicer has failed to
perform any of its duties, responsibilities and obligations under this Agreement
or the related Servicing 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 4.17 ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT. If the
Master Servicer has, during the course of any fiscal 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 Securities Administrator, the Trustee, the Rating
Agencies and the Seller on or before March 1 of each year, commencing on March
1, 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 4.18 REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION.
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 the Trustee
who shall make available a copy of the monthly statement to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30 in each year, the Securities


                                      -77-
<PAGE>

Administrator shall, in accordance with industry standards and only if
instructed by the Depositor, file a Form 15 Suspension Notice with respect to
the Trust Fund, if applicable. Prior to (i) March 15, 2005 and (ii) unless and
until a Form 15 Suspension Notice shall have been filed, prior to March 15 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 Company to be delivered pursuant to this Agreement and each
Servicer, in each case, required to be delivered pursuant to the related
Servicing 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 4.16 and 4.17. 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 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 4.18; 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"). Copies of all reports filed by the
Securities Administrator under the Exchange Act shall be sent to: the Depositor
c/o Bear, Stearns & Co. Inc., Attn: Managing Director-Analysis and Control, One
Metrotech Center North, Brooklyn, New York 11202-3859. Fees and expenses
incurred by the Securities Administrator in connection with this Section 4.18
shall not be reimbursable from the Trust Fund.

         Section 4.19   UCC. The Trustee agrees to file continuation statements
for any Uniform Commercial Code financing statements which the Seller has
informed the Trustee were filed on the Closing Date in connection with the
Trust. The Seller shall file any financing statements or amendments thereto
required by any change in the Uniform Commercial Code.

         Section 4.20   OPTIONAL PURCHASE OF CERTAIN MORTGAGE LOANS.

         With respect to any Mortgage Loans which as of the first day of a
Calendar Quarter is delinquent in payment by 90 days or more or is an REO
Property, EMC shall have the right to purchase any Mortgage Loan from the Trust
which becomes 90 days or more delinquent or becomes an REO Property at a price
equal to the Repurchase Price; provided however (i) that


                                      -78-
<PAGE>

such Mortgage Loan is still 90 days or more delinquent or is an REO Property as
of the date of such purchase and (ii) this purchase option, if not theretofore
exercised, shall terminate on the date prior to the last day of the related
Calendar Quarter. This purchase option, if not exercised, shall not be
thereafter reinstated unless the delinquency is cured and the Mortgage Loan
thereafter again becomes 90 days or more delinquent or becomes an REO Property,
in which case the option shall again become exercisable as of the first day of
the related Calendar Quarter.

         In addition, EMC shall, at its option, purchase any Mortgage Loan from
the Trust if the first Due Date for such Mortgage Loan is subsequent to the
Cut-off Date and the initial Monthly Payment is not made within thirty (30) days
of such Due Date. Such purchase shall be made at a price equal to the Repurchase
Price.

         If at any time EMC remits to the Master Servicer a payment for deposit
in the Master Servicer Collection Account covering the amount of the Repurchase
Price for such a Mortgage Loan, and EMC provides to the Trustee a certification
signed by a Servicing Officer stating that the amount of such payment has been
deposited in the Master Servicer Collection Account, then the Trustee shall
execute the assignment of such Mortgage Loan prepared and delivered to the
Trustee, at the request of EMC, without recourse, representation or warranty, to
EMC which shall succeed to all the Trustee's right, title and interest in and to
such Mortgage Loan, and all security and documents relative thereto. Such
assignment shall be an assignment outright and not for security. EMC will
thereupon own such Mortgage, and all such security and documents, free of any
further obligation to the Trustee or the Certificateholders with respect
thereto.

                                      -79-
<PAGE>

                                   ARTICLE V

                                    ACCOUNTS

         Section 5.01 COLLECTION OF MORTGAGE LOAN PAYMENTS; PROTECTED ACCOUNT.

                  (a) The Company shall make reasonable efforts in accordance
with customary and usual standards of practice of prudent mortgage lenders in
the respective states in which the Mortgaged Properties related to the EMC
Mortgage Loans are located to collect all payments called for under the terms
and provisions of the EMC Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Company may in its
discretion (i) waive any late payment charge and (ii) extend the due dates for
payments due on a Mortgage Note related to an EMC Mortgage Loan for a period not
greater than 125 days. In the event of any such arrangement, the Company shall
make Advances on the related EMC Mortgage Loan during the scheduled period in
accordance with the amortization schedule of such EMC Mortgage Loan without
modification thereof by reason of such arrangements, and shall be entitled to
reimbursement therefor in accordance with Section 6.01. The Company shall not be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note or otherwise or against any
public or governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law. In addition, if (x) an EMC Mortgage Loan is in default or
default is imminent or (y) the Company delivers to the Trustee a certification
addressed to the Trustee, based on the advice of counsel or certified public
accountants, in either case, that have a national reputation with respect to
taxation of REMICs, that a modification of such EMC Mortgage Loan will not
result in the imposition of taxes on or disqualify any of REMIC I, REMIC II or
REMIC III, the Company may, (A) amend the related Mortgage Note to reduce the
Mortgage Rate applicable thereto, provided that such reduced Mortgage Rate shall
in no event be lower than 5.00% with respect to any EMC Mortgage Loan and (B)
amend any Mortgage Note related to an EMC Mortgage Loan to extend to the
maturity thereof.

         In accordance with the standards of the first paragraph of Section
3.01, the Company shall not waive (or permit a sub-servicer to waive) any
Prepayment Charge related to an EMC Mortgage Loan unless: (i) the enforceability
thereof shall have been limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally,
(ii) the enforcement thereof is illegal, or any local, state or federal agency
has threatened legal action if the prepayment penalty is enforced, (iii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment or (iv) such waiver is standard
and customary in servicing similar Mortgage Loans and relates to a default or a
reasonably foreseeable default and would, in the reasonable judgment of the
Company, maximize recovery of total proceeds taking into account the value of
such Prepayment Charge and the related EMC Mortgage Loan. If a Prepayment Charge
is waived, but does not meet the standards described above, then the Company is
required to pay the amount of such waived Prepayment Charge, for the benefit of
the Class P Certificates, by remitting such amount to the Master Servicer by the
Remittance Date.

                                      -80-
<PAGE>

                  (b) The Company shall establish and maintain a Protected
Account (which shall at all times be an Eligible Account) with a depository
institution in the name of the Company for the benefit of the Trustee on behalf
of the Certificateholders and designated "U.S. Bank National Association, in
trust for registered holders of Bear Stearns Asset Backed Securities I LLC,
Asset-Backed Certificates Series 2004-AC7". The Company shall deposit or cause
to be deposited into the Protected Account on a daily basis within one Business
Day of receipt, except as otherwise specifically provided herein, the following
payments and collections remitted by subservicers or received by it in respect
of the EMC Mortgage Loans subsequent to the Cut-off Date (other than in respect
of principal and interest due on the EMC Mortgage Loans on or before the Cut-off
Date) and the following amounts required to be deposited hereunder:

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

                  (ii) all payments on account of interest on the EMC Mortgage
         Loans net of the related Servicing Fee permitted under Section 3.10 and
         LPMI Fees, if any;

                  (iii) all Liquidation Proceeds and Insurance Proceeds with
         respect to any EMC Mortgage Loans, other than proceeds to be applied to
         the restoration or repair of the Mortgaged Property or released to the
         Mortgagor in accordance with the Company's normal servicing procedures;

                  (iv) any amount required to be deposited by the Company
         pursuant to Section 5.01(c) in connection with any losses on Permitted
         Investments;

                  (v) any amounts required to be deposited by the Company
         pursuant to Section 3.05;

                  (vi) any Prepayment Charges collected on the EMC Mortgage
         Loans; and

                  (vii) any other amounts required to be deposited hereunder.

         The foregoing requirements for remittance by the Company into the
Protected 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 or assumption fees, if collected, need not be remitted by the
Company. In the event that the Company shall remit any amount not required to be
remitted and not otherwise subject to withdrawal pursuant to Section 5.02, it
may at any time withdraw or direct the institution maintaining the Protected
Account, to withdraw such amount from the Protected Account, any provision
herein to the contrary notwithstanding. Such withdrawal or direction may be
accomplished by delivering written notice thereof to the institution maintaining
the Protected Account, that describes the amounts deposited in error in the
Protected Account. The Company shall maintain adequate records with respect to
all withdrawals made pursuant to this Section. All funds deposited in the
Protected Account shall be held in trust for the Certificateholders until
withdrawn in accordance with Section 5.02.

                  (c) The institution that maintains the Protected Account shall
invest the funds in the Protected Account, in the manner directed by the
Company, in Permitted Investments


                                      -81-
<PAGE>

which shall mature not later than the Remittance Date and shall not be sold or
disposed of prior to its maturity. All such Permitted Investments shall be made
in the name of the Trustee, for the benefit of the Certificateholders. All
income and gain net of any losses realized from any such investment shall be for
the benefit of the Company as servicing compensation and shall be remitted to it
monthly as provided herein. The amount of any losses incurred in the Protected
Account in respect of any such investments shall be deposited by the Company
into the Protected Account, out of the Company's own funds.

                  (d) The Company shall give at least 30 days advance notice to
the Trustee, the Seller, the Master Servicer, each Rating Agency and the
Depositor of any proposed change of location of the Protected Account prior to
any change thereof.

         Section 5.02 PERMITTED WITHDRAWALS FROM THE PROTECTED ACCOUNT.

                  (a) The Company may from time to time make withdrawals from
the Protected Account for the following purposes:

                  (i) to pay itself (to the extent not previously paid to or
         withheld by the Company), as servicing compensation in accordance with
         Section 3.10, that portion of any payment of interest that equals the
         Servicing Fee for the period with respect to which such interest
         payment was made, and, as additional servicing compensation, those
         other amounts set forth in Section 3.10;

                  (ii) to reimburse the Company for Advances made by it with
         respect to the Mortgage Loans, provided, however, that the Company's
         right of reimbursement pursuant to this subclause (ii) shall be limited
         to amounts received on particular EMC Mortgage Loan(s) (including, for
         this purpose, Liquidation Proceeds and Insurance Proceeds) that
         represent late recoveries of payments of principal and/or interest on
         such particular EMC Mortgage Loan(s) in respect of which any such
         Advance was made;

                  (iii) to reimburse the Company for any previously made portion
         of a Servicing Advance or an Advance made by the Company that, in the
         good faith judgment of the Company, will not be ultimately recoverable
         by it from the related Mortgagor, any related Liquidation Proceeds,
         Insurance Proceeds or otherwise (a "Nonrecoverable Advance"), to the
         extent not reimbursed pursuant to clause (ii) or clause (v);

                  (iv) to reimburse the Company from Insurance Proceeds for
         Insured Expenses covered by the related Insurance Policy;

                  (v) to pay the Company any unpaid Servicing Fees and to
         reimburse it for any unreimbursed Servicing Advances, provided,
         however, that the Company's right to reimbursement for Servicing
         Advances pursuant to this subclause (v) with respect to any EMC
         Mortgage Loan shall be limited to amounts received on particular EMC
         Mortgage Loan(s) (including, for this purpose, Liquidation Proceeds,
         Insurance Proceeds and purchase and repurchase proceeds) that represent
         late recoveries of the payments for which such Servicing Advances were
         made;

                                      -82-
<PAGE>

                  (vi) to pay to the Seller, the Depositor or itself, as
         applicable, with respect to each EMC Mortgage Loan or property acquired
         in respect thereof that has been purchased pursuant to Section 2.02,
         2.03 or 4.20 of this Agreement, all amounts received thereon and not
         taken into account in determining the related Stated Principal Balance
         of such repurchased EMC Mortgage Loan;

                  (vii) to pay any expenses recoverable by the Company pursuant
         to Section 8.04 of this Agreement;

                  (viii) to withdraw pursuant to Section 5.01 any amount
         deposited in the Protected Account and not required to be deposited
         therein; and

                  (ix) to clear and terminate the Protected Account upon
         termination of this Agreement pursuant to Section 11.01 hereof.

         In addition, no later than 1:00 p.m. Eastern time on the Remittance
Date, the Company shall withdraw from the Protected Account and remit to the
Master Servicer the amount required to be withdrawn therefrom pursuant to
Section 5.05 hereof. With respect to any remittance received by the Master
Servicer from EMC after the date on which such remittance was due, EMC shall pay
to the Master Servicer interest on any such late remittance at an annual rate
equal to the prime rate announced to be in effect from time to time as published
as the average rate in The Wall Street Journal (Northeast Edition), plus two
percentage points, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be deposited in EMC's Protected Account by
EMC on the date such late payment is made and shall cover the period commencing
with the day following the date on which such remittance was due and ending with
the Business Day on which such remittance is made, both inclusive. Such interest
shall be remitted along with the distribution payable on the next succeeding
Remittance Date. The payment by EMC of any such interest shall not be deemed an
extension of time for payment or a waiver of any Event of Default with respect
to EMC.

         The Company shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Protected Account pursuant to subclauses (i), (ii), (iv), (v) and (vi)
above. Prior to making any withdrawal from the Protected Account pursuant to
subclause (iii), the Company shall deliver to the Trustee an Officer's
Certificate of a Servicing Officer indicating the amount of any previous Advance
or Servicing Advance determined by the Company to be a Nonrecoverable Advance
and identifying the related EMC Mortgage Loan(s), and their respective portions
of such Nonrecoverable Advance.

         Section 5.03 REPORTS TO MASTER SERVICER.

         On or before the tenth calendar day of each month, the Company shall
furnish to the Master Servicer electronically in a format acceptable to the
Master Servicer loan accounting reports in the investor's assigned loan number
order to document the payment activity on each EMC Mortgage Loan on an
individual mortgage loan basis. With respect to each month, such loan accounting
reports shall contain the following:

                                      -83-
<PAGE>

                  (i) with respect to each Scheduled Payment (on both an actual
         and scheduled basis with respect to mortgage loan balances and on an
         actual basis with respect to paid-through dates), the amount of such
         remittance allocable to principal (including a separate breakdown of
         any Principal Prepayment, including the amount of any Prepayment
         Interest Shortfall);

                  (ii) with respect to each Monthly Payment, the amount of such
         remittance allocable to scheduled interest;

                  (iii) the amount of servicing compensation received by the
         Company during the prior calendar month;

                  (iv) the aggregate scheduled principal balance of the EMC
         Mortgage Loans;

                  (v) the aggregate amount of Advances made by the Company
         pursuant to Section 6.01;

                  (vi) the aggregate of any expenses reimbursed to the Company
         during the prior calender month pursuant to Section 5.02;

                  (vii) the number and aggregate outstanding principal balances
         of EMC Mortgage Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89
         days, (3) 90 days or more; (b) as to which foreclosure has commenced;
         and (c) as to which REO Property has been acquired; and

                  (viii) the amount of any Prepayment Charges collected by the
         Company and the amount of Prepayment Charges paid by the Company in
         connection with a waiver that is not permitted under this Agreement.

         Section 5.04 COLLECTION OF TAXES; ASSESSMENTS AND SIMILAR ITEMS; ESCROW
ACCOUNTS.

         With respect to each EMC Mortgage Loan, to the extent required by the
related Mortgage Note, the Company shall establish and maintain one or more
accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors (or advances by the Company) for the payment of
taxes, assessments, hazard insurance premiums or comparable items for the
account of the Mortgagors. Nothing herein shall require the Company to compel a
Mortgagor to establish an Escrow Account in violation of applicable law.

         Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Company out of related collections for any payments made with respect to
each EMC Mortgage Loan pursuant to Section 3.01 (with respect to taxes and
assessments and insurance premiums) and Section 3.05 (with respect to hazard
insurance), to refund to any Mortgagors for any EMC Mortgage Loans any sums as
may be determined to be overages, to pay interest, if required by law or the
terms of the related Mortgage or Mortgage Note, to such Mortgagors on balances


                                      -84-
<PAGE>

in the Escrow Account or to clear and terminate the Escrow Account at the
termination of this Agreement in accordance with Section 11.01 thereof. The
Escrow Account shall not be a part of the Trust Fund.

         Section 5.05 SERVICER PROTECTED ACCOUNTS. (a) The Master Servicer shall
enforce the obligation of the Company and the Servicers to establish and
maintain a Protected Account in accordance with this Agreement and the Servicing
Agreements, with records to be kept with respect thereto on a Mortgage Loan by
Mortgage Loan basis, into which accounts shall be deposited within one Business
Day (or as of such other time specified in the Servicing Agreements) of receipt
all collections of principal and interest on any Mortgage Loan and with respect
to any REO Property received by the Company or the related Servicer, including
Principal Prepayments, Insurance Proceeds, Liquidation Proceeds, and advances
made from the Company's or such Servicer's own funds (less servicing
compensation as permitted by this Agreement or the related Servicing Agreement)
and all other amounts to be deposited in the Protected Accounts. Each of the
Company and the Servicers are hereby authorized to make withdrawals from and
deposits to the related Protected Account for purposes required or permitted by
this Agreement. To the extent provided in this Agreement or any Servicing
Agreement, the Protected Account shall be held in a Designated Depository
Institution and segregated on the books of such institution in the name of the
Trustee for the benefit of Certificateholders.

                  (b) To the extent provided in this Agreement or any Servicing
Agreement, amounts on deposit in a Protected Account may be invested in
Permitted Investments in the name of the Trustee for the benefit of
Certificateholders and, except as provided in the preceding paragraph, not
commingled with any other funds, such Permitted Investments to mature, or to be
subject to redemption or withdrawal, no later than the date on which such funds
are required to be withdrawn for deposit in the Master Servicer Collection
Account, and shall be held until required for such deposit. The income earned
from Permitted Investments made pursuant to this Section 5.04 shall be paid to
the Company or the related Servicer under this Agreement or the related
Servicing Agreement, and the risk of loss of moneys required to be distributed
to the Certificateholders resulting from such investments shall be borne by and
be the risk of the Company or the related Servicer, as the case may be. The
Company or the related Servicer (to the extent provided in this Agreement or the
related Servicing Agreement) shall deposit the amount of any such loss in the
Protected Account within two Business Days of receipt of notification of such
loss but not later than the second Business Day prior to the Distribution Date
on which the moneys so invested are required to be distributed to the
Certificateholders.

                  (c) To the extent provided in this Agreement or the related
Servicing Agreement and subject to this Article V, on or before each Remittance
Date, the Company or the related Servicer shall withdraw or shall cause to be
withdrawn from its Protected Account and shall immediately deposit or cause to
be deposited in the Master Servicer Collection Account amounts representing the
following collections and payments (other than with respect to principal of or
interest on the Mortgage Loans due on or before the Cut-off Date):

                  (i) Scheduled Payments on the Mortgage Loans received or any
         related portion thereof advanced by the Company or the related Servicer
         pursuant to the related


                                      -85-
<PAGE>

         Servicing Agreement which were due on or before the related Due Date,
         net of the amount thereof comprising the Servicing Fees;

                  (ii) Full Principal Prepayments and any Liquidation Proceeds
         received by the Company or the related Servicer with respect to such
         Mortgage Loans in the related Prepayment Period, with interest to the
         date of prepayment or liquidation, net of the amount thereof comprising
         the Servicing Fees and LPMI Fees, if any;

                  (iii) Partial Principal Prepayments received by the Company or
         the related Servicer for such Mortgage Loans in the related Prepayment
         Period;

                  (iv) Any amount to be used as an Advance; and

                  (v) The amount of any Prepayment Charges collected with
         respect to the Mortgage Loans and the amount of any Prepayment Charges
         paid by the Company or the related Servicer in connection with the
         waiver of a Prepayment Charge in a manner that is not permitted under
         this Agreement or the related Servicing Agreement.

                  (d) Withdrawals may be made from a Protected Account by the
Company as described in Section 5.02 hereof and by the Master Servicer or the
related Servicer only to make remittances as provided in Section 5.05(c), 5.06
and 5.07; to reimburse the Master Servicer or the Servicer for Advances which
have been recovered by subsequent collection from the related Mortgagor; to
remove amounts deposited in error; to remove fees, charges or other such amounts
deposited on a temporary basis; or to clear and terminate the account at the
termination of this Agreement in accordance with Section 11.01. As provided in
Sections 5.05(c) and 5.06(b) certain amounts otherwise due to the related
Servicer may be retained by the related Servicer and need not be deposited in
the Master Servicer Collection Account.

         Section 5.06 MASTER SERVICER COLLECTION ACCOUNT. (a) The Master
Servicer shall establish and maintain in the name of the Trustee, for the
benefit of the Certificateholders, the Master Servicer Collection Account which
shall be an Eligible Account. The Master Servicer will deposit in the Master
Servicer Collection Account as identified by the Master Servicer and as received
by the Master Servicer, the following amounts:

                  (i) Any Advance and any Compensating Interest Payments;

                  (ii) Any Insurance Proceeds, Liquidation Proceeds or
         Subsequent Recoveries received by or on behalf of the Master Servicer
         or which were not deposited in a Protected Account;

                  (iii) The Repurchase Price with respect to any Mortgage Loans
         purchased by the Seller or Section 2.02 or 2.03, any amounts which are
         to be treated pursuant to Section 2.04 of this Agreement as the payment
         of such a Repurchase Price, the Repurchase Price with respect to any
         Mortgage Loans purchased by EMC pursuant to Section 4.20, and all
         proceeds of any Mortgage Loans or property acquired with respect
         thereto repurchased by the Seller or its designee pursuant to Section
         11.01;

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<PAGE>

                  (iv) Any amounts required to be deposited with respect to
         losses on investments of deposits in an Account; and

                  (v) Any other amounts received by or on behalf of the Master
         Servicer or the Trustee and required to be deposited in the Master
         Servicer Collection Account pursuant to this Agreement.

                  (b) All amounts deposited to the Master Servicer Collection
Account shall be held by the Master Servicer in the name of the Trustee in trust
for the benefit of the Certificateholders in accordance with the terms and
provisions of this Agreement. The requirements for crediting the Master Servicer
Collection Account or the Distribution 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 or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges, need not be credited by the Master Servicer or the related
Servicer to the Distribution Account or the Master Servicer Collection Account,
as applicable. In the event that the Master Servicer shall deposit or cause to
be deposited to the Distribution Account any amount not required to be credited
thereto, the Trustee, upon receipt of a written request therefor signed by a
Servicing Officer of the Master Servicer, shall promptly transfer such amount to
the Master Servicer, any provision herein to the contrary notwithstanding.

                  (c) The amount at any time credited to the Master Servicer
Collection Account may be invested, in the name of the Trustee, or its nominee,
for the benefit of the Certificateholders, in Permitted Investments or be held
in cash as directed by Master Servicer. All Permitted Investments shall mature
or be subject to redemption or withdrawal on or before, and shall be held until,
the next succeeding Distribution Account Deposit Date. Any and all investment
earnings from the Master Servicer Collection Account shall be paid to the Master
Servicer. The risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the Master Servicer. The Master Servicer shall deposit the amount of any
such loss in the Master Servicer Collection Account within two Business Days of
receipt of notification of such loss but not later than the second Business Day
prior to the Distribution Date on which the moneys so invested are required to
be distributed to the Certificateholders.

         Section 5.07 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE MASTER
SERVICER COLLECTION ACCOUNT. (a) The Master Servicer will, from time to time on
demand of the Master Servicer or the Securities Administrator, make or cause to
be made such withdrawals or transfers from the Master Servicer Collection
Account as the Master Servicer has designated for such transfer or withdrawal
pursuant to this Agreement and the related Servicing Agreement. The Master
Servicer may clear and terminate the Master Servicer Collection Account pursuant
to Section 11.01 and remove amounts from time to time deposited in error.

                  (b) On an ongoing basis, the Master Servicer shall withdraw
from the Master Servicer Collection Account to pay itself as provided in Section
4.14 and to pay any expenses, costs and liabilities recoverable by the Trustee,
the Master Servicer, the Custodian or the Securities Administrator pursuant to
Sections 4.03, 8.03, 8.04 and 10.05; provided however, that


                                      -87-
<PAGE>

the Master Servicer shall be obligated to pay from its own funds any amounts
which it is required to pay under Section 8.03(a).

                  (c) In addition, on or before each Distribution Account
Deposit Date, the Master Servicer shall deposit in the Distribution Account (or
remit to the Trustee for deposit therein) any Advances required to be made by
the Master Servicer with respect to the Mortgage Loans.

                  (d) No later than 3:00 p.m. New York time on each Distribution
Account Deposit Date, the Master Servicer will transfer all available funds on
deposit in the Master Servicer Collection Account with respect to the related
Distribution Date to the Trustee for deposit in the Distribution Account.

         Section 5.08 DISTRIBUTION ACCOUNT.

                  (a) The Trustee shall establish and maintain in the name of
the Trustee, for the benefit of the Certificateholders, the Distribution Account
as a segregated trust account or accounts.

                  (b) All amounts deposited to the Distribution Account shall be
held by the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.

                  (c) The Distribution Account shall constitute an Eligible
Account of the Trust Fund segregated on the books of the Trustee and held by the
Trustee and the Distribution Account and the funds deposited therein shall not
be subject to, and shall be protected from, all claims, liens, and encumbrances
of any creditors or depositors of the Trustee (whether made directly, or
indirectly through a liquidator or receiver of the Trustee). The amount at any
time credited to the Distribution Account may be, as directed by the Master
Servicer, held either uninvested in a trust or deposit account of the Trustee
with no liability for interest or other compensation thereof, except as
otherwise agreed in writing with the Master Servicer, or invested in the name of
the Trustee, in such Permitted Investments as may be selected by the Master
Servicer on such direction which mature not later than the Business Day next
preceding the succeeding Distribution Date, except if such Permitted Investment
is an obligation of or is managed by the institution that maintains such fund or
account, then such Permitted Investment shall mature not later than such
Distribution Date. Permitted Investments in respect of the Distribution Account
shall not be sold or disposed of prior to their maturity. All investment
earnings on amounts on deposit in the Distribution Account or benefit from funds
uninvested therein from time to time shall be for the account of the Master
Servicer. The Master Servicer shall be permitted to receive distribution of any
and all investment earnings from the Distribution Account on each Distribution
Date. If there is any loss on a Permitted Investment or demand deposit, the
Master Servicer shall deposit the amount of the loss in the Distribution
Account. With respect to the Distribution Account and the funds deposited
therein, the Trustee shall take such action as may be necessary to ensure that
the Certificateholders shall be entitled to the priorities afforded to such a
trust account (in addition to a claim against the estate of the Trustee) as
provided by 12 U.S.C. ss. 92a(e), and applicable regulations pursuant thereto,
if applicable, or any applicable comparable state statute applicable to state
chartered banking corporations.

                                      -88-
<PAGE>

         Section 5.09 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION
ACCOUNT.

                  (a) The Trustee will, from time to time on demand of the
Master Servicer or the Securities Administrator, make or cause to be made such
withdrawals or transfers from the Distribution Account as the Master Servicer
has designated for such transfer or withdrawal pursuant to this Agreement or any
Servicing Agreement or as the Securities Administrator has instructed hereunder
for the following purposes (limited in the case of amounts due the Master
Servicer to those not withdrawn from the Master Servicer Collection Account in
accordance with the terms of this Agreement; provided that the Trustee shall not
be responsible for such determination and may rely on the Master Servicer's or
the Securities Administrator's instructions under this Section 5.09):

                  (i) to reimburse the Master Servicer, the Company or the
related Servicer for any Advance or Servicing Advance of its own funds, the
right of the Master Servicer, the Company or the related Servicer to
reimbursement pursuant to this subclause (i) being limited to amounts received
on a particular Mortgage Loan (including, for this purpose, the Repurchase Price
therefor, Insurance Proceeds and Liquidation Proceeds) which represent late
payments or recoveries of the principal of or interest on such Mortgage Loan
respecting which such Advance or Servicing Advance was made;

                  (ii) to reimburse the Master Servicer, the Company or the
related Servicer from Insurance Proceeds or Liquidation Proceeds relating to a
particular Mortgage Loan for amounts expended by the Master Servicer, the
Company or the related Servicer in good faith in connection with the restoration
of the related Mortgaged Property which was damaged by an uninsured cause or in
connection with the liquidation of such Mortgage Loan;

                  (iii) to reimburse the Master Servicer, the Company or the
related Servicer from Insurance Proceeds relating to a particular Mortgage Loan
for insured expenses incurred with respect to such Mortgage Loan and to
reimburse the Master Servicer, the Company or the related Servicer from
Liquidation Proceeds from a particular Mortgage Loan for Liquidation Expenses
incurred with respect to such Mortgage Loan; provided that the Master Servicer
shall not be entitled to reimbursement for Liquidation Expenses with respect to
a Mortgage Loan to the extent that (i) any amounts with respect to such Mortgage
Loan were paid as Excess Liquidation Proceeds pursuant to clause (x) of this
Subsection (a) to the Master Servicer; and (ii) such Liquidation Expenses were
not included in the computation of such Excess Liquidation Proceeds;

                  (iv) to reimburse the Master Servicer, the Company or a
Servicer for advances of funds pursuant to this Agreement or the related
Servicing Agreement, and the right to reimbursement pursuant to this subclause
being limited to amounts received on the related Mortgage Loan (including, for
this purpose, the Repurchase Price therefor, Insurance Proceeds and Liquidation
Proceeds) which represent late recoveries of the payments for which such
advances were made;


                                      -89-
<PAGE>


                  (v) to reimburse the Master Servicer, the Company or a
Servicer for any Advance or advance, after a Realized Loss has been allocated
with respect to the related Mortgage Loan if the Advance or advance has not been
reimbursed pursuant to clauses (i) and (vi);

                  (vi) to pay the Master Servicer as set forth in Section 4.14;

                  (vii) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections 4.03,
8.04(c) and (d) and 12.02 or otherwise reimbursable to it pursuant to this
Agreement;

                  (viii) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds to the extent not retained by the
Company or the related Servicer;

                  (ix) to reimburse or pay the Company or the related Servicer
any such amounts as are due thereto under this Agreement or the related
Servicing Agreement and have not been retained by or paid to the Company or the
related Servicer, to the extent provided herein and in the related Servicing
Agreement;

                  (x) to reimburse the Trustee, the Custodian or the Securities
Administrator for expenses, costs and liabilities incurred by or reimbursable to
it pursuant to this Agreement (to the extent not reimbursed from the Master
Servicer Collection Account in accordance with Section 5.07);

                  (xi) to remove amounts deposited in error; and

                  (xii) to clear and terminate the Distribution Account pursuant
to Section 11.01.

                  (b) The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
accounting for any reimbursement from the Distribution Account pursuant to
subclauses (i) through (iv), inclusive, and (vi) or with respect to any such
amounts which would have been covered by such subclauses had the amounts not
been retained by the Master Servicer without being deposited in the Distribution
Account under Section 5.07.

                  (c) On each Distribution Date, the Trustee shall distribute
the Available Funds to the extent of funds on deposit in the Distribution
Account to the holders of the Certificates in accordance with the Remittance
Report upon which the Trustee may conclusively rely.

                                      -90-
<PAGE>

                                   ARTICLE VI

                           DISTRIBUTIONS AND ADVANCES

         Section 6.01 ADVANCES.

                  (a) The Company shall make an Advance with respect to any EMC
Mortgage Loan and deposit such Advance in the Master Servicer Collection Account
no later than 1:00 p.m. Eastern time on the Remittance Date in immediately
available funds. The Master Servicer shall cause the related Servicer to remit
any such Advance required pursuant to the terms of the related Servicing
Agreement. The Company or the related Servicer, as applicable, shall be
obligated to make any such Advance only to the extent that such advance would
not be a Nonrecoverable Advance. If the Company or the related Servicer shall
have determined that it has made a Nonrecoverable Advance or that a proposed
Advance or a lesser portion of such Advance would constitute a Nonrecoverable
Advance, the Company or the related Servicer, as the case may be, shall deliver
(i) to the Trustee for the benefit of the Certificateholders funds constituting
the remaining portion of such Advance, if applicable, and (ii) to the Depositor,
the Master Servicer, each Rating Agency and the Trustee an Officer's Certificate
setting forth the basis for such determination.

         In lieu of making all or a portion of such Advance from its own funds,
the Company may (i) cause to be made an appropriate entry in its records
relating to the Protected Account that any Amounts Held for Future Distribution
has been used by the Company in discharge of its obligation to make any such
Advance and (ii) transfer such funds from the Protected Account to the
Distribution Account. Any funds so applied and transferred shall be replaced by
the Company by deposit in the Distribution Account, no later than the close of
business on the Remittance Date immediately preceding the Distribution Date on
which such funds are required to be distributed pursuant to this Agreement.

         The Company shall be entitled to be reimbursed from the Protected
Account for all Advances of its own funds made pursuant to this Section as
provided in Section 5.02. The obligation to make Advances with respect to any
EMC Mortgage Loan shall continue until such EMC Mortgage Loan is paid in full or
the related Mortgaged Property or related REO Property has been liquidated or
until the purchase or repurchase thereof (or substitution therefor) from the
Trust Fund pursuant to any applicable provision of this Agreement, except as
otherwise provided in this Section 6.01.

                  (b) If the Scheduled Payment on a Mortgage Loan that was due
on a related Due Date and is delinquent other than as a result of application of
the Relief Act and for which the Company or the related Servicer was required to
make an Advance pursuant to this Agreement or the related Servicing Agreement
exceeds the amount deposited in the Master Servicer Collection Account which
will be used for an Advance with respect to such Mortgage Loan, the Master
Servicer will deposit in the Master Servicer Collection Account not later than
the Distribution Account Deposit Date immediately preceding the related
Distribution Date an amount equal to such deficiency, net of the Master
Servicing Fee and the Servicing Fee for such Mortgage Loan except to the extent
the Master Servicer determines any such Advance to be nonrecoverable from
Liquidation Proceeds, Insurance Proceeds or future payments on the


                                      -91-
<PAGE>

Mortgage Loan for which such Advance was made. Subject to the foregoing, the
Master Servicer shall continue to make such Advances through the date that the
Company or the related Servicer is required to do so under this Agreement or the
related Servicing Agreement, as applicable. If applicable, on the Distribution
Account Deposit Date, the Master Servicer shall present an Officer's Certificate
to the Trustee (i) stating that the Master Servicer elects not to make an
Advance in a stated amount and (ii) detailing the reason it deems the advance to
be nonrecoverable.

         Subject to and in accordance with the provisions of Article IX hereof,
in the event the Master Servicer fails to make such Advance, then the Trustee,
as Successor Master Servicer, shall be obligated to make such Advance, subject
to the provisions of this Section 6.01.

         Section 6.02 COMPENSATING INTEREST PAYMENTS.

                  (a) In the event that there is a Prepayment Interest Shortfall
arising from a voluntary Principal Prepayment in part or in full by the
Mortgagor with respect to any EMC Mortgage Loan, the Company shall, to the
extent of the Servicing Fee for such Distribution Date, deposit into the Master
Servicer Collection Account, as a reduction of the Servicing Fee for such
Distribution Date, no later than the close of business on the Remittance Date
immediately preceding such Distribution Date, an amount equal to the Prepayment
Interest Shortfall; and in case of such deposit, the Company shall not be
entitled to any recovery or reimbursement from the Depositor, the Trustee, the
Seller, the Master Servicer, the Securities Administrator, the Trust Fund or the
Certificateholders.

                  (b) The Master Servicer shall cause each Servicer under the
related Servicing Agreement to remit any required Compensating Interest Payments
to the Master Servicer Collection Account on the Remittance Date.

                  (c) The Master Servicer shall be required to remit the amount
of any such Prepayment Interest Shortfalls, to the extent of the Master
Servicing Compensation for such Distribution Date, in the event the Company or
the related Servicer is required to make such payment but fails to do so.

         Section 6.03 REMIC DISTRIBUTIONS.

         On each Distribution Date the Securities Administrator, as agent for
the Trustee, shall be deemed to make distributions (i) to the REMIC I Regular
Interests in accordance with Section 6.07 hereof and (ii) to the REMIC II
Regular Interests in accordance with Section 6.08 hereof.

         Section 6.04 DISTRIBUTIONS.

(a) On each Distribution Date, the Available Funds for such Distribution Date
shall be withdrawn by the Trustee to the extent of funds on deposit in the
Distribution Account and distributed as directed in accordance with the
Remittance Report for such Distribution Date, in the following order of
priority:

                                      -92-
<PAGE>

                  FIRST, from Interest Funds, to pay accrued and unpaid interest
on the Offered Certificates as follows:

                  1. To the holders of the Senior Certificates, the Monthly
         Interest Distributable Amount for each such Class for such Distribution
         Date, on a pro rata basis based on the entitlement of each such Class;

                  2. To the holders of the Class M-1 Certificates, the Monthly
         Interest Distributable Amount for such Class for such Distribution
         Date;

                  3. To the holders of the Class M-2 Certificates, the Monthly
         Interest Distributable Amount for such Class for such Distribution
         Date;

                  4. To the holders of the Class M-3 Certificates, the Monthly
         Interest Distributable Amount for such Class for such Distribution
         Date;

                  5. To the holders of the Class B-1 Certificates, the Monthly
         Interest Distributable Amount for such Class for such Distribution
         Date;

                  6. To the holders of the Class B-2 Certificates, the Monthly
         Interest Distributable Amount for such Class for such Distribution
         Date; and

                  7. To the holders of the Class B-3 Certificates, the Monthly
         Interest Distributable Amount for such Class for such Distribution
         Date.

         Any Excess Spread to the extent necessary to meet a level of
overcollateralization equal to the Overcollateralization Target Amount will be
the Extra Principal Distribution Amount and will be included as part of the
Principal Distribution Amount. Any Remaining Excess Spread will be applied as
Net Monthly Excess Cashflow and distributed pursuant to clause THIRD below.

         On any Distribution Date, any Unpaid Interest Shortfalls will be
allocated to the Certificates as set forth in the definition of "Monthly
Interest Distributable Amount" in Section 1.01.

                  SECOND, the Principal Distribution Amount for any Distribution
Date shall be distributed to the Offered Certificates (other than the Class A-3
Certificates), on a pro rata basis, based on the Certificate Principal Balance
of each such Class, until the Certificate Principal Balances thereof have been
reduced to zero.

                  THIRD, on each Distribution Date after the payment of interest
and principal to the Certificates as described in clauses FIRST and SECOND
above, any Net Monthly Excess Cashflow for such Distribution Date will be
distributed as follows:

                  1. To the holders of the Senior Certificates, on a pro rata
         basis, based on the entitlement of each such Class, then to the holders
         of the Class M-1 Certificates, then to the holders of the Class M-2
         Certificates, then to the holders of the Class M-3 Certificates, then
         to the holders of the Class B-1 Certificates, then to the holders of


                                      -93-
<PAGE>

         the Class B-2 Certificates and then to the holders of the Class B-3
         Certificates, any Unpaid Interest Shortfall for such Classes of
         Certificates on such Distribution Date, to the extent not previously
         reimbursed;

                  2. To the holders of the Class M-1 Certificates, in an amount
         equal to the Applied Realized Loss Amount for such Class;

                  3. To the holders of the Class M-2 Certificates, in an amount
         equal to the Applied Realized Loss Amount for such Class;

                  4. To the holders of the Class M-3 Certificates, in an amount
         equal to the Applied Realized Loss Amount for such Class;

                  5. To the holders of the Class B-1 Certificates, in an amount
         equal to the Applied Realized Loss Amount for such Class;

                  6. To the holders of the Class B-2 Certificates, in an amount
         equal to the Applied Realized Loss Amount for such Class;

                  7. To the holders of the Class B-3 Certificates, in an amount
         equal to the Applied Realized Loss Amount for such Class;

                  8. From amounts otherwise distributable to the Class C
         Certificates, to the Net WAC Reserve Fund, in respect of the Senior
         Certificates, on a pro rata basis, the Net WAC Rate Carryover Amount
         for each such Class for such Distribution Date or any prior
         Distribution Dates to the extent unpaid;

                  9. From amounts otherwise distributable to the Class C
         Certificates, to the Net WAC Reserve Fund, in respect of the Class M-1
         Certificates, the Net WAC Rate Carryover Amount for such Class for such
         Distribution Date or any prior Distribution Dates to the extent unpaid;

                  10. From amounts otherwise distributable to the Class C
         Certificates, to the Net WAC Reserve Fund, in respect of the Class M-2
         Certificates, the Net WAC Rate Carryover Amount for such Class for such
         Distribution Date or any prior Distribution Dates to the extent unpaid;

                  11. From amounts otherwise distributable to the Class C
         Certificates, to the Net WAC Reserve Fund, in respect of the Class M-3
         Certificates, the Net WAC Rate Carryover Amount for such Class for such
         Distribution Date or any prior Distribution Dates to the extent unpaid;

                  12. From amounts otherwise distributable to the Class C
         Certificates, to the Net WAC Reserve Fund, in respect of the Class B-1
         Certificates, the Net WAC Rate Carryover Amount for such Class for such
         Distribution Date or any prior Distribution Dates to the extent unpaid;

                                      -94-
<PAGE>

                  13. From amounts otherwise distributable to the Class C
         Certificates, to the Net WAC Reserve Fund, in respect of the Class B-2
         Certificates, the Net WAC Rate Carryover Amount for such Class for such
         Distribution Date or any prior Distribution Dates to the extent unpaid;

                  14. From amounts otherwise distributable to the Class C
         Certificates, to the Net WAC Reserve Fund, in respect of the Class B-3
         Certificates, the Net WAC Rate Carryover Amount for such Class for such
         Distribution Date or any prior Distribution Dates to the extent unpaid;

                  15. To the holders of the Class C Certificates, the Class C
         Distribution Amount less amounts distributed pursuant to items 8
         through 14 above; and

                  16. To the holders of the Class R-3 Certificates, any amount
         of Net Monthly Excess Cashflow remaining after distributions pursuant
         to items 1 through 15 of this clause THIRD.

         In addition, notwithstanding the foregoing, on any Distribution Date
after the Distribution Date on which the Certificate Principal Balance of a
Class of Offered Certificates has been reduced to zero, that Class of Offered
Certificates will be retired and will no longer be entitled to distributions,
including distributions in respect of Unpaid Interest Shortfalls or Net WAC Rate
Carryover Amounts.

                  (b) On each Distribution Date, all amounts representing
Prepayment Charges in respect of the Mortgage Loans received during the related
Prepayment Period and deposited in the Distribution Account will be withdrawn
from the Distribution Account and distributed by the Trustee in accordance with
the Remittance Report to the Class P Certificates and shall not be available for
distribution to the holders of any other Class of Certificates. The payment of
such Prepayment Charges shall not reduce the Certificate Principal Balance of
the Class P Certificates.

                  (c) Subject to Section 11.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if (i) such Holder has
so notified the Trustee at least 5 Business Days prior to the related Record
Date and (ii) such Holder shall hold Regular Certificates with aggregate
principal denominations of not less than $1,000,000 or evidencing a Percentage
Interest aggregating 10% or more with respect to such Class or, if not, by check
mailed by first class mail to such Certificateholder at the address of such
holder appearing in the Certificate Register. Notwithstanding the foregoing, but
subject to Section 11.02 hereof respecting the final distribution, distributions
with respect to Certificates registered in the name of a Depository shall be
made to such Depository in immediately available funds.

                  (d) On or before 5:00 p.m. Eastern time on the fifth Business
Day immediately preceding each Distribution Date, the Master Servicer shall
deliver a report to the Securities Administrator in the form of a computer
readable magnetic tape (or by such other


                                      -95-
<PAGE>

means as the Master Servicer and the Securities Administrator may agree from
time to time) containing such data and information, as agreed to by the Master
Servicer and the Securities Administrator such as to permit the Securities
Administrator to prepare the Monthly Statement to Certificateholders and to
direct the Trustee in writing to make the required distributions for the related
Distribution Date (the "Remittance Report"). The Securities Administrator shall
deliver a Remittance Report to the Trustee on or before 5:00 p.m. Eastern time
on the Business Day immediately preceding each Distribution Date.

         Section 6.05 ALLOCATION OF REALIZED LOSSES.

                  (a) On or prior to each Determination Date, the Master
Servicer shall determine the amount of any Realized Loss in respect of each
Mortgage Loan that occurred during the immediately preceding calendar month.

                  (b) The interest portion of Realized Losses shall be allocated
to the Certificates as described in Section 1.02 hereof.

                  (c) The principal portion of all Realized Losses on the
Mortgage Loans pursuant to Section 6.05(d) shall be allocated on each
Distribution Date as follows: first, to Net Monthly Excess Cashflow; second, to
the Class C Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; third, to the Class B-3 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; fourth, to the
Class B-2 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; fifth, to the Class B-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; sixth, to the Class M-3
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; seventh, to the Class M-2 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and eighth, to the Class M-1
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero. All such 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 the principal portion of Realized Losses to a
Subordinate 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 C Certificates shall be made by reducing the
amount otherwise payable in respect thereof pursuant to Section 6.04(a) clause
THIRD. No allocations of any Realized Losses shall be made to the Certificate
Principal Balances of the Senior Certificates or the Class P Certificates.

         All such 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.

                                      -96-
<PAGE>

         In addition, in the event that the Master Servicer receives any
Subsequent Recoveries from the Company or the related Servicer, the Master
Servicer shall deposit such funds into the Master Servicer Collection Account
pursuant to Section 5.06. 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 6.05 and not previously reimbursed to such
Class of Subordinate Certificates with Net Monthly Excess Cashflow pursuant to
clause THIRD of Section 6.04(a). 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 6.05 and not previously reimbursed to such Class of
Subordinate Certificates with Net Monthly Excess Cashflow pursuant to clause
THIRD of Section 6.04(a). Holders of such Certificates will not be entitled to
any payment in respect of current interest on the amount of such increases for
any Accrual Period preceding the 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.

                  (d) All Realized Losses on the Mortgage Loans shall be
allocated on each Distribution Date to the following REMIC I Regular Interests
in the specified percentages, as follows: first, to Uncertificated Accrued
Interest payable to the REMIC I Regular Interest AA and REMIC I Regular Interest
ZZ up to an aggregate amount equal to the REMIC I Interest Loss Allocation
Amount, 98% and 2%, respectively; second, to the Uncertificated Principal
Balances of the REMIC I Regular Interest AA and REMIC I Regular Interest ZZ up
to an aggregate amount equal to the REMIC I Principal Loss Allocation Amount,
98% and 2%, respectively; third, to the Uncertificated Principal Balances of
REMIC I Regular Interest AA, REMIC I Regular Interest B-3 and REMIC I Regular
Interest ZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC I Regular Interest B-3 has been reduced to zero; fourth, to the
Uncertificated Principal Balances of REMIC I Regular Interest AA, REMIC I
Regular Interest B-2 and REMIC I Regular Interest ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC I Regular
Interest B-2 has been reduced to zero; fifth, to the Uncertificated Principal
Balances of REMIC I Regular Interest AA, REMIC I Regular Interest B-1 and REMIC
I Regular Interest ZZ, 98%, 1% and 1%, respectively, until the Uncertificated
Principal Balance of REMIC I Regular Interest B-1 has been reduced to zero;
sixth, to the Uncertificated Principal Balances of REMIC I Regular Interest AA,
REMIC I Regular Interest M-3 and REMIC I Regular Interest ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC I Regular
Interest M-3 has been reduced to zero; seventh, to the Uncertificated Principal
Balances of REMIC I Regular Interest AA, REMIC I Regular Interest M-2 and REMIC
I Regular Interest ZZ, 98%, 1% and 1%, respectively, until the Uncertificated
Principal Balance of REMIC I Regular Interest M-2 has been reduced to zero; and
eighth, to the Uncertificated Principal Balances of REMIC I Regular Interest AA,
REMIC I Regular Interest M-1 and REMIC I Regular Interest ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC I Regular
Interest M-1 has been reduced to zero

                                      -97-
<PAGE>

                  (e) All Realized Losses on the Mortgage Loans shall be
allocated on each Distribution Date to the REMIC II Regular Interests in the
same manner as Realized Losses are allocated to the Corresponding Certificates,
pursuant to Section 6.05(c).

         Section 6.06 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.

                  (a) Not later than each Distribution Date, the Securities
Administrator shall prepare and make available to each Holder of Certificates,
the Trustee, the Master Servicer and the Depositor a statement setting forth for
the Certificates:

                  (i) the amount of the related distribution to Holders of each
         Class allocable to principal, separately identifying (A) the aggregate
         amount of any Principal Prepayments included therein, (B) the aggregate
         of all scheduled payments of principal included therein and (C) Extra
         Principal Distribution Amount (if any);

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

                  (iii) the Certificate Principal Balance or Certificate
         Notional Amount of each Class after giving effect (i) to all
         distributions allocable to principal on such Distribution Date and (ii)
         the allocation of any Applied Realized Loss Amounts for such
         Distribution Date;

                  (iv) the aggregate of the Stated Principal Balances of all of
         the Mortgage Loans for the following Distribution Date;

                  (v) the amount of the Master Servicing Fee paid to or retained
         by the Master Servicer for the related Due Period and the amount of the
         Servicing Fees paid to or retained by the Company or the related
         Servicer for the related Due Period;

                  (vi) the Pass-Through Rate for each Class of Certificates with
         respect to the current Accrual Period, and, if applicable, whether such
         Pass-Through Rate was limited by the Net WAC Rate Cap;

                  (vii) the amount of Advances included in the distribution on
         such Distribution Date;

                  (viii) the cumulative amount of Applied Realized Loss Amounts
         to date;

                  (ix) the number and aggregate principal amounts of Mortgage
         Loans (A) Delinquent (exclusive of Mortgage Loans in foreclosure and
         bankruptcy) (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
         days, (B) in foreclosure and delinquent (1) 31 to 60 days, (2) 61 to 90
         days and (3) 91 or more days and (C) in bankruptcy and delinquent (1)
         31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, in each case
         as of the close of business on the last day of the calendar month
         preceding such Distribution Date;

                                      -98-
<PAGE>

                  (x) with respect to any Mortgage Loan that was liquidated
         during the preceding calendar month, the loan number and Stated
         Principal Balance of, and Realized Loss on, such Mortgage Loan as of
         the end of the related Prepayment Period;

                  (xi) the total number and principal balance of any real estate
         owned or REO Properties as of the end of the related Prepayment Period;

                  (xii) the three month rolling average of the percent
         equivalent of a fraction, the numerator of which is the aggregate
         Stated Principal Balance of the Mortgage Loans that are 60 days or more
         delinquent or are in bankruptcy or foreclosure or are REO Properties,
         and the denominator of which is the aggregate Stated Principal Balance
         of all of the Mortgage Loans as of the last day of the calendar month
         preceding such Distribution Date;

                  (xiii) the Realized Losses during the related Prepayment
         Period and the cumulative Realized Losses through the end of the
         preceding month;

                  (xiv) the Net WAC Rate Carryover Amount for each Class of
         Certificates and the amount on deposit in the Net WAC Reserve Fund; and

                  (xv) the amount of the distribution made on such Distribution
         Date to the Holders of the Class P Certificates allocable to Prepayment
         Charges.

         The Securities Administrator may make the foregoing Monthly Statement
(and, at its option, any additional files containing the same information in an
alternative format) available each month to Certificateholders via the
Securities Administrator's internet website. The Securities Administrator's
internet website shall initially be located at "www.ctslink.com". Assistance in
using the website can be obtained by calling the Securities Administrator's
customer service desk at (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 may change the way Monthly Statements are distributed
in order to make such distributions more convenient or more accessible to the
above parties.

         To the extent timely received from the Securities Administrator, the
Trustee will also make the related Monthly Statements available to
Certificateholders via the Trustee's internet website. The Trustee's internet
website will initially be located at
"https://trustinvestorreporting.usbank.com". Assistance in using the Trustee's
internet website can be obtained by calling the Trustee's customer service desk
at (800) 934-6802.

                  (b) The Securities Administrator's responsibility for making
the above information available to the Certificateholders is limited to the
availability, timeliness and accuracy of the information derived from the Master
Servicer, the Company and the Servicers. The Securities Administrator will make
available a copy of each statement provided pursuant to this Section 6.05 to
each Rating Agency.

                                      -99-
<PAGE>

                  (c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished upon request to each
Person who at any time during the calendar year was a Certificateholder, based
on information provided by the Securities Administrator containing the
information set forth in clauses (a)(i) and (a)(ii) of this Section 6.06
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee or the Securities Administrator
pursuant to any requirements of the Code as from time to time in effect.

                  (d) Upon filing with the Internal Revenue Service, the
Securities Administrator shall furnish to the Holders of the Residual
Certificates the applicable Form 1066 and each applicable Form 1066Q and shall
respond promptly to written requests made not more frequently than quarterly by
any Holder of a Residual Certificate with respect to the following matters:

                  (i) The original projected principal and interest cash flows
         on the Closing Date on each Class of regular and residual interests
         created hereunder and on the Mortgage Loans, based on the Prepayment
         Assumption;

                  (ii) The projected remaining principal and interest cash flows
         as of the end of any calendar quarter with respect to each Class of
         regular and residual interests created hereunder and the Mortgage
         Loans, based on the Prepayment Assumption;

                  (iii) The applicable Prepayment Assumption and any interest
         rate assumptions used in determining the projected principal and
         interest cash flows described above;

                  (iv) The original issue discount (or, in the case of the
         Mortgage Loans, market discount) or premium accrued or amortized
         through the end of such calendar quarter with respect to each Class of
         regular or residual interests created hereunder and to the Mortgage
         Loans, together with each constant yield to maturity used in computing
         the same;

                  (v) The treatment of losses realized with respect to the
         Mortgage Loans or the regular interests created hereunder, including
         the timing and amount of any cancellation of indebtedness income of a
         REMIC with respect to such regular interests or bad debt deductions
         claimed with respect to the Mortgage Loans;

                  (vi) The amount and timing of any non-interest expenses of a
         REMIC; and

                  (vii) Any taxes (including penalties and interest) imposed on
         the REMIC, including, without limitation, taxes on "prohibited
         transactions," "contributions" or "net income from foreclosure
         property" or state or local income or franchise taxes.

         The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 10.12.

                                     -100-
<PAGE>

         Section 6.07 REMIC DESIGNATIONS AND REMIC I DISTRIBUTIONS.

                  (a) The Trustee shall elect that each of REMIC I, REMIC II and
REMIC III and shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of such
REMIC elections. The assets of REMIC I shall include the Mortgage Loans and all
interest owing in respect of and principal due thereon, the Distribution
Account, the Master Servicer Collection Account, the Protected Accounts
maintained by the Company and the Servicers, any REO Property, any proceeds of
the foregoing and any other assets subject to this Agreement (other than the Net
WAC Reserve Fund). The REMIC I Regular Interests shall constitute the assets of
REMIC II. The REMIC II Regular Interests shall constitute the assets of REMIC
III.

                  (b) On each Distribution Date, the Available Funds, in the
following order of priority and in accordance with the Remittance Report, shall
be deemed 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-1 Certificates, as the case may be:

                           (i) first, to the Holders of REMIC I Regular Interest
AA, REMIC Regular Interest A-1, REMIC I Regular Interest A-2, REMIC I Regular
Interest M-1, REMIC I Regular Interest M-2, REMIC I Regular Interest M-3, REMIC
I Regular Interest B-1, REMIC I Regular Interest B-2, REMIC I Regular Interest
B-3 and REMIC I Regular Interest ZZ, pro rata, in an amount equal to (A) the
Uncertificated Accrued Interest for each such REMIC I Regular Interest for such
Distribution Date, plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates. Amounts payable as Uncertificated Accrued Interest
in respect of REMIC I Regular Interest ZZ shall be reduced and deferred when the
REMIC I Overcollateralized Amount is less than the REMIC I Overcollateralization
Target Amount, by the lesser of (x) the amount of such difference and (y) the
REMIC I Regular Interest ZZ Maximum Interest Deferral Amount and such amount
will be payable to the Holders of REMIC Regular Interest A-1, REMIC I Regular
Interest A-2, REMIC I Regular Interest M-1, REMIC I Regular Interest M-2, REMIC
I Regular Interest M-3, REMIC I Regular Interest B-1, REMIC I Regular Interest
B-2 and REMIC I Regular Interest B-3 in the same proportion as the
Overcollateralization Increase Amount is allocated to the Corresponding
Interests, respectively, and the Uncertificated Principal Balance of REMIC I
Regular Interest ZZ shall be increased by such amount;

                           (ii) second, to the Holders of REMIC I Regular
Interests, in an amount equal to the remainder of the Available Funds for 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 AA, until the Uncertificated Principal Balance of
such REMIC I Regular Interest is reduced to zero;

                                    (B) 2.00% of such remainder, first, to the
Holders of REMIC I Regular Interest A-1, REMIC I Regular Interest A-2, REMIC I
Regular Interest M-1, REMIC I Regular Interest M-2, REMIC I Regular Interest
M-3, REMIC I Regular Interest B-1, REMIC I


                                     -101-
<PAGE>

Regular Interest B-2 and REMIC I Regular Interest B-3, in an aggregate amount
equal to 1.00% of and in the same proportion as principal payments are allocated
to the Corresponding Interests, until the Uncertificated Principal Balances of
such REMIC I Regular Interests are reduced to zero; and second, to the Holders
of REMIC I Regular Interest ZZ, such remainder, until the Uncertificated
Principal Balance of such REMIC I Regular Interest is reduced to zero; then

                                    (C) any remaining amount to the Holders of
the Class R-1 Certificates;

                  (c) On each Distribution Date, all amounts representing
Prepayment Charges deemed distributed in respect of REMIC II Regular Interest P
shall be deemed distributed in respect of REMIC I Regular Interest P, provided
that such amounts shall not reduce the Uncertificated Principal Balance of REMIC
I Regular Interest P. On the Distribution Date in November 2009, $100 shall be
deemed distributed in respect of REMIC I Regular Interest P in reduction of the
Uncertificated Principal Balance thereof.

         Section 6.08 REMIC II DISTRIBUTIONS AND CERTAIN REMIC III
DISTRIBUTIONS.

                  (a) On each Distribution Date, the Available Funds, in the
following order of priority and in accordance with the Remittance Report, shall
be deemed distributed by REMIC II to REMIC III on account of the REMIC II
Regular Interests or withdrawn from the Distribution Account and distributed to
the Holders of the Class R-2 Certificates, as the case may be:

                  (i) to the Holders of the REMIC II Regular Interests, in the
same manner and priority as paid to the Corresponding Certificates,

                                    (A) the Uncertificated Accrued Interest (or,
in the case of REMIC II Regular Interest C, the REMIC II Regular Interest C
Distribution Amount) for such Distribution Date, plus

                                    (B) any amounts in respect thereof remaining
unpaid from previous Distribution Dates and

                  (ii) to the Holders of REMIC II Regular Interests, in an
amount equal to the remainder of the Available Funds for such Distribution Date
after the distributions made pursuant to clause (i) above, allocated in the same
manner and priority as paid to the Corresponding Certificates, and any remaining
amount to the Holders of the Class R-2 Certificates.

                  (b) On each Distribution Date, all amounts representing
Prepayment Charges distributed in respect of the Class P Certificates shall be
deemed distributed in respect of REMIC II Regular Interest P, provided that such
amounts shall not reduce the Uncertificated Principal Balance of REMIC II
Regular Interest P. On the Distribution Date in November 2009, $100 shall be
deemed distributed in respect of REMIC II Regular Interest P in reduction of the
Uncertificated Principal Balance thereof.

                                     -102-
<PAGE>

                  (c) On each Distribution Date, (i) the related Uncertificated
Accrued Interest for such Distribution Date, plus any amounts in respect thereof
remaining unpaid from previous Distribution Dates, shall be deemed distributed
in respect of REMIC III Regular Interest A-2 and REMIC III Regular Interest A-3
and (ii) amounts distributable in reduction of the Certificate Principal Balance
of the Class A-2 Certificates shall be deemed distributed to the Holders of
REMIC III Regular Interest A-2 in reduction of the Uncertificated Principal
Balance thereof.

         Section 6.09 NET WAC RESERVE FUND AND CLASS A-2/A-3 NET WAC
PASS-THROUGH AMOUNTS.

                  (a) The Trustee shall establish a Net WAC Reserve Fund on
behalf of the holders of the Offered Certificates. The Net WAC Reserve Fund must
be an Eligible Account. The Net WAC Reserve Fund shall be entitled "Net WAC
Reserve Fund, U.S. Bank National Association as Trustee for the benefit of
holders of Bear Stearns Asset Backed Securities I LLC, Asset-Backed
Certificates, Series 2004-AC7, Class A-1, Class A-2, Class A-3, Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2 and Class B-3". On the Closing Date, the
Depositor will deposit, or cause to be deposited, into the Net WAC Reserve Fund
$5,000. On each Distribution Date as to which there is a Net WAC Rate Carryover
Amount payable to any Class of Certificates, the Trustee shall, in accordance
with the Remittance Report for such Distribution Date, deposit the amounts
pursuant to paragraphs 8 through 14 of clause THIRD of Section 6.04(a) into the
Net WAC Reserve Fund and the Trustee has been directed by the Class C
Certificateholder to distribute such amounts to the Holders of the Offered
Certificates in the amounts and priorities set forth in clause THIRD of Section
6.04(a).

                  (b) The Net WAC Reserve Fund is an "outside reserve fund"
within the meaning of Treasury Regulation ss.1.860G-2(h) and shall be an asset
of the Trust Fund but not an asset of any REMIC. The Trustee on behalf of the
Trust shall be the nominal owner of the Net WAC Reserve Fund. The Class C
Certificateholders shall be the beneficial owners of the Net WAC Reserve Fund,
subject to the power of the Trustee to transfer amounts under Section 6.04(a).
Amounts in the Net WAC Reserve Fund shall be held either uninvested in a trust
or deposit account of the Trustee with no liability for interest or other
compensation thereof or, at the direction of the Majority Class C
Certificateholder, be invested in Permitted Investments that mature no later
than the Business Day prior to the next succeeding Distribution Date. All net
income and gain from such investments shall be distributed to the Majority Class
C Certificateholder, not as a distribution in respect of any interest in any
REMIC, on such Distribution Date. All amounts earned on amounts on deposit in
the Net WAC Reserve Fund shall be taxable to the Majority Class C
Certificateholder. Any losses on such investments shall be deposited in the Net
WAC Reserve Fund by the Majority Class C Certificateholder out of its own funds
immediately as realized. In the event that the Majority Class C
Certificateholder shall fail to provide investment instructions to the Trustee,
the amounts on deposit in the Net WAC Reserve Fund shall be held uninvested.

                  (c) For federal tax return and information reporting, the
right of the holders of the Offered Certificates to receive payments from the
Net WAC Reserve Fund in respect of any Net WAC Rate Carryover Amount shall be
assigned a value of zero.

                                     -103-
<PAGE>

                  (d) With respect to each Distribution Date as to which there
is a positive Class A-2/A-3 Net WAC Pass-Through Amount, such amount shall be
payable from the Holders of the Class A-2 Certificates to the Holders of the
Class A-3 Certificates. Accordingly, on each such Distribution Date the Trustee
shall deposit into the Net WAC Reserve Fund the Class A-2/A-3 Net WAC
Pass-Through Amount, rather than distributing such amount to the Class A-2
Certificateholders. Notwithstanding the foregoing, such Class A-2/A-3 Net WAC
Pass-Through Amount shall for federal, state and local tax purposes be deemed
distributed in respect of REMIC III Regular Interest A-2 and the Class A-2
Certificates.

         On each such Distribution Date, the Trustee shall hold the Class
A-2/A-3 Net WAC Pass-Through Amount for the benefit of the Holders of the Class
A-3 Certificates, and shall distribute such amount to the Holders of the Class
A-3 Certificates. Payments to the Holders of the Class A-3 Certificates of any
Class A-2/A-3 Net WAC Pass-Through Amount will not be payments with respect to a
"regular interest" in a REMIC within the meaning of Code Section 860G(a)(1).

         By accepting a Class A-2 Certificate, each Class A-2 Certificateholder
thereby agrees to direct the Trustee, and the Trustee hereby is directed, to
deposit into the Net WAC Reserve Fund any Class A-2/A-3 Net WAC Pass-Through
Amount rather than distributing such amounts to the Class A-2 Certificateholders
and further agrees that such direction is given for good and valuable
consideration, the receipt and sufficiency of which is acknowledged by such
acceptance. By accepting a Class A-2 Certificate, each Class A-2
Certificateholder acknowledges that any such Class A-2/A-3 Net WAC Pass-Through
Amount shall for federal, state and local tax purposes be deemed distributed in
respect of REMIC III Regular Interest A-2 and the Class A-3 Certificates. By
accepting a Class A-3 Certificate, each Class A-3 Certificateholder acknowledges
that for federal, state and local tax purposes any payments of such Class
A-2/A-3 Net WAC Pass-Through Amount shall not be payments with respect to a
"regular interest" in a REMIC within the meaning of Code Section 860G(a)(1).

         Section 6.10 CLASS P CERTIFICATE ACCOUNT. The Trustee shall establish
and maintain with itself a separate, segregated trust account titled "Bear
Stearns Asset-Backed Securities I Trust 2004-AC7 Class P Certificate Account".
On the Closing Date, the Depositor will deposit, or cause to be deposited in the
Class P Certificate Account $100.00. The amount on deposit in the Class P
Certificate Account shall be held uninvested. On the November 2009 Distribution
Date, the Trustee shall withdraw the amount on deposit in the Class P
Certificate Account and remit such amount to the holders of the Class P
Certificates in reduction of the Certificate Principal Balance thereof.

                                     -104-
<PAGE>

                                  ARTICLE VII

                                THE CERTIFICATES

         Section 7.01 THE CERTIFICATES.

         The Certificates shall be substantially in the forms attached hereto as
Exhibits A-1 through A-6. The Certificates shall be issuable in registered form,
in the minimum dollar denominations, integral dollar multiples in excess thereof
(except that one Certificate of each Class may be issued in a different amount
which must be in excess of the applicable minimum dollar denomination) and
aggregate dollar denominations as set forth in the following table:

<TABLE>
<CAPTION>
                   Minimum        Integral Multiple in  Original Certificate
    Class        Denomination      Excess of Minimum      Principal Balance             Pass-Through Rate
--------------------------------------------------------------------------------------------------------------
<S>                 <C>                  <C>               <C>                             <C>
     A-1            $25,000              $1,000            $183,178,800.00         Class A-1 Pass-Through Rate
     A-2            $25,000              $1,000            $ 20,353,200.00         Class A-2 Pass-Through Rate
     A-3            $25,000              $1,000                  N/A               Class A-3 Pass-Through Rate
     M-1            $25,000              $1,000            $ 21,807,000.00         Class M-1 Pass-Through Rate
     M-2            $25,000              $1,000            $ 16,388,000.00         Class M-2 Pass-Through Rate
     M-3            $25,000              $1,000            $ 5,419,000.00          Class M-3 Pass-Through Rate
     B-1            $25,000              $1,000            $ 4,493,000.00          Class B-1 Pass-Through Rate
     B-2            $25,000              $1,000            $ 3,965,000.00          Class B-2 Pass-Through Rate
     B-3            $25,000              $1,000            $ 6,212,000.00          Class B-3 Pass-Through Rate
      C             $25,000              $1,000            $ 2,511,312.81                      N/A
      P                $100               N/A                  $100.00                         N/A
     R-1               100%               N/A                    N/A                           N/A
     R-2               100%               N/A                    N/A                           N/A
     R-3               100%               N/A                    N/A                           N/A
</TABLE>

         The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such authentication and delivery. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate the countersignature
of the Trustee by manual signature, and such countersignature upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly countersigned and delivered hereunder. All
Certificates shall be dated the date of their countersignature. On the Closing
Date, the Trustee shall authenticate the Certificates to be issued at the
written direction of the Depositor, or any affiliate thereof.

         The Depositor shall provide, or cause to be provided, to the Trustee on
a continuous basis, an adequate inventory of Certificates to facilitate
transfers.

                                     -105-
<PAGE>

         Section 7.02 CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES.

                  (a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 7.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of like aggregate Percentage Interest.

         At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute, authenticate, and
deliver the Certificates that the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of Transfer or exchange shall be accompanied by a written instrument of Transfer
in form satisfactory to the Trustee duly executed by the holder thereof or his
attorney duly authorized in writing.

         No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but 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 may be required.

         All Certificates surrendered for registration of Transfer or exchange
shall be canceled and subsequently destroyed by the Trustee in accordance with
the Trustee's customary procedures.

                  (b) No Transfer of a Private Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall each certify
to the Trustee and the Securities Administrator in writing the facts surrounding
the Transfer in substantially the forms set forth in Exhibit D (the "Transferor
Certificate") and (x) deliver a letter in substantially the form of either
Exhibit E (the "Investment Letter") or Exhibit F (the "Rule 144A Letter") or (y)
there shall be delivered to the Trustee and the Securities Administrator an
Opinion of Counsel addressed to the Trustee and the Securities Administrator
that such Transfer may be made pursuant to an exemption from the Securities Act,
which Opinion of Counsel shall not be an expense of the Depositor, the Seller,
the Master Servicer, the Securities Administrator or the Trustee. The Depositor
shall provide to any Holder of a Private Certificate and any prospective
transferee designated by any such Holder, information regarding the related
Certificates and the Mortgage Loans and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4)
for Transfer of any such Certificate without registration thereof under


                                     -106-
<PAGE>

the Securities Act pursuant to the registration exemption provided by Rule 144A.
The Trustee, the Securities Administrator and the Master Servicer shall
cooperate with the Depositor in providing the Rule 144A information referenced
in the preceding sentence, including providing to the Depositor such information
regarding the Certificates, the Mortgage Loans and other matters regarding the
Trust Fund as the Depositor shall reasonably request to meet its obligation
under the preceding sentence. Each Holder of a Private Certificate desiring to
effect such Transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Seller, the Securities Administrator and the Master Servicer
against any liability that may result if the Transfer is not so exempt or is not
made in accordance with such federal and state laws.

         No Transfer of an ERISA Restricted Certificate shall be made unless
either (i) the Trustee, the Master Servicer and the Securities Administrator
shall have received a representation from the transferee of such Certificate
acceptable to and in form and substance satisfactory to the Trustee, the Master
Servicer and the Securities Administrator, to the effect that such transferee is
not an employee benefit plan subject to Section 406 of ERISA and/or a plan
subject to Section 4975 of the Code, or a Person acting on behalf of any such
plan or using the assets of any such plan, or (ii) in the case of any such ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or a plan subject to Section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan or any other person acting on behalf of any such plan, the Trustee shall
have received an Opinion of Counsel for the benefit of the Trustee, the Master
Servicer and the Securities Administrator and on which they may rely,
satisfactory to the Trustee, to the effect that the purchase and holding of such
ERISA Restricted Certificate is permissible under applicable law, will not
constitute or result in the assets of the Trust being deemed to be "plan assets"
under ERISA or the Code, will not result in any prohibited transactions under
ERISA or Section 4975 of the Code and will not subject the Trustee, the Master
Servicer, the Depositor or the Securities Administrator to any obligation in
addition to those expressly undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Master Servicer, the
Depositor or the Securities Administrator. Notwithstanding anything else to the
contrary herein, any purported transfer of an ERISA Restricted Certificate to or
on behalf of an employee benefit plan subject to Section 406 of ERISA and/or a
plan subject to Section 4975 of the Code without the delivery of the Opinion of
Counsel as described above shall be void and of no effect; provided that the
restriction set forth in this sentence shall not be applicable if there has been
delivered to the Trustee an Opinion of Counsel meeting the requirements of
clause (ii) of the first sentence of this paragraph. None of the Trustee, the
Securities Administrator or the Master Servicer shall be required to monitor,
determine or inquire as to compliance with the transfer restrictions with
respect to any ERISA Restricted Certificate that is a Book-Entry Certificate,
and none of the Trustee, the Securities Administrator or the Master Servicer
shall have any liability for transfers of any such Book-Entry Certificates made
through the book-entry facilities of any Depository or between or among
participants of the Depository or Certificate Owners made in violation of the
transfer restrictions set forth herein. None of the Trustee, the Securities
Administrator or the Master Servicer shall be under any liability to any Person
for any registration of transfer of any ERISA Restricted Certificate that is in
fact not permitted by this Section 7.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement. The Trustee and the
Securities Administrator shall each be entitled, but not obligated, to recover
from


                                     -107-
<PAGE>

any Holder of any ERISA Restricted Certificate that was in fact an employee
benefit plan subject to Section 406 of ERISA or a plan subject to Section 4975
of the Code or a Person acting on behalf of any such plan at the time it became
a Holder or, at such subsequent time as it became such a plan or Person acting
on behalf of such a plan, all payments made on such ERISA Restricted Certificate
at and after either such time. Any such payments so recovered by the Trustee or
the Securities Administrator shall be paid and delivered by the Trustee or the
Securities Administrator to the last preceding Holder of such Certificate that
is not such a plan or Person acting on behalf of a plan.

         Each beneficial owner of a Subordinate Certificate or any interest
therein shall be deemed to have represented, by virtue of its acquisition or
holding of that certificate or interest therein, that either (i) it is not a
Plan or investing with "Plan Assets", (ii) it has acquired and is holding such
certificate in reliance on the Exemption, and that it understands that there are
certain conditions to the availability of the Exemption, including that the
certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by S&P, Fitch Ratings or Moody's, and the certificate is so
rated or (iii) (1) it is an insurance company, (2) 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 (3) the conditions in Sections I and III of PTCE
95-60 have been satisfied.

                  (c) 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 the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:

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

                  (ii) No Ownership Interest in a Residual Certificate may be
         registered on the Closing Date or thereafter transferred, and the
         Trustee shall not register the Transfer of any Residual Certificate
         unless, in addition to the certificates required to be delivered to the
         Trustee under subparagraph (b) above, the Trustee shall have been
         furnished with an affidavit (a "Transfer Affidavit") of the initial
         owner or the proposed transferee in the form attached hereto as Exhibit
         C.

                  (iii) Each Person holding or acquiring any Ownership Interest
         in a Residual Certificate shall agree (A) to obtain a Transfer
         Affidavit from any other Person to whom such Person attempts to
         Transfer its Ownership Interest in a Residual Certificate, (B) to
         obtain a Transfer Affidavit from any Person for whom such Person is
         acting as nominee, trustee or agent in connection with any Transfer of
         a Residual Certificate and (C) not to Transfer its Ownership Interest
         in a Residual Certificate or to cause the Transfer of an Ownership
         Interest in a Residual Certificate to any other Person if it has actual
         knowledge that such Person is not a Permitted Transferee.

                                     -108-
<PAGE>

                  (iv) Any attempted or purported Transfer of any Ownership
         Interest in a Residual Certificate in violation of the provisions of
         this Section 7.02(c) shall be absolutely null and void and shall vest
         no rights in the purported Transferee. If any purported transferee
         shall become a Holder of a Residual Certificate in violation of the
         provisions of this Section 6.02(c), then the last preceding Permitted
         Transferee shall be restored to all rights as Holder thereof
         retroactive to the date of registration of Transfer of such Residual
         Certificate. The Trustee shall be under no liability to any Person for
         any registration of Transfer of a Residual Certificate that is in fact
         not permitted by Section 7.02(b) and this Section 7.02(c) or for making
         any payments due on such Certificate to the Holder thereof or taking
         any other action with respect to such Holder under the provisions of
         this Agreement so long as the Transfer was registered after receipt of
         the related Transfer Affidavit. The Trustee shall be entitled but not
         obligated to recover from any Holder of a Residual Certificate that was
         in fact not a Permitted Transferee at the time it became a Holder or,
         at such subsequent time as it became other than a Permitted Transferee,
         all payments made on such Residual Certificate at and after either such
         time. Any such payments so recovered by the Trustee shall be paid and
         delivered by the Trustee to the last preceding Permitted Transferee of
         such Certificate.

                  (v) The Master Servicer shall make available within 60 days of
         written request from the Trustee, all information necessary to compute
         any tax imposed under Section 860E(e) of the Code as a result of a
         Transfer of an Ownership Interest in a Residual Certificate to any
         Holder who is not a Permitted Transferee.

         The restrictions on Transfers of a Residual Certificate set forth in
this Section 7.02(c) shall cease to apply (and the applicable portions of the
legend on a Residual Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel addressed to
the Trustee, which Opinion of Counsel shall not be an expense of the Trustee,
the Securities Administrator, the Seller or the Master Servicer to the effect
that the elimination of such restrictions will not cause REMIC I, REMIC II
and/or REMIC III, as applicable, to fail to qualify as a REMIC at any time that
the Certificates are outstanding or result in the imposition of any tax on the
Trust Fund, a Certificateholder or another Person. Each Person holding or
acquiring any ownership Interest in a Residual Certificate hereby consents to
any amendment of this Agreement that, based on an Opinion of Counsel addressed
to the Trustee and furnished to the Trustee, is reasonably necessary (a) to
ensure that the record ownership of, or any beneficial interest in, a Residual
Certificate is not transferred, directly or indirectly, to a Person that is not
a Permitted Transferee and (b) to provide for a means to compel the Transfer of
a Residual Certificate that is held by a Person that is not a Permitted
Transferee to a Holder that is a Permitted Transferee.

                  (d) The preparation and delivery of all certificates and
opinions referred to above in this Section 7.02 shall not be an expense of the
Trust Fund, the Trustee, the Depositor, the Seller, the Securities Administrator
or the Master Servicer.

         Section 7.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

         If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership


                                     -109-
<PAGE>

thereof and (b) there is delivered to the Securities Administrator and the
Trustee such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 7.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section 7.03 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time. All Certificates
surrendered to the Trustee under the terms of this Section 7.03 shall be
canceled and destroyed by the Trustee in accordance with its standard procedures
without liability on its part.

         Section 7.04 PERSONS DEEMED OWNERS.

         The Securities Administrator, the Trustee and any agent of the
Securities Administrator or the Trustee may treat the person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Securities Administrator, the Trustee nor any agent
of the Securities Administrator or the Trustee shall be affected by any notice
to the contrary.

         Section 7.05 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.

         If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor or the Master Servicer shall request such information in writing from
the Trustee, then the Trustee shall, within ten Business Days after the receipt
of such request, provide the Depositor, the Master Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Trust Fund held by the Trustee, if any. The Depositor
and every Certificateholder, by receiving and holding a Certificate, agree that
the Trustee shall not be held accountable by reason of the disclosure of any
such information as to the list of the Certificateholders hereunder, regardless
of the source from which such information was derived.

         Section 7.06 BOOK-ENTRY CERTIFICATES.

         The Regular Certificates, upon original issuance, shall be issued in
the form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. Such Certificates shall initially be registered on the Certificate
Register in the name of the Depository or its nominee, and no Certificate Owner
of such Certificates will receive a definitive certificate representing such
Certificate Owner's interest in such Certificates, except as provided in Section
7.08. Unless and until definitive, fully


                                     -110-
<PAGE>

registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of such Certificates pursuant to Section 7.08:

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

                  (b) the Depositor, the Securities Administrator and the
Trustee may deal with the Depository and the Depository Participants for all
purposes (including the making of distributions) as the authorized
representative of the respective Certificate Owners of such Certificates; (c)
registration of the Book-Entry Certificates may not be transferred by the
Trustee except to another Depository;

                  (d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 7.08, the Depository will make
book-entry transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;

                  (e) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants;

                  (f) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants; and

                  (g) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control.

         For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.

         Section 7.07 NOTICES TO DEPOSITORY.

         Whenever any notice or other communication is required to be given to
Certificateholders of a Class with respect to which Book-Entry Certificates have
been issued, unless and until Definitive Certificates shall have been issued to
the related Certificate Owners, the Trustee shall give all such notices and
communications to the Depository.

                                     -111-
<PAGE>

         Section 7.08 DEFINITIVE CERTIFICATES.

         If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depositor or the Depository advises the Trustee that the
Depository is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Depositor is unable to locate a qualified successor, (b)
the Depositor, at its sole option, advises the Trustee that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Trustee and the Depository in writing through the Depository Participants that
the continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, then the Trustee shall notify
all Certificate Owners of such Certificates, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to applicable Certificate Owners requesting the same. The Depositor shall
provide the Trustee with an adequate inventory of certificates to facilitate the
issuance and transfer of Definitive Certificates. Upon surrender to the Trustee
of any such Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall countersign
and deliver such Definitive Certificates. Neither the Depositor nor the Trustee
shall be liable for any delay in delivery of such instructions and each may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of such 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 Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of such Definitive Certificates as Certificateholders hereunder.

         Section 7.09 MAINTENANCE OF OFFICE OR AGENCY.

         The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies at U.S. Bank National Association, 60
Livingston Avenue, Bond Drop Window, St. Paul, Minnesota 55107 where
Certificates may be surrendered for registration of transfer or exchange. The
Trustee will give prompt written notice to the Certificateholders of any change
in such location of any such office or agency.

                                     -112-
<PAGE>

                                  ARTICLE VIII

                       THE COMPANY AND THE MASTER SERVICER

         Section 8.01 LIABILITIES OF THE DEPOSITOR, THE COMPANY AND THE MASTER
SERVICER. Each of the Depositor, the Company and the Master Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by it herein.

         Section 8.02 MERGER OR CONSOLIDATION OF THE DEPOSITOR, THE COMPANY OR
THE MASTER SERVICER.

                  (a) Each of the Depositor, the Company and the Master Servicer
will keep in full force and effect its existence, rights and franchises as a
corporation under the laws of the state of its incorporation, and 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 duties under this Agreement.

                  (b) Any Person into which the Depositor, the Company or the
Master Servicer may be merged or consolidated, or any corporation resulting from
any merger or consolidation to which the Depositor, the Company or the Master
Servicer shall be a party, or any Person succeeding to the business of the
Depositor, the Company or the Master Servicer, shall be the successor of the
Depositor, the Company or the Master Servicer hereunder, without the execution
or filing of any paper or further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.

         Section 8.03 INDEMNIFICATION OF THE TRUSTEE, THE MASTER SERVICER AND
THE SECURITIES ADMINISTRATOR.

                  (a) The Master Servicer agrees to indemnify the Indemnified
Persons for, and to hold them harmless against, any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or relating to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement, including the powers of attorney delivered
pursuant to Sections 4.01 and 4.05 hereof, the Assignment Agreements, the
Custodial Agreement or the Certificates (i) related to the Master Servicer's
failure to perform its duties in compliance with this Agreement (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) or (ii) incurred by reason of the Master Servicer's willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder, provided, in each case, that with respect to any such claim or legal
action (or pending or threatened claim or legal action), the Trustee shall have
given the Master Servicer and the Seller written notice thereof promptly after
the Trustee shall have with respect to such claim or legal action knowledge
thereof; provided, however that the failure to give such notice shall not
relieve the Master Servicer of its indemnification obligations hereunder. This
indemnity shall survive the resignation or removal


                                     -113-
<PAGE>

of the Trustee, Master Servicer or the Securities Administrator and the
termination of this Agreement.

                  (b) The Company agrees to indemnify the Indemnified Persons
and to hold them harmless from and against any and all claims, losses, damages,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Indemnified Persons may sustain in any
way related to the failure of the Company to perform in any way its duties and
service the EMC Mortgage Loans in strict compliance with the terms of this
Agreement and for breach of any representation or warranty of the Company
contained herein. The Company shall immediately notify the Master Servicer and
the Trustee if a claim is made by a third party with respect to this Agreement
or the EMC Mortgage Loans, assume (with the consent of the Master Servicer and
the Trustee and with counsel reasonably satisfactory to the Master Servicer and
the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or any Indemnified Person in
respect of such claim but failure to so notify the Company shall not limit its
obligations hereunder. The Company agrees that it will not enter into any
settlement of any such claim without the consent of the Indemnified Persons
unless such settlement includes an unconditional release of such Indemnified
Persons from all liability that is the subject matter of such claim. The
provisions of this Section 8.03(b) shall survive termination of this Agreement.

                  (c) The Seller will indemnify any Indemnified Person for any
loss, liability or expense of any Indemnified Person not otherwise paid or
covered pursuant to Subsections (a) or (b) above.

         Section 8.04 LIMITATIONS ON LIABILITY OF THE DEPOSITOR, THE COMPANY,
THE MASTER SERVICER AND OTHERS. Subject to the obligation of the Seller, the
Company and the Master Servicer to indemnify the Indemnified Persons pursuant to
Section 8.03:

                  (a) Neither the Depositor, the Company, the Master Servicer
nor any of the directors, officers, employees or agents of the Depositor, the
Company and the Master Servicer shall be under any liability to the Indemnified
Persons, the Trust Fund or the Certificateholders for taking any action or for
refraining from taking 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 Company, the Master Servicer or any such Person against any
breach of warranties or representations made herein or any liability which would
otherwise be imposed by reason of such Person's willful misfeasance, bad faith
or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.

                  (b) The Depositor, the Company, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Company and the
Master Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.

                  (c) The Depositor, the Company, the Master Servicer the
Securities Administrator, the Trustee, the Custodian and any director, officer,
employee or agent of the Depositor, the Company, the Master Servicer, the
Securities Administrator, the Trustee or the


                                     -114-
<PAGE>

Custodian shall be indemnified by the Trust and held harmless thereby against
any loss, liability or expense (including reasonable legal fees and
disbursements of counsel) incurred on their part that may be sustained in
connection with, arising out of, or related to, any claim or legal action
(including any pending or threatened claim or legal action) relating to this
Agreement, the Assignment Agreements, the Custodial Agreement, the Certificates
or the Servicing Agreements (except with respect to the Master Servicer only, to
the extent that the Master Servicer is indemnified by the Company under this
Agreement or by the related Servicer under the related Servicing Agreement),
other than (i) any such loss, liability or expense related to the Company's or
the Master Servicer's failure to perform its respective duties in compliance
with this Agreement (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement), or to the Custodian's
failure to perform its duties under the Custodial Agreement, or (ii) any such
loss, liability or expense incurred by reason of the Company's, the Master
Servicer's or the Custodian's willful misfeasance, bad faith or gross negligence
in the performance of duties hereunder or under the Custodial Agreement, as
applicable, or by reason of reckless disregard of obligations and duties
hereunder or under the Custodial Agreement, as applicable.

                  (d) Neither the Depositor, the Company nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
that is not incidental to its duties under this Agreement and that in its
opinion may involve it in any expense or liability; provided, however, the
Master Servicer may in its discretion, with the consent of the Trustee (which
consent shall not be unreasonably withheld), 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 shall be expenses, costs and liabilities of the
Trust Fund, and the Master Servicer shall be entitled to be reimbursed therefor
out of the Master Servicer Collection Account as provided by Section 5.05.
Nothing in this Subsection 8.04(d) shall affect the Master Servicer's obligation
to supervise, or to take such actions as are necessary to ensure, the servicing
and administration of the Mortgage Loans pursuant to Subsection 4.01(a).

                  (e) In taking or recommending any course of action pursuant to
this Agreement, unless specifically required to do so pursuant to this
Agreement, the Master Servicer shall not be required to investigate or make
recommendations concerning potential liabilities which the Trust might incur as
a result of such course of action by reason of the condition of the Mortgaged
Properties but shall give notice to the Trustee if it has notice of such
potential liabilities.

                  (f) The Master Servicer shall not be liable for any acts or
omissions of the Company or the Servicers, except as otherwise expressly
provided herein.

         Section 8.05 MASTER SERVICER AND COMPANY NOT TO RESIGN. (a) Except as
provided in Section 8.07, the Master Servicer shall not resign from the
obligations and duties hereby imposed on it except (i) with the prior written
consent of the Trustee (which consent shall not be unreasonably withheld) or
(ii) upon a determination that any such duties hereunder are no longer
permissible under applicable law and such impermissibility cannot be cured. Any
such


                                     -115-
<PAGE>

determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect, addressed to and delivered
to, the Trustee. No such resignation by the Master Servicer shall become
effective until EMC or the Trustee or a successor to the Master Servicer
reasonably satisfactory to the Trustee shall have assumed the responsibilities
and obligations of the Master Servicer in accordance with Section 9.02 hereof.
The Trustee shall notify the Rating Agencies of the resignation of the Master
Servicer.

                  (b) The Company shall not resign from the obligations and
duties hereby imposed on it except (i) upon the assignment of its servicing
duties with respect to all or a portion of the EMC Mortgage Loans to an
institution that is a Fannie Mae and Freddie Mac approved seller/servicer in
good standing that has a net worth of not less than $10,000,000 and with the
prior written consent of the Master Servicer (which consent shall not be
unreasonably withheld) or (ii) upon the determination that its duties hereunder
are no longer permissible under applicable law and such incapacity cannot be
cured by the Company. Any determination permitting the resignation of the
Company shall be evidenced by an Opinion of Counsel to such effect addressed to
and delivered, to the Master Servicer and the Trustee which Opinion of Counsel
shall be in form and substance acceptable to the Master Servicer and the
Trustee. No appointment of a successor to the Company shall be effective
hereunder unless (a) the Rating Agencies have confirmed in writing that such
appointment will not result in a downgrade, qualification or withdrawal of the
then current ratings assigned to the Certificates, (b) such successor shall have
represented that it is meets the eligibility criteria set forth in clause (i)
above and (c) such successor has agreed to assume the obligations of the Company
hereunder to the extent of the EMC Mortgage Loans to be serviced by such
successor. The Company shall provide a copy of the written confirmation of the
Rating Agencies and the agreement executed by such successor to the Master
Servicer and the Trustee. No such resignation shall become effective until a
Qualified Successor or the Master Servicer shall have assumed the Company's
responsibilities and obligations hereunder. The Company shall notify the Master
Servicer, the Trustee and the Rating Agencies of the resignation of the Company
or the assignment of all or a portion of its servicing duties hereunder in
accordance with this Section 8.05.

         Section 8.06 SUCCESSOR MASTER SERVICER. In connection with the
appointment of any successor Master Servicer or the assumption of the duties of
the Master Servicer, EMC or the Trustee may make such arrangements for the
compensation of such successor master servicer out of payments on the Mortgage
Loans as EMC or the Trustee and such successor master servicer shall agree. If
the successor master servicer does not agree that such market value is a fair
price, such successor master servicer shall obtain two quotations of market
value from third parties actively engaged in the servicing of single-family
mortgage loans. In no event shall the compensation of any successor master
servicer exceed that permitted the Master Servicer without the consent of all of
the Certificateholders.

         Section 8.07 SALE AND 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 and EMC may terminate
the Master Servicer without cause and select a new Master Servicer; provided,
however, that: (i) the purchaser or transferee accepting such assignment and
delegation (a) shall be a Person which (or an Affiliate thereof the primary
business of which is the servicing of conventional residential mortgage loans)
shall be qualified


                                     -116-
<PAGE>

to service mortgage loans for Fannie Mae or Freddie Mac; (b) shall have a net
worth of not less than $10,000,000 (unless otherwise approved by each Rating
Agency pursuant to clause (ii) below); (c) shall be reasonably satisfactory to
the Trustee (as evidenced in a writing signed by the Trustee); and (d) 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 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; (iii) the Master
Servicer assigning and selling the master servicing shall deliver to the Trustee
an Officer's Certificate and an Opinion of Counsel addressed to the Trustee,
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; and (iv) in the event the Master Servicer is terminated
without cause by EMC, EMC shall pay, from its own funds and without any right of
reimbursement, the terminated Master Servicer a termination fee equal to 0.25%
of the aggregate Stated Principal Balance of the Mortgage Loans at the time the
master servicing of the Mortgage Loans is transferred to the successor Master
Servicer. No such assignment or delegation shall affect any liability of the
Master Servicer arising prior to the effective date thereof.

                                     -117-
<PAGE>

                                   ARTICLE IX

                    DEFAULT; TERMINATION OF MASTER SERVICER;
                             TERMINATION OF COMPANY

         Section 9.01 EVENTS OF DEFAULT.

         "Event of Default," wherever used herein, means any one of the
following events:

                  (i) any failure by the Master Servicer to remit to the Trustee
         any amounts received or collected by the Master Servicer in respect of
         the Mortgage Loans and required to be remitted by it hereunder or any
         Advance required to be made by it pursuant to this Agreement, which
         failure shall continue unremedied for one Business Day after the date
         on which written notice of such failure shall have been given to the
         Master Servicer by the Trustee or the Depositor, or to the Trustee and
         the Master Servicer by the Holders of Certificates evidencing not less
         than 25% of the Voting Rights evidenced by the Certificates; or

                  (ii) any failure by the Master Servicer 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 any breach
         of a representation or warranty by the Master Servicer, which failure
         or breach shall continue unremedied for a period of 60 days after the
         date on which written notice of such failure shall have been given to
         Master Servicer by the Trustee or the Depositor, or to the Trustee and
         the Master Servicer by the Holders of Certificates evidencing not less
         than 25% of the Voting Rights evidenced by the Certificates; or

                  (iii) a decree or order of a court or agency or supervisory
         authority having jurisdiction in the premises for the appointment of a
         receiver or liquidator in any insolvency, readjustment of debt,
         marshalling of assets and liabilities or similar proceedings, or for
         the winding-up or liquidation of its affairs, shall have been entered
         against the Master Servicer and such decree or order shall have
         remained in force undischarged or unstayed for a period of 60
         consecutive days; or

                  (iv) the Master Servicer shall consent to the appointment of a
         receiver or liquidator in any insolvency, readjustment of debt,
         marshalling of assets and liabilities or similar proceedings of or
         relating to the Master Servicer or all or substantially all of the
         property of the Master Servicer; or

                  (v) 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, or commence a voluntary case under, any applicable
         insolvency or reorganization statute, make an assignment for the
         benefit of its creditors, or voluntarily suspend payment of its
         obligations; or

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<PAGE>

                  (vi) the Master Servicer assigns or delegates its duties or
         rights under this Agreement in contravention of the provisions
         permitting such assignment or delegation under Sections 8.05 or 8.07.

         If an Event of Default shall occur, then, and in each and every such
case, so long as such Event of Default shall not have been remedied, the Trustee
may, and at the direction of the Holders of Certificates evidencing not less
than 25% of the Voting Rights evidenced by the Certificates, the Trustee shall,
by notice in writing to the Master Servicer, with a copy to the Rating Agencies,
and with the consent of the Company, may terminate all of the rights and
obligations (but not the liabilities) of the Master Servicer (and the Securities
Administrator if the Master Servicer and the Securities Administrator are the
same entity) under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder. On or
after the receipt by the Master Servicer of such written notice, all authority
and power of the Master Servicer (and, if applicable, the Securities
Administrator) hereunder, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee, or any successor
appointed pursuant to Section 9.02 (a "Successor Master Servicer" and, if
applicable, "Successor Securities Administrator"). Such Successor Master
Servicer shall thereupon if such Successor Master Servicer is a successor to the
Master Servicer, make any Advance required by Article VI, subject, in the case
of the Trustee, to Section 9.02. The Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the terminated Master Servicer and, if
applicable, the terminated Securities Administrator, as attorney- in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of any Mortgage Loans and related documents, or otherwise. Unless
expressly provided in such written notice, no such termination shall affect any
obligation of the Master Servicer to pay amounts owed pursuant to Article VIII
or Article X. The Master Servicer and, if applicable, the Securities
Administrator agrees to cooperate with the Trustee in effecting the termination
of the Master Servicer's and, if applicable, the Securities Administrator's
responsibilities and rights hereunder, including, without limitation, the
transfer to the applicable Successor Master Servicer of all cash amounts which
shall at the time be credited to the Master Servicer Collection Account
maintained pursuant to Section 5.06, or thereafter be received with respect to
the applicable Mortgage Loans. The Trustee shall promptly notify the Rating
Agencies of the occurrence of an Event of Default known to the Trustee.

         Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master Servicer shall be entitled to receive, out of any
late collection of a Scheduled Payment on a Mortgage Loan that was due prior to
the notice terminating the Master Servicer's rights and obligations as Master
Servicer hereunder and received after such notice, that portion thereof to which
the Master Servicer would have been entitled pursuant to Sections 5.05 and to
receive any other amounts payable to the Master Servicer hereunder the
entitlement to which arose prior to the termination of its activities hereunder.

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<PAGE>

                  Section 9.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

         On and after the time the Master Servicer receives a notice of
termination pursuant to Section 9.01 hereof the Trustee shall automatically
become the successor to the Master Servicer with respect to the transactions set
forth or provided for herein and after a transition period (not to exceed 90
days), shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Master Servicer by the terms and provisions
hereof; provided, however, that the Company shall have the right to either (a)
immediately assume the duties of the Master Servicer or (b) select a successor
Master Servicer; provided, further, however that, pursuant to Article VI hereof,
the Trustee in its capacity as successor Master Servicer shall be responsible
for making any Advances required to be made by the Master Servicer immediately
upon the termination of the Master Servicer and any such Advance shall be made
on the Distribution Date on which such Advance was required to be made by the
predecessor Master Servicer. Effective on the date of such notice of
termination, as compensation therefor, the Trustee shall be entitled to all
compensation, reimbursement of expenses and indemnifications that the Master
Servicer would have been entitled to if it had continued to act hereunder,
provided, however, that the Trustee shall not be (i) liable for any acts or
omissions of the Master Servicer, (ii) obligated to make Advances if it is
prohibited from doing so under applicable law, (iii) responsible for expenses of
the Master Servicer pursuant to Section 2.03 or (iv) obligated to deposit losses
on any Permitted Investment directed by the Master Servicer. Notwithstanding the
foregoing, the Trustee may, if it shall be unwilling to so act, or shall, if it
is prohibited by applicable law from making Advances pursuant to Article VI or
if it is otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current rating of the
Certificates by each Rating Agency as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. Any Successor Master Servicer
shall (i) be an institution that is a Fannie Mae and Freddie Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000
and (ii) be willing to act as successor servicer of any Mortgage Loans under
this Agreement or the related Servicing Agreement with respect to which the
Company or the original Servicer has been terminated as servicer, and shall have
executed and delivered to the Depositor and the Trustee an agreement accepting
such delegation and assignment, that contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Master Servicer (other than any liabilities of the Master Servicer hereof
incurred prior to termination of the Master Servicer under Section 9.01 or as
otherwise set forth herein), with like effect as if originally named as a party
to this Agreement, provided that each Rating Agency shall have acknowledged in
writing that its rating of the Certificates in effect immediately prior to such
assignment and delegation will not be qualified or reduced as a result of such
assignment and delegation. If the Trustee assumes the duties and
responsibilities of the Master Servicer in accordance with this Section 9.02,
the Trustee shall not resign as Master Servicer until a Successor Master
Servicer has been appointed and has accepted such appointment. Pending
appointment of a successor to the Master Servicer hereunder, the Trustee, unless
the Trustee is prohibited by law from so acting, shall, subject to Section 4.04
hereof, act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans or otherwise as
it and such successor shall agree; provided that no such compensation


                                     -120-
<PAGE>

unless agreed to by the Certificateholders shall be in excess of that permitted
the Master Servicer hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. Neither the Trustee nor any other Successor Master Servicer
shall be deemed to be in default hereunder by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof or any
failure to perform, or any delay in performing, any duties or responsibilities
hereunder, in either case caused by the failure of the Master Servicer and the
Securities Administrator to deliver or provide, or any delay in delivering or
providing, any cash, information, documents or records to it.

         The costs and expenses of the Trustee in connection with the
termination of the Master Servicer, appointment of a Successor Master Servicer
and, if applicable, any transfer of servicing, including, without limitation,
all costs and 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 or the Successor Master
Servicer to service the related Mortgage Loans properly and effectively, to the
extent not paid by the terminated Master Servicer, shall be payable to the
Trustee pursuant to Section 10.05. Any successor to the Master Servicer as
successor servicer under any Subservicing Agreement shall give notice to the
applicable Mortgagors of such change of servicer and shall, during the term of
its service as successor servicer maintain in force the policy or policies that
the Master Servicer is required to maintain pursuant to Section 4.04.

                  Section 9.03 NOTIFICATION TO CERTIFICATEHOLDERS.

                  (a) Upon any termination of or appointment of a successor to
the Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.

                  (b) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all Certificateholders notice of
each such Event of Default hereunder actually known to a Responsible Officer of
the Trustee, unless such Event of Default shall have been cured or waived.

                  Section 9.04 WAIVER OF DEFAULTS.

         The Trustee shall transmit by mail to all Certificateholders, within 60
days after the occurrence of any Event of Default actually known to a
Responsible Officer of the Trustee, unless such Event of Default shall have been
cured, notice of each such Event of Default hereunder known to the Trustee. The
Holders of Certificates evidencing not less than 51% of the Voting Rights may,
on behalf of all Certificateholders, waive any default by the Master Servicer in
the performance of its obligations hereunder and the consequences thereof,
except a default in the making of or the causing to be made of any required
distribution on the Certificates. Upon any such waiver of a past default, such
default shall be deemed to cease to exist, and any Event of Default arising
therefrom shall be deemed to have been timely remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any


                                     -121-
<PAGE>

right consequent thereon except to the extent expressly so waived. The Trustee
shall give notice of any such waiver to the Rating Agencies.

                  Section 9.05 COMPANY DEFAULT.

         In case one or more of the following events of default by the Company
(each, a "Company Default") shall occur and be continuing, that is to say:

                  (i) any failure by the Company to remit to the Master Servicer
any payment required to be made under the terms of this Agreement on any
Remittance Date; or

                  (ii) failure on the part of the Company duly to observe or
perform in any material respect any other of the covenants or agreements (other
than Sections 3.13 or 3.14) on the part of the Company set forth in this
Agreement, the breach of which has a material adverse effect and which continue
unremedied for a period of sixty days (except that such number of days shall be
fifteen in the case of a failure to pay any premium for any insurance policy
required to be maintained under this Agreement and such failure shall be deemed
to have a material adverse effect) after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Company by the Master Servicer; or

                  (iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Company and such
decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or

                  (iv) the Company shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Company or of or relating to all or
substantially all of its property; or

                  (v) the Company shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or

                  (vi) the Company attempts to assign its right to servicing
compensation hereunder or the Company attempts to sell or otherwise dispose of
all or substantially all of its property or assets or to assign this Agreement
or the servicing responsibilities hereunder or to delegate its duties hereunder
or any portion thereof except as otherwise permitted herein; or

                  (vii) the Company ceases to be qualified to transact business
in any jurisdiction where it is currently so qualified, but only to the extent
such non-qualification materially and adversely affects the Company's ability to
perform its obligations hereunder;

                  (viii) failure by the Company to duly perform, within the
required time period,

                                     -122-
<PAGE>

its obligations under Section 3.13 or Section 3.14 which failure continues
unremedied for a period of fifteen (15) days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Company by the Master Servicer.

         then, and in each and every such case, so long as a Company Default
shall not have been remedied, the Master Servicer, by notice in writing to the
Company may, in addition to whatever rights the Master Servicer and the Trustee
on behalf of the Certificateholders may have under Section 8.03 and at law or
equity to damages, including injunctive relief and specific performance,
terminate all the rights and obligations of the Company under this Agreement and
in and to the EMC Mortgage Loans and the proceeds thereof without compensating
the Company for the same. On or after the receipt by the Company of such written
notice, all authority and power of Company under this Agreement, whether with
respect to the EMC Mortgage Loans or otherwise, shall pass to and be vested in
the Master Servicer. Upon written request from the Master Servicer, the Company
shall prepare, execute and deliver, any and all documents and other instruments,
place in the Master Servicer's possession all Mortgage Files relating to the EMC
Mortgage Loans, and 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 EMC Mortgage Loans
and related documents, or otherwise, at the Company's sole expense. The Company
agrees to cooperate with the Master Servicer in effecting the termination of the
Company's responsibilities and rights hereunder, including, without limitation,
the transfer to such successor for administration by it of all cash amounts
which shall at the time be credited by the Company to its Protected Account or
Escrow Account or thereafter received with respect to the EMC Mortgage Loans or
any related REO Property.

                  Section 9.06 WAIVER OF COMPANY DEFAULTS.

         The Master Servicer, with the consent of the Trustee, may waive only by
written notice any default by the Company in the performance of its obligations
hereunder and its consequences. Upon any such waiver of a past default, such
default shall cease to exist, and any Company Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon except to the extent expressly so waived in writing.


                                     -123-
<PAGE>


                                   ARTICLE X

             CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

         Section 10.01 DUTIES OF TRUSTEE AND SECURITIES ADMINISTRATOR.

                  (a) The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiver of all 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. If an Event of
Default has occurred and has not been cured or waived, the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and the
same degree of care and skill in their exercise, as a prudent person would
exercise under the circumstances in the conduct of such Person's own affairs.

                  (b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee or the Securities Administrator pursuant
to any provision of this Agreement, the Trustee or the Securities Administrator,
respectively, shall examine them to determine whether they are, on their face,
in the form required by this Agreement; provided, however, that neither the
Trustee nor the Securities Administrator shall be responsible for the accuracy
or content of any resolution, certificate, statement, opinion, report, document,
order or other instrument furnished by the Master Servicer; provided, further,
that neither the Trustee nor the Securities Administrator shall be responsible
for the accuracy or verification of any calculation provided to it pursuant to
this Agreement.

                  (c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 6.04 and 11.01 herein based
solely on the applicable Remittance Report.

                  (d) 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 willful
misconduct; provided, however, that:

                  (i) Prior to the occurrence of an Event of Default, and after
         the curing or waiver of all such Events 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
         and the Securities Administrator 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
         their respective duties and obligations as are specifically set forth
         in this Agreement, no implied covenants or obligations shall be read
         into this Agreement against the Trustee 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


                                     -124-
<PAGE>

         therein, upon any certificates or opinions furnished to the Trustee or
         the Securities Administrator, respectively, and conforming to the
         requirements of this Agreement;

                  (ii) Neither the Trustee nor the Securities Administrator
         shall be liable in its individual capacity 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;

                  (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 directions of
         the Holders of Certificates evidencing not less than 25% of the
         aggregate Voting Rights of the Certificates, if such action or
         non-action relates to the time, method and place of conducting any
         proceeding for any remedy available to the Trustee or the Securities
         Administrator, respectively, or exercising any trust or other power
         conferred upon the Trustee or the Securities Administrator,
         respectively, under this Agreement;

                  (iv) The Trustee shall not be required to take notice or be
         deemed to have notice or knowledge of any default or Event of Default
         unless a Responsible Officer of the Trustee shall have actual knowledge
         thereof. In the absence of such notice, the Trustee may conclusively
         assume there is no such default or Event of Default;

                  (v) The Trustee shall not in any way be liable by reason of
         any insufficiency in any Account held by or in the name of Trustee
         unless it is determined by a court of competent jurisdiction in a
         non-appealable judgment that the Trustee's gross negligence or willful
         misconduct was the primary cause of such insufficiency (except to the
         extent that the Trustee is obligor and has defaulted thereon);

                  (vi) Anything in this Agreement to the contrary
         notwithstanding, 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 the Trustee or the Securities Administrator,
         respectively, has been advised of the likelihood of such loss or damage
         and regardless of the form of action; and

                  (vii) None of the Securities Administrator, the Master
         Servicer, the Seller, the Depositor or the Trustee shall be responsible
         for the acts or omissions of the other, it being understood that this
         Agreement shall not be construed to render them partners, joint
         venturers or agents of one another.

Neither the Trustee nor the Securities Administrator shall be required to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there is reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it, and none of the provisions contained in this Agreement shall in
any event require the Trustee or the Securities Administrator to perform, or be
responsible for the manner of


                                     -125-
<PAGE>

performance of, any of the obligations of the Master Servicer or the Company
hereunder or any Servicer under the related Servicing Agreement.

                  (e) All funds received by the Trustee and required to be
deposited in the Distribution Account pursuant to this Agreement will be
promptly so deposited by the Trustee.

         Section 10.02 CERTAIN MATTERS AFFECTING THE TRUSTEE AND THE SECURITIES
ADMINISTRATOR.

                  (a) Except as otherwise provided in Section 10.01:

                  (i) The Trustee and the Securities Administrator may rely and
         shall be protected in acting or refraining from acting in reliance on
         any resolution or certificate of the Seller, the Company, the Master
         Servicer or the related Servicer, any certificates of auditors or any
         other certificate, statement, instrument, opinion, report, notice,
         request, consent, order, appraisal, bond or other paper or document
         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 and any advice of such counsel or any Opinion of Counsel
         shall be full and complete authorization and protection with respect to
         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, other than its obligation to give
         notices pursuant to 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 applicable, reasonable
         security or indemnity 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
         an Event of Default of which a Responsible Officer of the Trustee has
         actual knowledge (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 under the circumstances in the conduct of his own
         affairs;

                  (iv) Prior to the occurrence of an Event of Default hereunder
         and after the curing or waiver of all Events 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 liable in its individual capacity 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) 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 Holders of
         Certificates

                                     -126-
<PAGE>

         evidencing not less than 25% of the aggregate Voting Rights of the
         Certificates and provided that the payment within a reasonable time to
         the Trustee or the Securities Administrator, as applicable, 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, reasonably assured to the
         Trustee or the Securities Administrator, as applicable, by the security
         afforded to it by the terms of this Agreement. The Trustee or the
         Securities Administrator may require reasonable indemnity against such
         expense or liability as a condition to taking any such action. The
         reasonable expense of every such examination shall be paid by the
         Certificateholders requesting the investigation;

                  (vi) The Trustee and the Securities Administrator may execute
         any of the trusts or powers hereunder or perform any duties hereunder
         either directly or through Affiliates, agents or attorneys; provided,
         however, that the Trustee may not appoint any paying agent other than
         the Securities Administrator to perform any paying agent functions
         under this Agreement without the express written consent of the Master
         Servicer, which consent will not be unreasonably withheld. Neither the
         Trustee nor the Securities Administrator shall be liable or responsible
         for the misconduct or negligence of any of the Trustee's or the
         Securities Administrator's agents or attorneys or paying agent
         appointed hereunder by the Trustee or the Securities Administrator with
         due care and, when required, with the consent of the Master Servicer;

                  (vii) Should the Trustee or the Securities Administrator deem
         the nature of any action required on its part to be unclear, the
         Trustee or the Securities Administrator, respectively, may require
         prior to such action that it be provided by the Depositor with
         reasonable further instructions; the right of the Trustee or the
         Securities Administrator to perform any discretionary act enumerated in
         this Agreement shall not be construed as a duty, and neither the
         Trustee nor the Securities Administrator shall be accountable for other
         than its negligence or willful misconduct in the performance of any
         such act;

                  (viii) Neither the Trustee nor the Securities Administrator
         shall be required to give any bond or surety with respect to the
         execution of the trust created hereby or the powers granted hereunder,
         except as provided in Subsection 10.07; and

                  (ix) Neither the Trustee nor the Securities Administrator
         shall have any duty to conduct any affirmative investigation as to the
         occurrence of any condition requiring the repurchase of any Mortgage
         Loan by any Person pursuant to this Agreement, or the eligibility of
         any Mortgage Loan for purposes of this Agreement.

         Section 10.03 TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE FOR
CERTIFICATES OR MORTGAGE LOANS.

         The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Trustee on the Certificates) shall be
taken as the statements of the Depositor, and neither the Trustee nor the
Securities Administrator shall have any responsibility for their correctness.
Neither the Trustee nor the Securities Administrator makes any representation as
to the validity or sufficiency of the Certificates (other than the signature and


                                     -127-
<PAGE>

countersignature of the Trustee on the Certificates) or of any Mortgage Loan
except as expressly provided in Sections 2.02 and 2.06 hereof; provided,
however, that the foregoing shall not relieve the Trustee, or the Custodian on
its behalf, of the obligation to review the Mortgage Files pursuant to Section
2.02 of this Agreement. The Trustee's signature and countersignature (or
countersignature of its agent) on the Certificates shall be solely in its
capacity as Trustee and shall not constitute the Certificates an obligation of
the Trustee in any other capacity. Neither the Trustee or the Securities
Administrator shall 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 with respect to the
Mortgage Loans. Subject to Section 2.06, neither the Trustee nor the Securities
Administrator shall be responsible for the legality or validity of this
Agreement or any document or instrument relating to this Agreement, the validity
of the execution of this Agreement or of any supplement hereto or instrument of
further assurance, or the validity, priority, perfection or sufficiency of the
security for the Certificates issued hereunder or intended to be issued
hereunder. Neither the Trustee nor the Securities Administrator shall at any
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan, or the
perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement. Neither the Trustee nor the Securities
Administrator shall have any responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.

         Section 10.04 TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN
CERTIFICATES.

         Each of the Trustee and the Securities Administrator in its individual
capacity or in any capacity other than as Trustee or Securities Administrator
hereunder may become the owner or pledgee of any Certificates with the same
rights it would have if it were not the Trustee or the Securities Administrator,
as applicable, and may otherwise deal with the parties hereto.

         Section 10.05 TRUSTEE'S AND SECURITIES ADMINISTRATOR'S FEES AND
EXPENSES.

         The fees and expenses of the Trustee and the Securities Administrator
shall be paid in accordance with a side letter agreement with the Master
Servicer and at the expense of the Master Servicer. In addition, the Trustee and
the Securities Administrator will be entitled to recover from the Master
Servicer Collection Account pursuant to Section 5.07 all reasonable
out-of-pocket expenses, disbursements and advances and the expenses of the
Trustee and the Securities Administrator, respectively, in connection with any
Event of Default, any breach of this Agreement or any claim or legal action
(including any pending or threatened claim or legal action) incurred or made by
the Trustee or the Securities Administrator, respectively, in the administration
of the trusts hereunder (including the reasonable compensation, expenses and
disbursements of its counsel) except any such expense, disbursement or advance
as may arise from its negligence or intentional misconduct or which is the
responsibility of the Certificateholders or the Trust Fund hereunder. If funds
in the Master Servicer Collection Account are insufficient therefor, the Trustee
and the Securities Administrator shall recover such expenses, disbursements or
advances from the Depositor and the Depositor hereby agrees to pay


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such expenses, disbursements or advances upon demand. Such compensation and
reimbursement obligation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust.

         Section 10.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES
ADMINISTRATOR.

         The Trustee and any successor Trustee and the Securities Administrator
and any successor Securities Administrator shall during the entire duration of
this Agreement be a state bank or trust company or a national banking
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus and undivided profits of at least
$40,000,000 or, in the case of a successor Trustee, $50,000,000, subject to
supervision or examination by federal or state authority and, in the case of the
Trustee, rated "BBB" or higher by Fitch Ratings with respect to their long-term
rating and rated "BBB" or higher by Standard & Poor's and "Baa2" or higher by
Moody's with respect to any outstanding long-term unsecured unsubordinated debt,
and, in the case of a successor Trustee or successor Securities Administrator
other than pursuant to Section 10.10, rated in one of the two highest long-term
debt categories of, or otherwise acceptable to, each of the Rating Agencies. The
Trustee shall not be an Affiliate of the Master Servicer. If the Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 10.06 the combined capital and surplus of such
corporation shall be deemed to be its total equity capital (combined capital and
surplus) as set forth in its most recent report of condition 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
10.06, the Trustee or the Securities Administrator shall resign immediately in
the manner and with the effect specified in Section 10.08.

         Section 10.07 INSURANCE.

         The Trustee and the Securities Administrator, at their own expense,
shall at all times maintain and keep in full force and effect: (i) fidelity
insurance, (ii) theft of documents insurance and (iii) forgery insurance (which
may be collectively satisfied by a "Financial Institution Bond" and/or a
"Bankers' Blanket Bond"). All such insurance shall be in amounts, with standard
coverage and subject to deductibles, as are customary for insurance typically
maintained by banks or their affiliates which act as custodians for
investor-owned mortgage pools. A certificate of an officer of the Trustee or the
Securities Administrator as to the Trustee's or the Securities Administrator's,
respectively, compliance with this Section 10.07 shall be furnished to any
Certificateholder upon reasonable written request.

         Section 10.08 RESIGNATION AND REMOVAL OF TRUSTEE AND SECURITIES
ADMINISTRATOR.

         The Trustee and the Securities Administrator may at any time resign
(including, in the case of the Securities Administrator, in connection with the
resignation or termination of the Master Servicer) and be discharged from the
Trust hereby created by giving written notice thereof to the Depositor, the
Seller, the Securities Administrator (or the Trustee, if the Securities
Administrator resigns) and the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor trustee or


                                     -129-
<PAGE>

successor securities administrator, as applicable, by written instrument, in
triplicate, one copy of which instrument shall be delivered to each of the
resigning trustee or securities administrator, as applicable, and the successor
trustee or securities administrator, as applicable. 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 may petition any
court of competent jurisdiction for the appointment of a successor trustee or
securities administrator.

         If at any time (i) the Trustee or the Securities Administrator shall
cease to be eligible in accordance with the provisions of Section 10.06 hereof
and shall fail to resign after written request thereto by the Depositor, (ii)
the Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged as 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, or (iii)(A) a tax is imposed with respect to the
Trust Fund by any state in which the Trustee or the Securities Administrator or
the Trust Fund is located, (B) the imposition of such tax would be avoided by
the appointment of a different trustee or securities administrator and (C) the
Trustee or the Securities Administrator, as applicable fails to indemnify the
Trust Fund against such tax, then the Depositor or the Master Servicer 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 multiple copies, a copy of which instrument shall be
delivered to the Trustee, the Securities Administrator, each Master Servicer and
the successor trustee or successor securities administrator, as applicable.

         The Holders evidencing at least 51% of the Voting Rights of each Class
of Certificates may at any time remove the Trustee or Securities Administrator
and appoint a successor trustee or securities administrator by written
instrument or instruments, in multiple copies, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered by the successor trustee or successor securities administrator to
each of the Master Servicer, the Trustee or Securities Administrator so removed
and the successor trustee or securities administrator so appointed. Notice of
any removal of the Trustee or Securities Administrator shall be given to each
Rating Agency by the Trustee or successor trustee.

         Any resignation or removal of the Trustee or Securities Administrator
and appointment of a successor trustee or securities administrator pursuant to
any of the provisions of this Section 10.08 shall become effective upon
acceptance of appointment by the successor trustee or securities administrator
as provided in Section 10.09 hereof.

         Section 10.09 SUCCESSOR TRUSTEE OR SECURITIES ADMINISTRATOR.

         Any successor trustee or securities administrator appointed as provided
in Section 10.08 hereof shall execute, acknowledge and deliver to the Depositor
and to its predecessor trustee or predecessor securities administrator, as
applicable, and the Master Servicer an instrument accepting such appointment
hereunder and thereupon the resignation or removal of the predecessor trustee or
securities administrator shall become effective and such successor trustee or
securities administrator, without any further act, deed or conveyance, shall
become fully


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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.

         No successor trustee or securities administrator shall accept
appointment as provided in this Section 10.09 unless at the time of such
acceptance such successor trustee or securities administrator shall be eligible
under the provisions of Section 10.07 hereof and its appointment shall not
adversely affect the then current rating of the Certificates.

         Upon acceptance of appointment by a successor trustee or securities
administrator as provided in this Section 10.09, the successor trustee or
securities administrator shall mail notice of the succession of such trustee or
securities administrator hereunder to all Holders of Certificates. If the
successor trustee or securities administrator fails to mail such notice within
ten days after acceptance of appointment, the Depositor shall cause such notice
to be mailed at the expense of the Trust Fund.

         Section 10.10 MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES
ADMINISTRATOR.

         Any corporation, state bank or national banking association into which
the Trustee or the Securities Administrator may be merged or converted or with
which it may be consolidated or any corporation, state bank or national banking
association resulting from any merger, conversion or consolidation to which the
Trustee or the Securities Administrator shall be a party, or any corporation,
state bank or national banking association succeeding to substantially all of
the corporate trust business of the Trustee or of the business of the Securities
Administrator, shall be the successor of the Trustee or the Securities
Administrator hereunder, provided that such corporation shall be eligible under
the provisions of Section 10.06 hereof without the execution or filing of any
paper or further act on the part of any of the parties hereto, anything herein
to the contrary notwithstanding.

         Section 10.11 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

         Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Master Servicer and the Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 10.11, such powers, duties, obligations, rights and trusts as the Master
Servicer and the Trustee may consider necessary or desirable. If the Master
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in the case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 10.06 and
no notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 10.09.

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<PAGE>

         Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

                  (i) All rights, powers, duties and obligations conferred or
         imposed upon the Trustee, except for the obligation of the Trustee
         under this Agreement to advance funds on behalf of the Master Servicer,
         shall be conferred or imposed upon and exercised or performed by the
         Trustee and such separate trustee or co-trustee jointly (it being
         understood that such separate trustee or co-trustee is not authorized
         to act separately without the Trustee joining in such act), except to
         the extent that under any law of any jurisdiction in which any
         particular act or acts are to be performed (whether a Trustee hereunder
         or as a Successor 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 the Trust Fund or any portion thereof in any such
         jurisdiction) shall be exercised and performed singly by such separate
         trustee or co-trustee, but solely at the direction of the Trustee;

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

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

         Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article X. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Master Servicer and the Depositor.

         Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co- trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

         Section 10.12 TAX MATTERS.

         It is intended that the Trust Fund shall constitute, and that the
affairs of the Trust Fund shall be conducted so that each REMIC formed hereunder
qualifies as, a "real estate mortgage investment conduit" as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Securities Administrator covenants and agrees that it shall act as agent for so
long as it is also Master Servicer (and the Securities Administrator is hereby
appointed to act


                                     -132-
<PAGE>

as agent) on behalf of the Trust Fund. The Trustee and/or the Securities
Administrator, as agent on behalf of the Trust Fund, shall do or refrain from
doing, as applicable, the following: (a) the Securities Administrator shall
prepare and file, or cause to be prepared and filed, in a timely manner, U.S.
Real Estate Mortgage Investment Conduit Income Tax Returns (Form 1066 or any
successor form adopted by the Internal Revenue Service) and prepare and file or
cause to be prepared and filed with the Internal Revenue Service and applicable
state or local tax authorities income tax or information returns for each
taxable year with respect to each such REMIC containing such information and at
the times and in the manner as may be required by the Code or state or local tax
laws, regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) 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 that is or becomes a
taxable entity, and within thirty days of the Closing Date, furnish or cause to
be furnished to the Internal Revenue Service, on Forms 8811 or as otherwise may
be required by the Code, the name, title, address, and telephone number of the
person that the holders of the Certificates may contact for tax information
relating thereto, together with such additional information as may be required
by such Form, and update such information at the time or times in the manner
required by the Code for the Trust Fund; (c) the Trustee shall make or cause to
be made elections, on behalf of each REMIC formed hereunder to be treated as a
REMIC on the federal tax return of such REMIC for its first taxable year (and,
if necessary, under applicable state law); (d) the Securities Administrator
shall prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions, including without
limitation, the calculation of any original issue discount using the Prepayment
Assumption; (e) the Securities Administrator shall provide information necessary
for the computation of tax imposed on the transfer of a Residual Certificate to
a Person that is not a Permitted Transferee, or an agent (including a broker,
nominee or other middleman) of a Person that is not a Permitted Transferee, or a
pass-through entity in which a Person that is not a Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) each of
the Securities Administrator and the Trustee shall, to the extent under its
control, conduct the affairs of the Trust Fund at all times that any
Certificates are outstanding so as to maintain the status of each REMIC formed
hereunder as a REMIC under the REMIC Provisions; (g) neither the Trustee nor the
Securities Administrator shall knowingly or intentionally take any action or
omit to take any action that would cause the termination of the REMIC status of
any REMIC formed hereunder; (h) the Trustee shall pay, from the sources
specified in the penultimate paragraph of this Section 10.12, as directed by the
Securities Administrator in its Remittance Report, the amount of any federal,
state and local taxes, including prohibited transaction taxes as described
below, imposed on any REMIC formed hereunder prior to the termination of the
Trust Fund when and as the same shall be due and payable (but such obligation
shall not prevent the Trustee, the Securities Administrator at the written
request of the Trustee, or any other appropriate Person from contesting any such
tax in appropriate proceedings and shall not prevent the Securities
Administrator from withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings); (i) the Trustee shall sign or cause to be
signed federal, state or local income tax or information returns or any other
document prepared by the Securities


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<PAGE>

Administrator pursuant to this Section 10.12 requiring a signature thereon by
the Trustee; (j) the Securities Administrator shall maintain records relating to
each REMIC formed hereunder including but not limited to the income, expenses,
assets and liabilities of each such REMIC and adjusted basis of the Trust Fund
property determined at such intervals as may be required by the Code, as may be
necessary to prepare the foregoing returns, schedules, statements or
information; (k) the Securities Administrator shall, for federal income tax
purposes, maintain books and records with respect to the REMICs on a calendar
year and on an accrual basis; (l) neither the Trustee nor the Master Servicer
shall enter into any arrangement not otherwise provided for in this Agreement by
which the REMICs will receive a fee or other compensation for services nor
permit the REMICs 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; and (m) as and when
necessary and appropriate, the Trustee, or at the written request of the
Trustee, the Securities Administrator, shall represent the Trust Fund in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
any taxable year of any REMIC formed hereunder, enter into settlement agreements
with any governmental taxing agency, extend any statute of limitations relating
to any tax item of the Trust Fund, and otherwise act on behalf of each REMIC
formed hereunder in relation to any tax matter involving any such REMIC.

         In order to enable each of the Trustee and the Securities Administrator
to perform its duties as set forth herein, the Depositor shall provide, or cause
to be provided, to the Trustee or the Securities Administrator within 10 days
after the Closing Date all information or data that the Trustee or the
Securities Administrator requests in writing and determines to be relevant for
tax purposes to the valuations and offering prices of the Certificates,
including, without limitation, the price, yield, prepayment assumption and
projected cash flows of the Certificates and the Mortgage Loans. Thereafter, the
Depositor shall provide to the Trustee or the Securities Administrator promptly
upon written request therefor, any such additional information or data that the
Trustee or the Securities Administrator may, from time to time, request in order
to enable the Trustee or the Securities Administrator to perform its duties as
set forth herein. The Depositor hereby indemnifies each of Trustee and the
Securities Administrator for any losses, liabilities, damages, claims or
expenses of the Trustee or the Securities Administrator arising from any errors
or miscalculations of the Trustee or the Securities Administrator, as
applicable, that result from any failure of the Depositor to provide, or to
cause to be provided, accurate information or data to the Trustee or the
Securities Administrator, as applicable, on a timely basis.

         In the event that any tax is imposed on "prohibited transactions" of
any of REMIC I, REMIC II or REMIC III as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of the Trust Fund as defined
in Section 860G(c) of the Code, on any contribution to any of REMIC I, REMIC II
or REMIC III after the startup day pursuant to Section 860G(d) of the Code, or
any other tax is imposed, including, without limitation, any federal, state or
local tax or minimum tax imposed upon any of REMIC I, REMIC II or REMIC III, and
is not paid as otherwise provided for herein, such tax shall be paid by (i) the
Trustee or the Securities Administrator, if any such other tax arises out of or
results from a breach by the Trustee or the Securities Administrator,
respectively, of any of its obligations under this


                                     -134-
<PAGE>

Agreement, (ii) any party hereto (other than the Trustee or the Securities
Administrator) to the extent any such other tax arises out of or results from a
breach by such other party of any of its obligations under this Agreement or
(iii) in all other cases, or in the event that any liable party hereto fails to
honor its obligations under the preceding clauses (i) or (ii), any such tax will
be paid first with amounts otherwise to be distributed to the Class R
Certificateholders, and second with amounts otherwise to be distributed to all
other Certificateholders in the following order of priority: first, to the Class
B-3 Certificates, second, to the Class B-2 Certificates, third, to the Class B-1
Certificates, fourth, to the Class M-3 Certificates, fifth, to the Class M-2
Certificates, sixth, to the Class M-1 Certificates and seventh, to the Senior
Certificates, on a pro rata basis, based on the amounts to be distributed.
Notwithstanding anything to the contrary contained herein, to the extent that
such tax is payable by the Holder of any Certificates, the Trustee is hereby
authorized to retain on any Distribution Date, from the Holders of the Class R
Certificates (and, if necessary, second, from the Holders of the other
Certificates in the priority specified in the preceding sentence), funds
otherwise distributable to such Holders in an amount sufficient to pay such tax.
Following written notification to the Securities Administrator by the Trustee of
any amount payable out of distributions to the Certificateholders pursuant to
the preceding two sentences, the Securities Administrator shall include in its
Remittance Report instructions as to distributions to such parties taking into
account the priorities described in the second preceding sentence. The
Securities Administrator, on written request by the Trustee, agrees to promptly
notify in writing the party liable for any such tax of the amount thereof and
the due date for the payment thereof.

         The Trustee and the Securities Administrator each agree that, in the
event it should obtain any information necessary for the other party to perform
its obligations pursuant to this Section 10.12, it will promptly notify and
provide such information to such other party. Notwithstanding anything in this
Agreement to the contrary, the Trustee agrees that, in the event that the
Trustee obtains actual knowledge that the Securities Administrator has breached
any of its obligations pursuant to this Section 10.12, the Trustee shall perform
such obligations on its behalf to the extent that the Trustee possesses all
documents necessary to so perform and receives reasonable compensation therefor,
provided, however, that the Trustee shall not be liable for any losses resulting
from any such breach.


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<PAGE>

                                   ARTICLE XI

                                   TERMINATION

         Section 11.01 TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL
MORTGAGE LOANS.

         Subject to Section 11.03, the obligations and responsibilities of the
Depositor, the Master Servicer, the Securities Administrator, the Seller and the
Trustee created hereby with respect to the Trust Fund shall terminate upon the
earlier of (a) the purchase by the Majority Class C Certificateholder of all of
the Mortgage Loans (and REO Properties) remaining in the Trust Fund at a price
(the "Mortgage Loan Purchase Price") equal to the sum of (i) 100% of the Stated
Principal Balance of each Mortgage Loan (other than in respect of REO Property),
(ii) accrued interest thereon at the applicable Mortgage Rate to, but not
including, the first day of the month of such purchase, (iii) the appraised
value of any REO Property in the Trust Fund (up to the Stated Principal Balance
of the related Mortgage Loan), such appraisal to be conducted by an appraiser
mutually agreed upon by the Master Servicer and the Trustee and (iv)
unreimbursed out-of pocket costs of the Company, the Servicers or the Master
Servicer, including unreimbursed servicing advances and the principal portion of
any unreimbursed Advances, made on the Mortgage Loans prior to the exercise of
such repurchase right and (v) any unreimbursed costs and expenses of the Trustee
and the Securities Administrator payable pursuant to Section 10.05 and (b) the
later of (i) the maturity or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) 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 and (ii) the Latest
Possible Maturity Date.

         The right to repurchase all Mortgage Loans and REO Properties pursuant
to clause (a) in the preceding paragraph shall be exercisable on or after the
earlier of (i) the 20% Clean-Up Call Date and (ii) the Distribution Date in
November 2014.

         Section 11.02 FINAL DISTRIBUTION ON THE CERTIFICATES.

         If on any Determination Date, (i) the Master Servicer determines that
there are no Outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than the funds in the Master Servicer Collection Account, the
Master Servicer shall direct the Securities Administrator to send a final
distribution notice promptly to each Certificateholder or (ii) the Securities
Administrator determines that a Class of Certificates shall be retired after a
final distribution on such Class, the Securities Administrator shall notify the
Certificateholders within five (5) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the related Certificates at the office
of the Trustee specified in the final distribution notice to Certificateholders.
If the Class C Certificateholder elects to terminate the Trust Fund pursuant to
Section 11.01, at least 20 days prior to the date notice is to be mailed to the
Certificateholders, the Majority Class C Certificateholder shall


                                     -136-
<PAGE>

notify the Depositor, the Securities Administrator, the Trustee of the date the
Majority Class C Certificateholder intends to terminate the Trust Fund. The
Master Servicer shall remit the Mortgage Loan Purchase Price to the Trustee on
the Business Day prior to the Distribution Date for such Optional Termination by
the Majority Class C Certificateholder.

         Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Securities Administrator by letter to Certificateholders mailed not
earlier than the 10th day and no later than the 15th day of the month
immediately preceding the month of such final distribution. Any such notice
shall specify (a) the Distribution Date upon which final distribution on the
Certificates will be made upon presentation and surrender of Certificates at the
office therein designated, (b) the amount of such final distribution, (c) the
location of the office or agency at which such presentation and surrender must
be made and (d) that the Record Date otherwise applicable to such Distribution
Date is not applicable, distributions being made only upon presentation and
surrender of the Certificates at the office therein specified. The Securities
Administrator will give such notice to each Rating Agency at the time such
notice is given to Certificateholders.

         In the event such notice is given, the Master Servicer shall cause all
funds in the Master Servicer Collection Account to be remitted to the Trustee
for deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit with respect to the Trust
Fund and the receipt by the Trustee of a Request for Release therefor, the
Trustee or the Custodian shall promptly release to the Master Servicer, as
applicable the Mortgage Files for the Mortgage Loans and the Trustee shall
execute and deliver any documents prepared and delivered to it which are
necessary to transfer any REO Property.

         Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class in accordance with
the Remittance Report the amounts allocable to such Certificates held in the
Distribution Account in the order and priority set forth in Section 6.04 hereof
on the final Distribution Date and in proportion to their respective Percentage
Interests.

         In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Securities Administrator shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Securities
Administrator may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that remain a part of the Trust Fund. If within one year
after the second notice all Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all unclaimed
funds and other assets of the Trust Fund that remain subject hereto.

                                     -137-
<PAGE>

         Section 11.03 ADDITIONAL TERMINATION REQUIREMENTS.

                  (a) Upon exercise by the Majority Class C Certificateholder of
its purchase option as provided in Section 11.01, the Trust Fund shall be
terminated in accordance with the following additional requirements, unless each
of the Trustee and the Securities Administrator have been supplied with an
Opinion of Counsel addressed to the Trustee, at the expense of the Majority
Class C Certificateholder, to the effect that the failure of the Trust Fund to
comply with the requirements of this Section 11.03 will not (i) result in the
imposition of taxes on "prohibited transactions" of a REMIC, or (ii) cause a
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding:

                  (1) The Majority Class C Certificateholder shall establish a
90-day liquidation period and notify the Trustee and Securities Administrator
thereof, and the Securities Administrator shall in turn specify the first day of
such period in a statement attached to the tax return for each of REMIC I, REMIC
II and REMIC III pursuant to Treasury Regulation Section 1.860F-1. The Majority
Class C Certificateholder shall satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any regulations thereunder, as
evidenced by an Opinion of Counsel addressed to the Trustee obtained at the
expense of the Majority Class C Certificateholder;

                  (2) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Securities
Administrator as agent of the Trustee shall sell all of the assets of REMIC I,
REMIC II and REMIC III for cash; and

                  (3) At the time of the making of the final payment on the
Certificates, the Securities Administrator as agent for the Trustee shall
distribute or credit, or cause to be distributed or credited, to the Holders of
the Residual Certificates all cash on hand (other than cash retained to meet
claims), and REMIC I shall terminate at that time.

                  (b) By their acceptance of the Certificates, the Holders
thereof hereby authorize the adoption of a 90-day liquidation period for REMIC
I, REMIC II and REMIC III, which authorization shall be binding upon all
successor Certificateholders.

                  (c) The Securities Administrator as agent for each REMIC
hereby agrees to adopt and sign such a plan of complete liquidation upon the
written request of the Majority Class C Certificateholder, and the receipt of
the Opinion of Counsel referred to in Section 11.03(a)(1) and to take such other
action in connection therewith as may be reasonably requested by the Majority
Class C Certificateholder.

                                     -138-
<PAGE>

                                  ARTICLE XII

                            MISCELLANEOUS PROVISIONS

         Section 12.01 AMENDMENT.

         This Agreement may be amended from time to time by parties hereto,
without the consent of any of the Certificateholders to cure any ambiguity, to
correct or supplement any provisions herein (including to give effect to the
expectations of investors), to change the manner in which the Master Servicer
Collection Account maintained by the Master Servicer or the Protected Account
maintained by the Company is maintained or to make such other provisions with
respect to matters or questions arising under this Agreement as shall not be
inconsistent with any other provisions herein if such action shall not, as
evidenced by an Opinion of Counsel addressed to the Trustee, adversely affect in
any material respect the interests of any Certificateholder; 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.

         Notwithstanding the foregoing, without the consent of the
Certificateholders, the parties hereto may at any time and from time to time
amend this Agreement to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or appropriate to maintain the qualification
of each of REMIC I, REMIC II and REMIC III as a REMIC under the Code or to avoid
or minimize the risk of the imposition of any tax on any of REMIC I, REMIC II or
REMIC III pursuant to the Code that would be a claim against any of REMIC I,
REMIC II or REMIC III at any time prior to the final redemption of the
Certificates, provided that the Trustee has been provided an Opinion of Counsel
addressed to the Trustee, which opinion shall be an expense of the party
requesting such opinion but in any case shall not be an expense of the Trustee,
the Securities Administrator or the Trust Fund, to the effect that such action
is necessary or appropriate to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.

         This Agreement may also be amended from time to time by the parties
hereto and the Holders of each Class of Certificates affected thereby evidencing
over 50% of the Voting Rights of such Class or Classes 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 that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, payments required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii) cause
any of REMIC I, REMIC II or REMIC III to cease to qualify as a REMIC or (iii)
reduce the aforesaid percentages of Certificates of each Class the Holders of
which are required to consent to any such amendment without the consent of the
Holders of all Certificates of such Class then outstanding.

         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 addressed to the Trustee , which opinion shall be
an expense of the party requesting such


                                     -139-
<PAGE>

amendment but in any case shall not be an expense of the Trustee or the
Securities Administrator, to the effect that such amendment will not (other than
an amendment pursuant to clause (ii) of, and in accordance with, the preceding
paragraph) cause the imposition of any tax on REMIC I, REMIC II, REMIC III or
the Certificateholders or cause REMIC I, REMIC II or REMIC III to cease to
qualify as a REMIC at any time that any Certificates are outstanding. Further,
nothing in this Agreement shall require the Trustee to enter into an amendment
without receiving an Opinion of Counsel, satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement (including any consent of the
applicable Certificateholders) have been complied with.

         Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
each Rating Agency.

         It shall not be necessary for the consent of Certificateholders under
this Section 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.

         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
of the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere. The Master Servicer shall effect such recordation at the
Trust's expense upon the request in writing of a Certificateholder, but only if
such direction is accompanied by an Opinion of Counsel (provided at the expense
of the Certificateholder requesting recordation) to the effect that such
recordation would materially and beneficially affect the interests of the
Certificateholders or is required by law.

         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 GOVERNING LAW.

         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS).

                                     -140-
<PAGE>

         Section 12.04 INTENTION OF PARTIES.

         It is the express intent of the parties hereto that the conveyance of
the Mortgage Notes, Mortgages, assignments of Mortgages, title insurance
policies and any modifications, extensions and/or assumption agreements and
private mortgage insurance policies relating to the Mortgage Loans by the Seller
to the Depositor, and by the Depositor to the Trustee be, and be construed as,
an absolute sale thereof to the Depositor or the Trustee, as applicable. It is,
further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Seller to the Depositor, or by the Depositor to the
Trustee. However, in the event that, notwithstanding the intent of the parties,
such assets are held to be the property of the Seller or the Depositor, as
applicable, or if for any other reason the Mortgage Loan Purchase Agreement or
this Agreement is held or deemed to create a security interest in such assets,
then (i) the Mortgage Loan Purchase Agreement and this Agreement shall each be
deemed to be a security agreement within the meaning of the Uniform Commercial
Code of the State of New York and (ii) the conveyance provided for in the
Mortgage Loan Purchase Agreement from the Seller to the Depositor, and the
conveyance provided for in this Agreement from the Depositor to the Trustee,
shall be deemed to be an assignment and a grant by the Seller or the Depositor,
as applicable, for the benefit of the Certificateholders, of a security interest
in all of the assets that constitute the Trust Fund, whether now owned or
hereafter acquired.

         The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement.

         Section 12.05 NOTICES.

                  (a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which a
Responsible Officer of the Trustee has actual knowledge:

                  (i) Any material change or amendment to this Agreement;

                  (ii) The occurrence of any Event of Default that has not been
         cured;

                  (iii) The resignation or termination of the Master Servicer,
         the Securities Administrator or the Trustee and the appointment of any
         successor;

                  (iv) The repurchase or substitution of Mortgage Loans pursuant
         to Sections 2.02, 2.03, 4.20 and 11.01; and

                  (v) The final payment to Certificateholders.

                  (b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered at or mailed
by registered mail, return receipt requested, postage prepaid, or by recognized
overnight courier, or by facsimile transmission to a


                                     -141-
<PAGE>

number provided by the appropriate party if receipt of such transmission is
confirmed to (i) in the case of the Depositor, Bear Stearns Asset Backed
Securities I LLC, 383 Madison Avenue, New York, New York 10179, Attention: Chief
Counsel; (ii) in the case of the Seller or the Company, EMC Mortgage
Corporation, 909 Hidden Ridge Drive, Irving, Texas 75038, Attention: Ralene
Ruyle or such other address as may be hereafter furnished to the other parties
hereto by the Master Servicer in writing; (iv) in the case of the Trustee, at
each Corporate Trust Office or such other address as the Trustee may hereafter
furnish to the other parties hereto; (v) in the case of the Master Servicer or
the Securities Administrator, P. O. Box 98, Columbia, Maryland 21046 (or, for
overnight deliveries, 9062 Old Annapolis Road, Columbia, Maryland 21045),
Attention: BSABS I 2004-AC7 or such other address as may be hereafter furnished
to the other parties hereto by the Securities Administrator in writing and (vi)
in the case of the Rating Agencies, (x) Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007, Attention: Home Equity Monitoring and
(y) Standard & Poor's, 55 Water Street, 41st Floor, New York, New York 10041,
Attention: Mortgage Surveillance Group. Any notice delivered to the Seller, the
Master Servicer, the Securities Administrator or the Trustee under this
Agreement shall be effective only upon receipt. Any notice required or permitted
to be mailed to a Certificateholder, unless otherwise provided herein, shall be
given by first-class mail, postage prepaid, at the address of such
Certificateholder 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, whether or not the Certificateholder receives such notice.

         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 ASSIGNMENT.

         Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 8.02, this Agreement may not be assigned by the
Master Servicer, the Seller or the Depositor.

         Section 12.08 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 representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or 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 provided
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 the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members


                                     -142-
<PAGE>

of an association; nor shall any Certificateholder be under any liability to any
third party by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.

         No Certificateholder shall have any right by virtue or by availing
itself of any provisions 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 or the Securities
Administrator, as appropriate, a written notice of an Event of Default and of
the continuance thereof, as hereinbefore provided, the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates
shall also have made written request to the Trustee or the Securities
Administrator, as appropriate to institute such action, suit or proceeding in
its own name as Trustee or the Securities Administrator, as appropriate,
hereunder and shall have offered to the Trustee or the Securities Administrator,
as appropriate, such reasonable indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee or
the Securities Administrator, as appropriate, for 60 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 being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the 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
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 12.08, each and every Certificateholder, the
Trustee or the Securities Administrator shall be entitled to such relief as can
be given either at law or in equity.

         Section 12.09 INSPECTION AND AUDIT RIGHTS. The Master Servicer agrees
that, on reasonable prior notice, it will permit any representative of the
Depositor or the Trustee during the Master Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Master Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor or the Trustee and to discuss its affairs,
finances and accounts relating to such Mortgage Loans with its officers,
employees and independent public accountants (and by this provision the Master
Servicer hereby authorizes such accountants to discuss with such representative
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested. Any out-of-pocket expense incident to the
exercise by the Depositor or the Trustee of any right under this Section 12.09
shall be borne by the party requesting such inspection, subject to such party's
right to reimbursement hereunder (in the case of the Trustee, pursuant to
Section 10.05 hereof).

                                     -143-
<PAGE>

         Section 12.10 CERTIFICATES NONASSESSABLE AND FULLY PAID.

         It is the intention of the Depositor that Certificateholders shall not
be personally liable for obligations of the Trust Fund, that the interests in
the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.

                                      * * *


                                     -144-
<PAGE>


         IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Seller, the
Company, the Securities Administrator and the Trustee have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.

                                      BEAR STEARNS ASSET BACKED SECURITIES I LLC
                                             as Depositor


                                      By:/s/ Baron Silverstein
                                         ---------------------------------------
                                      Name:  Baron Silverstein
                                      Title: Vice President

                                      EMC MORTGAGE CORPORATION,
                                             as Seller and Company

                                      By:/s/ Dana Dillard
                                         ---------------------------------------
                                      Name:  Dana Dillard
                                      Title: Senior Vice President

                                      WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                             as Securities Administrator and
                                             Master Servicer

                                      By:/s/ Stacey Taylor
                                         ---------------------------------------
                                      Name:  Stacey Taylor
                                      Title: Assistant Vice President


                                      U.S. BANK NATIONAL ASSOCIATION,
                                             as Trustee


                                      By:/s/ Vaneta I. Bernard
                                         ---------------------------------------
                                      Name:  Vaneta I. Bernard
                                      Title: Vice President


                                     -145-
<PAGE>



STATE OF NEW YORK   )
                    ) ss.:
COUNTY OF NEW YORK  )

                  On this 30th day of November, 2004, before me, a notary public
in and for said State, appeared Baron Silverstein, personally known to me on the
basis of satisfactory evidence to be an authorized representative of Bear
Stearns Asset Backed Securities I LLC, one of the companies that executed the
within instrument, and also known to me to be the person who executed it on
behalf of such limited liability company and acknowledged to me that such
limited liability company executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.


                                                   ----------------------------
                                                   Notary Public

[Notarial Seal]


                                     -146-
<PAGE>


STATE OF MARYLAND   )
                    ) ss.:
COUNTY OF HOWARD    )

                  On this 30th day of November, 2004, before me, a notary public
in and for said State, appeared Stacey Taylor, personally known to me on the
basis of satisfactory evidence to be an authorized representative of Wells Fargo
Bank, National Association that executed the within instrument, and also known
to me to be the person who executed it on behalf of such national banking
association, and acknowledged to me that such national banking association
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]


                                     -147-
<PAGE>

STATE OF TEXAS      )
                    ) ss.:
COUNTY OF DALLAS    )

                  On this 30th day of November, 2004, before me, a notary public
in and for said State, appeared Dana Dillard, personally known to me on the
basis of satisfactory evidence to be an authorized representative of EMC
Mortgage Corporation, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such 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]



                                     -148-
<PAGE>



STATE OF MASSACHUSETTS )
                       ) ss.:
COUNTY OF SUFFOLK      )

                  On this 30th day of November, 2004, before me, a notary public
in and for said State, appeared Vaneta I. Bernard, personally known to me on the
basis of satisfactory evidence to be an authorized representative of U.S. Bank
National Association that executed the within instrument, and also known to me
to be the person who executed it on behalf of such 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]



                                     -149-

<PAGE>

                                   EXHIBIT A-1

                      Form Of Class A-[1][2][3] 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").

         [FOR CLASS A-[1][2]]: THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE WILL BE DECREASED BY THE PRINCIPAL PAYMENTS HEREON. 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 TRUSTEE NAMED HEREIN.

         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.


                                      A-1-1


<PAGE>


<TABLE>
<CAPTION>
<S>                                                        <C>
Certificate No.1                                           [Pass-Through Rate: [______]%] [Variable Pass-Through
                                                           Rate]

Class A-[1][2][3] Senior

Date of Pooling and Servicing Agreement                    Aggregate Initial Certificate [Notional Amount]
and Cut-off Date:                                          [Principal Balance] of this Certificate as of the
November 1, 2004                                           Cut-off Date:
                                                           $__________

First Distribution Date:                                   Initial Certificate [Notional Amount] [Principal
December 27, 2004                                          Balance] of this Certificate as of the Cut-off Date:
                                                           $__________

Master Servicer:                                           CUSIP: __________
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
December 25, 2034
</TABLE>


                            ASSET-BACKED CERTIFICATE
                                 SERIES 2004-AC7

         evidencing a fractional undivided interest in the distributions
         allocable to the Class A-[1][2][3] Certificates with respect to a Trust
         Fund consisting primarily of a pool of conventional one- to four-family
         fixed interest rate mortgage loans sold by BEAR STEARNS ASSET BACKED
         SECURITIES I LLC.

         This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Bear Stearns Asset Backed
Securities I LLC, the Master Servicer, the Trustee or the Securities
Administrator referred to below or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by Bear Stearns Asset Backed Securities I
LLC, the Master Servicer, the Trustee or the Securities Administrator or any of
their affiliates or any other person. None of Bear Stearns Asset Backed
Securities I LLC, the Master Servicer or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, fixed rate mortgage loans
secured by one- to four- family residences (collectively, the "Mortgage Loans")
sold by Bear Stearns Asset Backed Securities I LLC ("BSABS I"). The Mortgage
Loans were sold by EMC Mortgage Corporation ("EMC") to BSABS I. Wells Fargo
Bank, National


                                      A-1-2
<PAGE>


Association will act as master servicer of the Mortgage Loans (the "Master
Servicer," which term includes any successors thereto under the Agreement
referred to below). The Trust Fund was created pursuant to the Pooling and
Servicing Agreement, dated as of the Cut-off Date specified above (the
"Agreement"), among BSABS I, as depositor (the "Depositor"), EMC Mortgage
Corporation as seller and company, Wells Fargo Bank, National Association, as
Master Servicer and securities administrator (the "Securities Administrator")
and U.S. Bank 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, capitalized terms used herein shall have the meaning
ascribed to them 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 its acceptance hereof
assents and by which such Holder is bound.

         [For Class A-1]: Interest on this Certificate will accrue during the
month prior to the month in which a Distribution Date (as hereinafter defined)
occurs on the Certificate Principal Balance hereof at a per annum rate equal to
the Pass-Through Rate set forth above. The Trustee will distribute on the 25th
day of each month, or, if such 25th day is not a Business Day, the immediately
following Business Day (each, 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 last day (or if such last day is
not a Business Day, the Business Day immediately preceding such last day) of the
calendar month immediately preceding the month in which the Distribution Date
occurs, an amount equal to the product of the Percentage Interest evidenced by
this Certificate and the amount (of interest and principal, if any) required to
be distributed to the Holders of Certificates of the same Class as this
Certificate. The Assumed Final Distribution Date is the Distribution Date in the
month following the latest scheduled maturity date of any Mortgage Loan and is
not likely to be the date on which the Certificate Principal Balance of this
Class of Certificates will be reduced to zero. [For Class A-2]: Interest on this
Certificate will accrue from and including the 25th day of the calendar month
preceding the month in which a Distribution Date (as hereinafter defined) occurs
to and including the 24th day of the calendar month in which that Distribution
Date occurs on the Certificate Principal Balance hereof at a per annum rate
equal to the Pass-Through Rate set forth above. The Trustee will distribute on
the 25th day of each month, or, if such 25th day is not a Business Day, the
immediately following Business Day (each, 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, an amount equal to the product of
the Percentage Interest evidenced by this Certificate and the amount (of
interest and principal, if any) required to be distributed to the Holders of
Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the Distribution Date in the month following the latest
scheduled maturity date of any Mortgage Loan and is not likely to be the date on
which the Certificate Principal Balance of this Class of Certificates will be
reduced to zero. [For Class A-3]: Interest on this Certificate will accrue from
and including the 25th day of the calendar month preceding the month in which a
Distribution Date (as hereinafter defined) occurs to and including the 24th day
of the calendar month in which that Distribution Date occurs on the Certificate
Notional Amount hereof at a per annum rate equal to the Pass-Through Rate set
forth above. The Trustee will distribute on the 25th day of each month, or, if
such 25th day is not a Business Day, the immediately following Business Day
(each, 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 last day (or if


                                      A-1-3
<PAGE>


such last day is not a Business Day, the Business Day immediately preceding such
last day) of the calendar month immediately preceding the month in which the
Distribution Date occurs, an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount (of interest, if any)
required to be distributed to the Holders of Certificates of the same Class as
this Certificate. The Assumed Final Distribution Date is the Distribution Date
in the month following the latest scheduled maturity date of any Mortgage Loan.

         Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice. [For Class
A-[1][2]]: The initial Certificate Principal Balance of this Certificate is set
forth above. The Certificate Principal Balance hereof will be reduced to the
extent of distributions allocable to principal hereon. [For Class A-3]: The
initial Certificate Notional Amount of this Certificate is set forth above.

         This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of the Class or
Classes of Certificates affected thereby evidencing over 50% of the Voting
Rights of such Class or Classes. 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 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 with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.


                                      A-1-4
<PAGE>


         The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of Depositor, the Master Servicer, the
Trustee or any such agent shall be affected by notice to the contrary.

         The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (B) the remittance of all funds due under the Agreement, or
(ii) the optional repurchase by the party named in the Agreement of all the
Mortgage Loans and other assets of the Trust Fund in accordance with the terms
of the Agreement. Such optional repurchase may be made only on or after the
earlier of (i) the first Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 20% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date
and (ii) the Distribution Date in November 2014. The exercise of such right will
effect the early retirement of the Certificates. In no event, however, will the
Trust Fund created by the Agreement continue beyond the expiration of 21 years
after the death of certain persons identified in the Agreement.

         Unless this Certificate has been countersigned by an authorized
signatory of the Trustee 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 Trustee has caused this Certificate to be duly
executed.


Dated: __________, 20___             U.S. BANK NATIONAL ASSOCIATION,
                                     not in its individual capacity but
                                     solely as Trustee


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


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class A-[1][2][3] Certificates referred to in the
within-mentioned Agreement.

                                     U.S. BANK NATIONAL ASSOCIATION
                                     Authorized signatory of U.S.
                                     Bank National Association, not
                                     in its individual capacity but
                                     solely as Trustee


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


                                     A-1-6
<PAGE>


                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed 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 Certificate Registrar 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.


                                     A-1-7
<PAGE>


                                   EXHIBIT A-2

                     Form of Class M-[1][2][3] Certificates


         THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR
CERTIFICATES [,] [AND] [THE CLASS M-1 CERTIFICATES] [,] [AND] [THE CLASS M-2
CERTIFICATES] AS DESCRIBED IN THE AGREEMENT (AS DEFINED BELOW).

         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").

         THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
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 TRUSTEE NAMED HEREIN.

         EACH BENEFICIAL OWNER OF A CERTIFICATE OR ANY INTEREST THEREIN SHALL BE
DEEMED TO HAVE REPRESENTED, BY VIRTUE OF ITS ACQUISITION OR HOLDING OF THAT
CERTIFICATE OR INTEREST THEREIN, THAT EITHER (I) IT IS NOT A PLAN OR INVESTING
WITH "PLAN ASSETS", (II) IT HAS ACQUIRED AND IS HOLDING SUCH CERTIFICATE IN
RELIANCE ON PROHIBITED TRANSACTION EXEMPTION 2002-41 AS AMENDED ("EXEMPTION"),
AND THAT IT UNDERSTANDS THAT THERE ARE CERTAIN CONDITIONS TO THE AVAILABILITY OF
THE EXEMPTION, INCLUDING THAT THE CERTIFICATE MUST BE RATED, AT THE TIME OF
PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY S&P, FITCH RATINGS OR
MOODY'S, AND THE CERTIFICATE IS SO RATED OR (III) (1) IT IS AN INSURANCE
COMPANY, (2) 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 (3) THE
CONDITIONS IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN SATISFIED.

         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


                                     A-2-1
<PAGE>


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.


                                     A-2-2
<PAGE>


<TABLE>
<CAPTION>
<S>                                              <C>
Certificate No.1                                 Variable Pass-Through Rate

Class M-[1][2][3] Subordinate

Date of Pooling and Servicing Agreement          Aggregate Initial Certificate Principal Balance of this
and Cut-off Date:                                Certificate as of the Cut-off Date:
November 1, 2004                                 $________________

First Distribution Date:                         Initial Certificate Principal Balance of this
December 27, 2004                                Certificate as of the Cut-off Date:
                                                 $----------------

Master Servicer:                                 CUSIP: _______________
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
December 25, 2034
</TABLE>


                            ASSET-BACKED CERTIFICATE
                                 SERIES 2004-AC7

         evidencing a fractional undivided interest in the distributions
         allocable to the Class M-[1][2][3] Certificates with respect to a Trust
         Fund consisting primarily of a pool of conventional one- to four-family
         fixed interest rate mortgage loans sold by BEAR STEARNS ASSET BACKED
         SECURITIES I LLC.

         This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Bear Stearns Asset Backed
Securities I LLC, the Master Servicer, the Trustee or the Securities
Administrator referred to below or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by Bear Stearns Asset Backed Securities I
LLC, the Master Servicer, the Trustee or the Securities Administrator or any of
their affiliates or any other person. None of Bear Stearns Asset Backed
Securities I LLC, the Master Servicer or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, fixed rate mortgage loans
secured by one- to four- family residences (collectively, the "Mortgage Loans")
sold by Bear Stearns Asset Backed Securities I LLC ("BSABS I"). The Mortgage
Loans were sold by EMC Mortgage Corporation ("EMC") to BSABS I. Wells Fargo
Bank, National Association will act as master servicer of the Mortgage Loans
(the "Master Servicer," which term includes any successors thereto under the
Agreement referred to below). The Trust Fund was created pursuant to the Pooling
and Servicing Agreement dated as of the Cut-off Date


                                     A-2-3
<PAGE>


specified above (the "Agreement"), among BSABS I, as depositor (the
"Depositor"), EMC Mortgage Corporation as seller and company, Wells Fargo Bank,
National Association, as Master Servicer and securities administrator (the
"Securities Administrator") and U.S. Bank 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, capitalized terms used herein
shall have the meaning ascribed to them 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 its
acceptance hereof assents and by which such Holder is bound.

         Interest on this Certificate will accrue from and including the 25th
day of the calendar month preceding the month in which a Distribution Date (as
hereinafter defined) occurs to and including the 24th day of the calendar month
in which that Distribution Date occurs on the Certificate Principal Balance
hereof at a per annum rate equal to the Pass-Through Rate set forth above. The
Trustee will distribute on the 25th day of each month, or, if such 25th day is
not a Business Day, the immediately following Business Day (each, 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, an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount (of interest and principal, if any) required to be
distributed to the Holders of Certificates of the same Class as this
Certificate. The Assumed Final Distribution Date is the Distribution Date in the
month following the latest scheduled maturity date of any Mortgage Loan and is
not likely to be the date on which the Certificate Principal Balance of this
Class of Certificates will be reduced to zero.

         Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice. The initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses allocable
hereto.

         This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.


                                     A-2-4
<PAGE>


         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of the Class or
Classes of Certificates affected thereby evidencing over 50% of the Voting
Rights of such Class or Classes. 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 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 with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

         Each beneficial owner of a Certificate or any interest therein shall be
deemed to have represented, by virtue of its acquisition or holding of that
certificate or interest therein, that either (i) it is not a Plan or investing
with "Plan Assets", (ii) it has acquired and is holding such certificate in
reliance on the Exemption, and that it understands that there are certain
conditions to the availability of the Exemption, including that the certificate
must be rated, at the time of purchase, not lower than "BBB-" (or its
equivalent) by S&P, Fitch Ratings or Moody's, and the certificate is so rated or
(iii) (1) it is an insurance company, (2) 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 (3) the conditions in Sections I and III of PTCE 95-60 have
been satisfied.

         The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them 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 or any such agent shall be affected by notice to the contrary.

         The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of


                                     A-2-5
<PAGE>


any Mortgage Loan and (B) the remittance of all funds due under the Agreement,
or (ii) the optional repurchase by the party named in the Agreement of all the
Mortgage Loans and other assets of the Trust Fund in accordance with the terms
of the Agreement. Such optional repurchase may be made only on or after the
earlier of (i) the first Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 20% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date
and (ii) the Distribution Date in November 2014. The exercise of such right will
effect the early retirement of the Certificates. In no event, however, will the
Trust Fund created by the Agreement continue beyond the expiration of 21 years
after the death of certain persons identified in the Agreement.

         Unless this Certificate has been countersigned by an authorized
signatory of the Trustee 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 Trustee has caused this Certificate to be duly
executed.


Dated: __________, 20___             U.S. BANK NATIONAL ASSOCIATION,
                                     not in its individual capacity but
                                     solely as Trustee


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


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class M-[1][2][3] Certificates referred to in the
within-mentioned Agreement.

                                     U.S. BANK NATIONAL ASSOCIATION
                                     Authorized signatory of U.S.
                                     Bank National Association, not
                                     in its individual capacity but
                                     solely as Trustee


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


                                     A-2-7
<PAGE>


                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed 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 Certificate Registrar 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.


                                     A-2-8
<PAGE>


                                  EXHIBIT A-3

                     Form of Class B-[1][2][3] Certificate


         THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR
CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS
M-3 CERTIFICATES [,] [AND] [THE CLASS B-1 CERTIFICATES] [,] [AND] [THE CLASS B-2
CERTIFICATES] AS DESCRIBED IN THE AGREEMENT (AS DEFINED BELOW).

         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").

         THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO.
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 TRUSTEE NAMED HEREIN.

         EACH BENEFICIAL OWNER OF A CERTIFICATE OR ANY INTEREST THEREIN SHALL BE
DEEMED TO HAVE REPRESENTED, BY VIRTUE OF ITS ACQUISITION OR HOLDING OF THAT
CERTIFICATE OR INTEREST THEREIN, THAT EITHER (I) IT IS NOT A PLAN OR INVESTING
WITH "PLAN ASSETS", (II) IT HAS ACQUIRED AND IS HOLDING SUCH CERTIFICATE IN
RELIANCE ON PROHIBITED TRANSACTION EXEMPTION 2002-41 AS AMENDED ("EXEMPTION"),
AND THAT IT UNDERSTANDS THAT THERE ARE CERTAIN CONDITIONS TO THE AVAILABILITY OF
THE EXEMPTION, INCLUDING THAT THE CERTIFICATE MUST BE RATED, AT THE TIME OF
PURCHASE, NOT LOWER THAN "BBB-" (OR ITS EQUIVALENT) BY S&P, FITCH RATINGS OR
MOODY'S, AND THE CERTIFICATE IS SO RATED OR (III) (1) IT IS AN INSURANCE
COMPANY, (2) 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 (3) THE
CONDITIONS IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN SATISFIED.

         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


                                     A-3-1
<PAGE>


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.


                                     A-3-2
<PAGE>


<TABLE>
<CAPTION>
<S>                                                <C>
Certificate No.1                                   Variable Pass-Through Rate

Class B-[1][2][3] Subordinate

Date of Pooling and Servicing Agreement            Aggregate Initial Certificate Principal Balance of this
and Cut-off Date:                                  Certificate as of the Cut-off Date:
November 1, 2004                                   $________________

First Distribution Date:                           Initial Certificate Principal Balance of this
December 27, 2004                                  Certificate as of the Cut-off Date:
                                                   $----------------

Master Servicer:                                   CUSIP: _________________
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
December 25, 2034
</TABLE>


                            ASSET-BACKED CERTIFICATE
                                 SERIES 2004-AC7

         evidencing a fractional undivided interest in the distributions
         allocable to the Class B-[1][2][3] Certificates with respect to a Trust
         Fund consisting primarily of a pool of conventional one- to four-family
         fixed interest rate mortgage loans sold by BEAR STEARNS ASSET BACKED
         SECURITIES I LLC.

         This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Bear Stearns Asset Backed
Securities I LLC, the Master Servicer, the Trustee or the Securities
Administrator referred to below or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by Bear Stearns Asset Backed Securities I
LLC, the Master Servicer, the Trustee or the Securities Administrator or any of
their affiliates or any other person. None of Bear Stearns Asset Backed
Securities I LLC, the Master Servicer or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced hereby in the beneficial ownership interest of
Certificates of the same Class as this Certificate in a trust (the "Trust Fund")
generally consisting of conventional first lien, fixed rate mortgage loans
secured by one- to four- family residences (collectively, the "Mortgage Loans")
sold by Bear Stearns Asset Backed Securities I LLC ("BSABS I"). The Mortgage
Loans were sold by EMC Mortgage Corporation ("EMC") to BSABS I. Wells Fargo
Bank, National Association will act as master servicer of the Mortgage Loans
(the "Master Servicer," which term includes any successors thereto under the
Agreement referred to below). The Trust Fund


                                     A-3-3
<PAGE>


was created pursuant to the Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement"), among BSABS I, as depositor (the
"Depositor"), EMC Mortgage Corporation as seller and company, Wells Fargo Bank,
National Association, as Master Servicer and securities administrator (the
"Securities Administrator") and U.S. Bank 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, capitalized terms used herein
shall have the meaning ascribed to them 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 its
acceptance hereof assents and by which such Holder is bound.

         Interest on this Certificate will accrue from and including the 25th
day of the calendar month preceding the month in which a Distribution Date (as
hereinafter defined) occurs to and including the 24th day of the calendar month
in which that Distribution Date occurs on the Certificate Principal Balance
hereof at a per annum rate equal to the Pass-Through Rate set forth above. The
Trustee will distribute on the 25th day of each month, or, if such 25th day is
not a Business Day, the immediately following Business Day (each, 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, an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount (of interest and principal, if any) required to be
distributed to the Holders of Certificates of the same Class as this
Certificate. The Assumed Final Distribution Date is the Distribution Date in the
month following the latest scheduled maturity date of any Mortgage Loan and is
not likely to be the date on which the Certificate Principal Balance of this
Class of Certificates will be reduced to zero.

         Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice. The initial
Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of
distributions allocable to principal hereon and any Realized Losses allocable
hereto.

         This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.


                                     A-3-4
<PAGE>


         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of the Class or
Classes of Certificates affected thereby evidencing over 50% of the Voting
Rights of such Class or Classes. 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 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 with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

         Each beneficial owner of a Certificate or any interest therein shall be
deemed to have represented, by virtue of its acquisition or holding of that
certificate or interest therein, that either (i) it is not a Plan or investing
with "Plan Assets", (ii) it has acquired and is holding such certificate in
reliance on the Exemption, and that it understands that there are certain
conditions to the availability of the Exemption, including that the certificate
must be rated, at the time of purchase, not lower than "BBB-" (or its
equivalent) by S&P, Fitch Ratings or Moody's, and the certificate is so rated or
(iii) (1) it is an insurance company, (2) 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 (3) the conditions in Sections I and III of PTCE 95-60 have
been satisfied.

         The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them 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 or any such agent shall be affected by notice to the contrary.


                                     A-3-5
<PAGE>


         The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (B) the remittance of all funds due under the Agreement, or
(ii) the optional repurchase by the party named in the Agreement of all the
Mortgage Loans and other assets of the Trust Fund in accordance with the terms
of the Agreement. Such optional repurchase may be made only on or after the
earlier of (i) the first Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 20% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date
and (ii) the Distribution Date in November 2014. The exercise of such right will
effect the early retirement of the Certificates. In no event, however, will the
Trust Fund created by the Agreement continue beyond the expiration of 21 years
after the death of certain persons identified in the Agreement.

         Unless this Certificate has been countersigned by an authorized
signatory of the Trustee 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 Trustee has caused this Certificate to be duly
executed.


Dated: __________, 20___             U.S. BANK NATIONAL ASSOCIATION,
                                     not in its individual capacity but
                                     solely as Trustee


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


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class B-[1][2][3] Certificates referred to in the
within-mentioned Agreement.

                                     U.S. BANK NATIONAL ASSOCIATION
                                     Authorized signatory of U.S.
                                     Bank National Association, not
                                     in its individual capacity but
                                     solely as Trustee


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


                                     A-3-7
<PAGE>


                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed 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 Certificate Registrar 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.


                                     A-3-8
<PAGE>


                                   EXHIBIT A-4

                          Form of Class C 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 HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES 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 ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
"INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH
ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY
THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE
THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION.

         NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 7.02(B) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICER, THE
TRUSTEE AND THE SECURITIES ADMINISTRATOR THAT THE PURCHASE AND HOLDING OF THIS
CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN THE ASSETS OF THE TRUST BEING
DEEMED TO BE "PLAN ASSETS" UNDER ERISA OR THE CODE, WILL NOT RESULT IN ANY
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY


                                     A-4-1
<PAGE>


ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE CODE AND WILL NOT
SUBJECT THE TRUSTEE, THE MASTER SERVICER OR THE SECURITIES ADMINISTRATOR TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.


                                     A-4-2
<PAGE>


<TABLE>
<CAPTION>
<S>                                                <C>
Certificate No.1                                   Percentage Interest: 100%

Class C                                            Variable Pass-Through Rate

Date of Pooling and Servicing Agreement            Aggregate Certificate Notional Amount of this
and Cut-off Date:                                  Certificate as of the Cut-off Date:
November 1, 2004                                   $______________

First Distribution Date:                           Initial Certificate Notional Amount of this Certificate
December 27, 2004                                  as of the Cut-off Date:
                                                   $--------------

Master Servicer:                                   CUSIP:______________
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
December 25, 2034
</TABLE>


                            ASSET-BACKED CERTIFICATE
                                 SERIES 2004-AC7

         evidencing a fractional undivided interest in the distributions
         allocable to the Class C Certificates with respect to a Trust Fund
         consisting primarily of a pool of conventional one- to four-family
         fixed interest rate mortgage loans sold by BEAR STEARNS ASSET BACKED
         SECURITIES I LLC.

         This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Bear Stearns Asset Backed
Securities I LLC, the Master Servicer, the Trustee or the Securities
Administrator referred to below or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by Bear Stearns Asset Backed Securities I
LLC, the Master Servicer, the Trustee or the Securities Administrator or any of
their affiliates or any other person. None of Bear Stearns Asset Backed
Securities I LLC, the Master Servicer or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.

         This certifies that Bear, Stearns Securities Corp. is the registered
owner of the Percentage Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") generally consisting of conventional first lien, fixed rate
mortgage loans secured by one- to four- family residences (collectively, the
"Mortgage Loans") sold by Bear Stearns Asset Backed Securities I LLC ("BSABS
I"). The Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to BSABS
I. Wells Fargo Bank, National Association will act as master servicer of the
Mortgage Loans (the "Master


                                     A-4-3
<PAGE>


Servicer," which term includes any successors thereto under the Agreement
referred to below). The Trust Fund was created pursuant to the Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement"), among BSABS I, as depositor (the "Depositor"), EMC Mortgage
Corporation as seller and company, Wells Fargo Bank, National Association, as
Master Servicer and securities administrator (the "Securities Administrator")
and U.S. Bank 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, capitalized terms used herein shall have the meaning
ascribed to them 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 its acceptance hereof
assents and by which such Holder is bound.

         The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, 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 last day (or if such last day is not a Business Day, the
Business Day immediately preceding such last day) of the calendar month
immediately preceding the month in which the Distribution Date occurs, an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amounts required to be distributed to the Holders of Certificates of the
same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month following the latest scheduled maturity date of
any Mortgage Loan.

         Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.

         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 Trustee 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 D and either
Exhibit E or Exhibit F, as applicable, 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 Securities Administrator
or the Master Servicer 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. Neither the Depositor nor the Trustee is
obligated to


                                     A-4-4
<PAGE>


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 Securities
Administrator, the Depositor, the Seller and the Master Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.

         No transfer of this Class C Certificate will be made unless the Trustee
shall have received the opinion of counsel set forth in section 7.02 of the
Pooling Agreement or (ii) a representation letter, in the form as described by
the Agreement, stating that the transferee is not an employee benefit or other
plan subject to the prohibited transaction provisions of ERISA or Section 4975
of the Code (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.

         This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of the Class or
Classes of Certificates affected thereby evidencing over 50% of the Voting
Rights of such Class or Classes. 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 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 with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.


                                     A-4-5
<PAGE>


         The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them 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 or any such agent shall be affected by notice to the contrary.

         The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (B) the remittance of all funds due under the Agreement, or
(ii) the optional repurchase by the party named in the Agreement of all the
Mortgage Loans and other assets of the Trust Fund in accordance with the terms
of the Agreement. Such optional repurchase may be made only on or after the
earlier of (i) the first Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 20% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date
and (ii) the Distribution Date in November 2014. The exercise of such right will
effect the early retirement of the Certificates. In no event, however, will the
Trust Fund created by the Agreement continue beyond the expiration of 21 years
after the death of certain persons identified in the Agreement.

         Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.


                                     A-4-6
<PAGE>


         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.


Dated: __________, 20___             U.S. BANK NATIONAL ASSOCIATION,
                                     not in its individual capacity but
                                     solely as Trustee


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


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class C Certificates referred to in the
within-mentioned Agreement.

                                     U.S. BANK NATIONAL ASSOCIATION
                                     Authorized signatory of U.S.
                                     Bank National Association, not
                                     in its individual capacity but
                                     solely as Trustee


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


                                     A-4-7
<PAGE>


                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed 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 Certificate Registrar 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.


                                     A-4-8
<PAGE>


                                   EXHIBIT A-5

                           Form of 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").

         THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON. 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 TRUSTEE NAMED
HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES 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 ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
"INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH
ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY
THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE
THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION.


                                     A-5-1
<PAGE>


         NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 7.02(B) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE THAT THE PURCHASE
AND HOLDING OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN THE ASSETS OF
THE TRUST BEING DEEMED TO BE "PLAN ASSETS" UNDER ERISA OR THE CODE, WILL NOT
RESULT IN ANY NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION
4975 OF THE CODE AND WILL NOT SUBJECT THE MASTER SERVICER, THE TRUSTEE OR THE
SECURITIES ADMINISTRATOR TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT.


                                     A-5-2
<PAGE>


<TABLE>
<CAPTION>
<S>                                                <C>
Certificate No.1                                   Percentage Interest: 100%

Class P

Date of Pooling and Servicing Agreement            Aggregate Initial Certificate Principal Balance of this
and Cut-off Date:                                  Certificate as of the Cut-off Date:
November 1, 2004                                   $100.00

First Distribution Date:                           Initial Certificate Principal Balance of this
December 27, 2004                                  Certificate as of the Cut-off Date:
                                                   $100.00

Master Servicer:                                   CUSIP: _________________
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
December 25, 2034
</TABLE>


                            ASSET-BACKED CERTIFICATE
                                 SERIES 2004-AC7

         evidencing a fractional undivided interest in the distributions
         allocable to the Class P Certificates with respect to a Trust Fund
         consisting primarily of a pool of conventional one- to four-family
         fixed interest rate mortgage loans sold by BEAR STEARNS ASSET BACKED
         SECURITIES I LLC.

         This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Bear Stearns Asset Backed
Securities I LLC, the Master Servicer, the Trustee or the Securities
Administrator referred to below or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by Bear Stearns Asset Backed Securities I
LLC, the Master Servicer, the Trustee or the Securities Administrator or any of
their affiliates or any other person. None of Bear Stearns Asset Backed
Securities I LLC, the Master Servicer or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.

         This certifies that Bear, Stearns Securities Corp. is the registered
owner of the Percentage Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") generally consisting of conventional first lien, fixed rate
mortgage loans secured by one- to four- family residences (collectively, the
"Mortgage Loans") sold by Bear Stearns Asset Backed Securities I LLC ("BSABS
I"). The Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to BSABS
I. Wells Fargo Bank, National Association will act as master servicer of the
Mortgage Loans (the "Master Servicer," which term includes any successors
thereto under the Agreement referred to below).


                                     A-5-3
<PAGE>


The Trust Fund was created pursuant to the Pooling and Servicing Agreement dated
as of the Cut-off Date specified above (the "Agreement"), among BSABS I, as
depositor (the "Depositor"), EMC Mortgage Corporation as seller and company,
Wells Fargo Bank, National Association, as Master Servicer and securities
administrator (the "Securities Administrator") and U.S. Bank 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,
capitalized terms used herein shall have the meaning ascribed to them 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 its acceptance hereof assents and by which such
Holder is bound.

         Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Depositor will have the right, in
its sole discretion and without notice to the Holder of this Certificate, to
sell this Certificate to a purchaser selected by the Depositor, which purchaser
may be the Depositor, or any affiliate of the Depositor, on such terms and
conditions as the Depositor may choose.

         The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, 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 last day (or if such last day is not a Business Day, the
Business Day immediately preceding such last day) of the calendar month
immediately preceding the month in which the Distribution Date occurs, an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amounts required to be distributed to the Holders of Certificates of the
same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month following the latest scheduled maturity date of
any Mortgage Loan.

         Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.

         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 Trustee
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 D and either Exhibit E or Exhibit F, as applicable, 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 Securities Administrator or the Master Servicer 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. Neither the
Depositor nor the Trustee is obligated to register or qualify the Class of
Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Securities Administrator, the
Depositor, the Seller and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

         No transfer of this Class P Certificate will be made unless the Trustee
shall have received either (i) the opinion of counsel set forth in Section
7.02(b) of the Pooling Agreement or (ii) a representation letter, in the form as
described by the Agreement, stating that the transferee is not an employee
benefit or other plan subject to the prohibited transaction provisions of ERISA
or Section 4975 of the Code (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.

         This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of the Class or
Classes of Certificates affected thereby evidencing over 50% of the


                                     A-5-5
<PAGE>


Voting Rights of such Class or Classes. 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 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 with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

         The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them 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 or any such agent shall be affected by notice to the contrary.

         The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (B) the remittance of all funds due under the Agreement, or
(ii) the optional repurchase by the party named in the Agreement of all the
Mortgage Loans and other assets of the Trust Fund in accordance with the terms
of the Agreement. Such optional repurchase may be made only on or after the
earlier of (i) the first Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 20% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date
and (ii) the Distribution Date in November 2014. The exercise of such right will
effect the early retirement of the Certificates. In no event, however, will the
Trust Fund created by the Agreement continue beyond the expiration of 21 years
after the death of certain persons identified in the Agreement.

         Unless this Certificate has been countersigned by an authorized
signatory of the Trustee 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 Trustee has caused this Certificate to be duly
executed.


Dated: __________, 20___             U.S. BANK NATIONAL ASSOCIATION,
                                     not in its individual capacity but
                                     solely as Trustee


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


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class P Certificates referred to in the
within-mentioned Agreement.

                                     U.S. BANK NATIONAL ASSOCIATION
                                     Authorized signatory of U.S.
                                     Bank National Association, not
                                     in its individual capacity but
                                     solely as Trustee


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


                                     A-5-7
<PAGE>


                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed 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 Certificate Registrar 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.


                                     A-5-8
<PAGE>


                                   EXHIBIT A-6

                     Form of Class R-[1][2][3] Certificates


         THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED
STATES PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL 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").

         NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 7.02(B) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE THAT THE PURCHASE
AND HOLDING OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN THE ASSETS OF
THE TRUST BEING DEEMED TO BE "PLAN ASSETS" UNDER ERISA OR THE CODE, WILL NOT
RESULT IN ANY NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION
4975 OF THE CODE AND WILL NOT SUBJECT THE MASTER SERVICER, THE TRUSTEE OR THE
SECURITIES ADMINISTRATOR TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT.

         ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) 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), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF EITHER OF THE FOREGOING, (C)
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
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE (INCLUDING THE TAX IMPOSED BY SECTION 511 OF THE CODE ON UNRELATED BUSINESS
TAXABLE INCOME), (D) RURAL ELECTRIC AND TELEPHONE COOPERATIVES DESCRIBED IN
SECTION 1381(A)(2)(C) OF THE CODE, (E) AN ELECTING LARGE PARTNERSHIP UNDER


                                     A-6-1
<PAGE>


SECTION 775(A) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES
(A), (B), (C), (D) OR (E) BEING HEREIN REFERRED TO AS A "DISQUALIFIED
ORGANIZATION"), OR (F) AN AGENT OF A DISQUALIFIED ORGANIZATION, (2) NO PURPOSE
OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH
TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL
CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
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
OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.


                                     A-6-2
<PAGE>


Certificate No.1

Class R-[1][2][3]
                                                   Percentage Interest: 100%
Date of Pooling and Servicing Agreement
and Cut-off Date:
November 1, 2004

First Distribution Date:
December 27, 2004

Master Servicer:
Wells Fargo Bank, National Association
                                                   CUSIP: ____________
Assumed Final Distribution Date:
December 25, 2034


                            ASSET-BACKED CERTIFICATE
                                 SERIES 2004-AC7

         evidencing a fractional undivided interest in the distributions
         allocable to the Class R-[1][2][3] Certificates with respect to a Trust
         Fund consisting primarily of a pool of conventional one- to four-family
         fixed interest rate mortgage loans sold by BEAR STEARNS ASSET BACKED
         SECURITIES I LLC.

         This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Bear Stearns Asset Backed
Securities I LLC, the Master Servicer, the Trustee or the Securities
Administrator referred to below or any of their affiliates or any other person.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental entity or by Bear Stearns Asset Backed Securities I
LLC, the Master Servicer, the Trustee or the Securities Administrator or any of
their affiliates or any other person. None of Bear Stearns Asset Backed
Securities I LLC, the Master Servicer or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.

         This certifies that Bear, Stearns Securities Corp. is the registered
owner of the Percentage Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust Fund") generally consisting of conventional first lien, fixed rate
mortgage loans secured by one- to four- family residences (collectively, the
"Mortgage Loans") sold by Bear Stearns Asset Backed Securities I LLC ("BSABS
I"). The Mortgage Loans were sold by EMC Mortgage Corporation ("EMC") to BSABS
I. Wells Fargo Bank, National Association will act as master servicer of the
Mortgage Loans (the "Master Servicer," which term includes any successors
thereto under the Agreement referred to below). The Trust Fund was created
pursuant to the Pooling and Servicing Agreement dated as of the


                                     A-6-3
<PAGE>


Cut-off Date specified above (the "Agreement"), among BSABS I, as depositor (the
"Depositor"), EMC Mortgage Corporation as seller and company, Wells Fargo Bank,
National Association, as Master Servicer and securities administrator (the
"Securities Administrator") and U.S. Bank 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, capitalized terms used herein
shall have the meaning ascribed to them 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 its
acceptance hereof assents and by which such Holder is bound.

         Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Depositor will have the right, in
its sole discretion and without notice to the Holder of this Certificate, to
sell this Certificate to a purchaser selected by the Depositor, which purchaser
may be the Depositor, or any affiliate of the Depositor, on such terms and
conditions as the Depositor may choose.

         The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, 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 last day (or if such last day is not a Business Day, the
Business Day immediately preceding such last day) of the calendar month
immediately preceding the month in which the Distribution Date occurs, an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amounts required to be distributed to the Holders of Certificates of the
same Class as this Certificate. The Assumed Final Distribution Date is the
Distribution Date in the month following the latest scheduled maturity date of
any Mortgage Loan.

         Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose and designated in such notice.

         No transfer of this Class R-[1][2][3] Certificate will be made unless
the Trustee shall have received either (i) the opinion of counsel set forth in
section 7.02 of the Pooling Agreement or (ii) a representation letter, in the
form as described by the Agreement, stating that


                                     A-6-4
<PAGE>


the transferee is not an employee benefit or other plan subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code (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.

         This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust Fund formed pursuant to the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust Fund for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement from time
to time by the parties thereto with the consent of the Holders of the Class or
Classes of Certificates affected thereby evidencing over 50% of the Voting
Rights of such Class or Classes. 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 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 with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee for such purposes, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates in authorized
denominations representing a like aggregate Percentage Interest will be issued
to the designated transferee.

         The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the Person in whose name this Certificate is


                                     A-6-5
<PAGE>


registered as the owner hereof for all purposes, and none of Depositor, the
Master Servicer, the Trustee or any such agent shall be affected by notice to
the contrary.

         The obligations created by the Agreement and the Trust Fund created
thereby (other than the obligations to make payments to Certificateholders with
respect to the termination of the Agreement) shall terminate upon the earlier of
(i) the later of (A) the maturity or other liquidation (or Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and (B) the remittance of all funds due under the Agreement, or
(ii) the optional repurchase by the party named in the Agreement of all the
Mortgage Loans and other assets of the Trust Fund in accordance with the terms
of the Agreement. Such optional repurchase may be made only on or after the
earlier of (i) the first Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans is less than or equal to 20% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date
and (ii) the Distribution Date in November 2014. The exercise of such right will
effect the early retirement of the Certificates. In no event, however, will the
Trust Fund created by the Agreement continue beyond the expiration of 21 years
after the death of certain persons identified in the Agreement.

         Unless this Certificate has been countersigned by an authorized
signatory of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.


                                     A-6-6
<PAGE>


         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.


Dated: __________, 20___             U.S. BANK NATIONAL ASSOCIATION,
                                     not in its individual capacity but
                                     solely as Trustee


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


                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Class R-[1][2][3] Certificates referred to in the
within-mentioned Agreement.

                                     U.S. BANK NATIONAL ASSOCIATION
                                     Authorized signatory of U.S.
                                     Bank National Association, not
                                     in its individual capacity but
                                     solely as Trustee


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


                                     A-6-7
<PAGE>


                                   ASSIGNMENT
                                   ----------

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Asset-Backed 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 Certificate Registrar 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.


                                     A-6-8
<PAGE>


                                    EXHIBIT B

                             MORTGAGE LOAN SCHEDULE
                             ----------------------

                             [provided upon request]










                                      B-1
<PAGE>


                                    EXHIBIT C

                           FORM OF TRANSFER AFFIDAVIT

                                    Affidavit pursuant to Section 860E(e)(4) of
                                    the Internal Revenue Code of 1986, as
                                    amended, and for other purposes


STATE OF                  )
                          )ss:
COUNTY OF                 )


         [NAME OF OFFICER], being first duly sworn, deposes and says:

         1.       That he/she is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _____] [the United States], on behalf of which
he makes this affidavit.

         2.       That (i) the Investor is not a "disqualified organization" as
defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), and will not be a disqualified organization as of [Closing Date]
[date of purchase]; (ii) it is not acquiring the Bear Stearns Asset-Backed
Securities I LLC Asset-Backed Certificates, Series 2004-AC7, Class R-__
Certificates (the "Residual Certificates") for the account of a disqualified
organization; (iii) it consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by Bear Stearns Asset Backed Securities
I LLC (upon advice of counsel) to constitute a reasonable arrangement to ensure
that the Residual Certificates will not be owned directly or indirectly by a
disqualified organization; and (iv) it will not transfer such Residual
Certificates unless (a) it has received from the transferee an affidavit in
substantially the same form as this affidavit containing these same four
representations and (b) as of the time of the transfer, it does not have actual
knowledge that such affidavit is false.

         3.       That the Investor is one of the following: (i) a citizen or
resident of the United States, (ii) a corporation or partnership (including an
entity treated as a corporation or partnership for federal income tax purposes)
created or organized in, or under the laws of, the United States or any state
thereof or the District of Columbia (except, in the case of a partnership, to
the extent provided in regulations), provided that 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 United States
Persons, (iii) an estate whose income is subject to United States federal income
tax regardless of its source, or (iv) a trust other than a "foreign trust," as
defined in Section 7701 (a)(31) of the Code.

         4.       That the Investor's taxpayer identification number is
______________________.

         5.       That no purpose of the acquisition of the Residual
Certificates is to avoid or impede the assessment or collection of tax.


                                      C-1
<PAGE>


         6.       That the Investor understands that, as the holder of the
Residual Certificates, the Investor may incur tax liabilities in excess of any
cash flows generated by such Residual Certificates.

         7.       That the Investor intends to pay taxes associated with holding
the Residual Certificates as they become due.

         IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] this ____ day of _________, 20__.

                                             [NAME OF INVESTOR]


                                             By:
                                                --------------------------------
                                                [Name of Officer]
                                                [Title of Officer]
                                                [Address of Investor for receipt
                                                of distributions]

                                             Address of Investor for receipt of
                                             tax information:



                                      C-2
<PAGE>


Personally appeared before me the above-named [Name of Officer], known or proved
to me to be the same person who executed the foregoing instrument and to be the
[Title of Officer] of the Investor, 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 Investor.

         Subscribed and sworn before me this ___ day of _________, 20___.

NOTARY PUBLIC

COUNTY OF

STATE OF

My commission expires the ___ day of ___________________, 20___.


                                      C-3
<PAGE>


                                    EXHIBIT D

                         FORM OF TRANSFEROR CERTIFICATE

                             ______________, 200___


Bear Stearns Asset Backed Securities I LLC
383 Madison Avenue
New York, New York 10179

U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, MA 02110


Attention: Bear Stearns Asset Backed Securities I Trust 2004-AC7

         Re:      Bear Stearns Asset Backed Securities I LLC
                  Asset-Backed Certificates, Series 2004-AC7, Class

Ladies and Gentlemen:

         In connection with the sale by ___________ (the "Seller") to ________
(the "Purchaser") of $_________ Initial Certificate Principal Balance of
Asset-Backed Certificates, Series 2004-AC7, Class _____ (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of November 1, 2004, among Bear Stearns
Asset-Backed Securities I LLC, as depositor (the "Depositor"), EMC Mortgage
Corporation, as seller and company, Wells Fargo Bank, National Association, as
master servicer and securities administrator and U.S. Bank National Association,
as trustee (the "Trustee"). The Seller hereby certifies, represents and warrants
to, a covenants with, the Depositor and the Trustee that:

         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.


                                      D-1
<PAGE>


                                             Very truly yours,


                                             ___________________________________
                                             (Seller)


                                             By:________________________________

                                             Name:______________________________

                                             Title:_____________________________


                                      D-2
<PAGE>


                                    EXHIBIT E

             FORM OF INVESTOR REPRESENTATION LETTER (NON-RULE 144A)

                               ___________, 200__


Bear Stearns Asset Backed Securities I LLC
383 Madison Avenue
New York, New York 10179

U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, MA 02100


Attention:      Bear Stearns Asset Backed Securities I Trust 2004-AC7

         Re:      Bear Stearns Asset-Backed Securities I LLC Asset-Backed
                  Certificates, Series 2004-AC7, Class

Ladies and Gentlemen:

         ______________ (the "Purchaser") intends to purchase from
______________ (the "Seller") $_________ Initial Certificate Principal Balance
of Asset-Backed Certificates, Series 2004-AC7, Class _____ (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of November 1, 2004 among Bear Stearns Asset
Backed Securities I LLC, as depositor (the "Depositor"), EMC Mortgage
Corporation, as seller and company, Wells Fargo Bank, National Association, as
master servicer and securities administrator, and U.S. Bank National
Association, as trustee (the "Trustee"). All terms used herein and not otherwise
defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Purchaser hereby certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

                  1.       The Purchaser 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 Purchaser is acquiring the Certificates for its
         own account for investment only and not with a view to or for sale in
         connection with any


                                      E-1
<PAGE>


         distribution thereof in any manner that would violate the Act or any
         applicable state securities laws.

                  3.       The Purchaser 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 Purchaser has been furnished with, and has had an
         opportunity to review (a) [a copy of the Private Placement Memorandum,
         dated ______, 2004, relating to the Certificates (b)] a copy of the
         Pooling and Servicing Agreement and [(b)] [(c)] such other information
         concerning the Certificates, the Mortgage Loans and the Depositor as
         has been requested by the Purchaser from the Depositor or the Seller
         and is relevant to the Purchaser's decision to purchase the
         Certificates. The Purchaser has had any questions arising from such
         review answered by the Depositor or the Seller to the satisfaction of
         the Purchaser. [If the Purchaser did not purchase the Certificates from
         the Seller in connection with the initial distribution of the
         Certificates and was provided with a copy of the Private Placement
         Memorandum (the "Memorandum") relating to the original sale (the
         "Original Sale") of the Certificates by the Depositor, the Purchaser
         acknowledges that such Memorandum was provided to it by the Seller,
         that the Memorandum was prepared by the Depositor solely for use in
         connection with the Original Sale and the Depositor did not participate
         in or facilitate in any way the purchase of the Certificates by the
         Purchaser from the Seller, and the Purchaser agrees that it will look
         solely to the Seller and not to the Depositor with respect to any
         damage, liability, claim or expense arising out of, resulting from or
         in connection with (a) error or omission, or alleged error or omission,
         contained in the Memorandum, or (b) any information, development or
         event arising after the date of the Memorandum.]

                  5.       The Purchaser 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 Act or any state securities
         law, or that would require registration or qualification pursuant
         thereto. The Purchaser


                                      E-2
<PAGE>


         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,


                                             ___________________________________
                                             (Purchaser)


                                             By:________________________________

                                             Name:______________________________

                                             Title:_____________________________


                                      E-3
<PAGE>


                             Nominee Acknowledgment

         The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.

                                             [NAME OF NOMINEE]


                                             By:________________________________
                                                        (Authorized Officer)


                                             [By:_______________________________
                                                       Attorney-in-fact]


                                      E-4
<PAGE>


                                    EXHIBIT F

                            FORM OF INVESTMENT LETTER

                                                                         [Date]


[SELLER]

Bear Stearns Asset Backed Securities I LLC
383 Madison Avenue
New York, New York 10179

U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, MA 02110

         Re:      Bear Stearns Asset Backed Securities I Trust 2004-AC7,
                  Asset-Backed Certificates, Series 2004-AC7 (the
                  "Certificates"), including the Class Certificates (the
                  "Privately Offered Certificates")

Dear Ladies and Gentlemen:

         In connection with our purchase of Privately Offered Certificates, we
confirm that:

                  (i)      we understand that the Privately Offered Certificates
                           are not being registered under the Securities Act of
                           1933, as amended (the "Act") or any applicable state
                           securities or "Blue Sky" laws, and are being sold to
                           us in a transaction that is exempt from the
                           registration requirements of such laws;

                  (ii)     any information we desired concerning the
                           Certificates, including the Privately Offered
                           Certificates, the trust in which the Certificates
                           represent the entire beneficial ownership interest
                           (the "Trust") or any other matter we deemed relevant
                           to our decision to purchase Privately Offered
                           Certificates has been made available to us;

                  (iii)    we are able to bear the economic risk of investment
                           in Privately Offered Certificates; we are an
                           institutional "accredited investor" as defined in
                           Section 501(a) of Regulation D promulgated under the
                           Act and a sophisticated institutional investor;

                  (iv)     we are acquiring Privately Offered Certificates for
                           our own account, not as nominee for any other person,
                           and not with a present view to any distribution or
                           other disposition of the Privately Offered
                           Certificates;

                  (v)      we agree the Privately Offered Certificates must be
                           held indefinitely by us (and may not be sold,
                           pledged, hypothecated or in any way disposed of)
                           unless subsequently registered under the Act and any
                           applicable state securities or "Blue Sky" laws or an
                           exemption from the registration


                                      F-1
<PAGE>


                           requirements of the Act and any applicable state
                           securities or "Blue Sky" laws is available;

                  (vi)     we agree that in the event that at some future time
                           we wish to dispose of or exchange any of the
                           Privately Offered Certificates (such disposition or
                           exchange not being currently foreseen or
                           contemplated), we will not transfer or exchange any
                           of the Privately Offered Certificates unless:

                                    (A) (1) the sale is to an Eligible Purchaser
                           (as defined below), (2) if required by the Pooling
                           and Servicing Agreement (as defined below) a letter
                           to substantially the same effect as either this
                           letter or, if the Eligible Purchaser is a Qualified
                           Institutional Buyer as defined under Rule 144A of the
                           Act, the Rule 144A and Related Matters Certificate in
                           the form attached to the Pooling and Servicing
                           Agreement (as defined below) (or such other
                           documentation as may be acceptable to the Trustee and
                           the Securities Administrator) is executed promptly by
                           the purchaser and delivered to the addressees hereof
                           and (3) all offers or solicitations in connection
                           with the sale, whether directly or through any agent
                           acting on our behalf, are limited only to Eligible
                           Purchasers and are not made by means of any form of
                           general solicitation or general advertising
                           whatsoever; and

                                    (B) if the Privately Offered Certificate is
                           not registered under the Act (as to which we
                           acknowledge you have no obligation), the Privately
                           Offered Certificate is sold in a transaction that
                           does not require registration under the Act and any
                           applicable state securities or "blue sky" laws and,
                           if Wells Fargo Bank, National Association (the
                           "Securities Administrator") so requests, a
                           satisfactory Opinion of Counsel is furnished to such
                           effect, which Opinion of Counsel shall be an expense
                           of the transferor or the transferee;

                  (vii)    we agree to be bound by all of the terms (including
                           those relating to restrictions on transfer) of the
                           Pooling and Servicing, pursuant to which the Trust
                           was formed; we have reviewed carefully and understand
                           the terms of the Pooling and Servicing Agreement;

                  (viii)   we either: (i) are not acquiring the Privately
                           Offered Certificate directly or indirectly by, or on
                           behalf of, an employee benefit plan or other
                           retirement arrangement which is subject to Title I of
                           the Employee Retirement Income Security Act of 1974,
                           as amended, and/or section 4975 of the Internal
                           Revenue Code of 1986, as amended, or (ii) are
                           providing the Opinion of Counsel required by the
                           Agreement.

                  (ix)     We understand that each of the Class ___ Certificates
                           bears, and will continue to bear, a legend to
                           substantiate the following effect: "THIS CERTIFICATE
                           HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
                           SECURITIES ACT OF 1933, AS AMENDED (THE


                                      F-2
<PAGE>


                           "SECURITIES 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 ONLY (1) PURSUANT TO RULE 144A
                           UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON
                           THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
                           INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
                           (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
                           PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
                           HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
                           PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
                           RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
                           REGISTRATION PROVIDED BY RULE 144 UNDER THE
                           SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED
                           FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN
                           THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or
                           (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN
                           WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
                           PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN
                           VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE
                           RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN
                           THE FORM PROVIDED IN THE AGREEMENT AND (B) THE
                           RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
                           ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE,
                           PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
                           SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH
                           CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
                           LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
                           JURISDICTION. THIS CERTIFICATE HAS NOT BEEN AND WILL
                           NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933,
                           AS AMENDED (THE "SECURITIES 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 ONLY (1) PURSUANT TO RULE 144A
                           UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON
                           THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
                           INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
                           (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
                           PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
                           HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
                           PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
                           RULE 144A, (2) PURSUANT TO AN EXEMPTION


                                      F-3
<PAGE>


                           FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
                           SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED
                           FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN
                           THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or
                           (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN
                           WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
                           PARAGRAPHS PURCHASING NOT FOR DISTRIBUTION IN
                           VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE
                           RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN
                           THE FORM PROVIDED IN THE AGREEMENT AND (B) THE
                           RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
                           ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE,
                           PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
                           SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH
                           CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
                           LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
                           JURISDICTION."

         "Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.

         Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement, dated as of November 1, 2004,
between Bear Stearns Asset Backed Securities I LLC, as depositor, EMC Mortgage
Corporation, as seller and company, Wells Fargo Bank, National Association, as
master servicer and securities administrator and U.S. Bank National Association,
as Trustee (the "Pooling and Servicing Agreement').

         If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.


Name of Nominee (if any):____________________________


                                      F-4
<PAGE>


         IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Eligible Purchaser
on the ___ day of ________, 20___.

                                        Very truly yours,

                                        [PURCHASER]


                                        By:_____________________________________
                                                      (Authorized Officer)


                                        [By:____________________________________
                                                      Attorney-in-fact]


                                      F-5
<PAGE>


                             Nominee Acknowledgment

         The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.

                                        [NAME OF NOMINEE]


                                        By:_____________________________________
                                                      (Authorized Officer)


                                        [By:____________________________________
                                                      Attorney-in-fact]


                                      F-6
<PAGE>


                                    EXHIBIT G

                           FORM OF REQUEST FOR RELEASE

To:      U.S. Bank National Association
         One Federal Street, 3rd Floor
         Boston, MA 02110

RE:      Pooling and Servicing Agreement, dated as of November 1, 2004, between
         Bear Stearns Asset Backed Securities I LLC, as Depositor, EMC Mortgage
         Corporation, as seller and company, Wells Fargo Bank, National
         Association, as master servicer and securities administrator and U.S.
         Bank National Association, as Trustee

         In connection with the administration of the Mortgage Loans held by you
pursuant to the above-captioned Pooling and Servicing Agreement, we request the
release, and hereby acknowledge receipt, of the Mortgage File for the Mortgage
Loan described below, for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

Reason for Requesting Documents (check one):

_____    1.    Mortgage Paid in Full and proceeds have been deposited into the
               Custodial Account

_____    2.    Foreclosure

_____    3.    Substitution

_____    4.    Other Liquidation

_____    5.    Nonliquidation                     Reason:_______________________

_____    6.    California Mortgage Loan paid in full

                                          By:___________________________________
                                                            (authorized signer)

                                          Issuer:_______________________________

                                          Address:______________________________

                                          Date:_________________________________


                                      G-1
<PAGE>


                                    EXHIBIT H

                          DTC Letter of Representations
                             [provided upon request]










                                      H-1
<PAGE>


                                    EXHIBIT I

                   Schedule of Mortgage Loans with Lost Notes
                             [provided upon request]










                                      I-1
<PAGE>


                                    EXHIBIT J

                           FORM OF CUSTODIAL AGREEMENT
                           ---------------------------

         THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to
time, the "Agreement'), dated as of November 30, 2004, by and among U.S. BANK
NATIONAL ASSOCIATION, not individually but solely as trustee under the Pooling
and Servicing Agreement defined below (including its successors under the
Pooling and Servicing Agreement defined below, the "Trustee"), BEAR STEARNS
ASSET BACKED SECURITIES I LLC, as depositor (together with any successor in
interest, the "Depositor"), EMC MORTGAGE CORPORATION, as seller (the "Seller")
and company (together with any successor in interest or successor under the
Pooling and Servicing Agreement referred to below, the "Company") and WELLS
FARGO BANK, NATIONAL ASSOCIATION, as master servicer (together with any
successor in interest or successor under the Pooling and Servicing Agreement
referred to below, the "Master Servicer"), securities administrator and
custodian (together with any successor in interest or any successor appointed
hereunder, the "Custodian").

                                WITNESSETH THAT:
                                ----------------

         WHEREAS, the Depositor, the Seller, the Master Servicer and the Trustee
have entered into a Pooling and Servicing Agreement, dated as of November 1,
2004, relating to the issuance of Bear Stearns Asset Backed Securities I Trust
2004-AC7, Asset-Backed Certificates, Series 2004-AC7 (as in effect on the date
of this Agreement, the "Original Pooling and Servicing Agreement," and as
amended and supplemented from time to time, the "Pooling and Servicing
Agreement'); and

         WHEREAS, the Custodian has agreed to act as agent for the Trustee for
the purposes of receiving and holding certain documents and other instruments
delivered by the Depositor, the Seller or the Master Servicer under the Pooling
and Servicing Agreement and the Servicers under their respective Servicing
Agreements, all upon the terms and conditions and subject to the limitations
hereinafter set forth;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Trustee, the Depositor, the
Seller, the Master Servicer and the Custodian hereby agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

         Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned in the Original Pooling and Servicing Agreement,
unless otherwise required by the context herein.


                                      J-1
<PAGE>


                                   ARTICLE II
                          CUSTODY OF MORTGAGE DOCUMENTS

         Section 2.1 Custodian to Act as Agent: Acceptance of Mortgage Files.
The custodian, as the duly appointed custodial agent of the Trustee for these
purposes, acknowledges (subject to any exceptions noted in the Initial
Certification referred to in Section 2.3(a) receipt of the Mortgage Files
relating to the Mortgage Loans identified on the schedule attached hereto (the
"Mortgage Files") and declares that it holds and will hold such Mortgage Files
as agent for the Trustee, in trust, for the use and benefit of all present and
future Certificateholders.

         Section 2.2 Recordation of Assignments. If any Mortgage File includes
one or more assignments of Mortgage that have not been recorded pursuant to the
provisions of Section 2.01 of the Pooling and Servicing Agreement and the
related Mortgage Loan is not a MOM Loan or the related Mortgaged Properties are
located in jurisdictions specifically excluded by the Opinion of Counsel
delivered to the Trustee pursuant to Section 2.01 of the Pooling and Servicing
Agreement, each such assignment shall be delivered by the Custodian to the
Seller for the purpose of recording it in the appropriate public office for real
property records, and the Seller, at no expense to the Custodian, shall promptly
cause to be recorded in the appropriate public office for real property records
each such assignment of Mortgage and, upon receipt thereof from such public
office, shall return each such assignment of Mortgage to the Custodian.

         Section 2.3 Review of Mortgage Files.

         (a)      On or prior to the Closing Date, in accordance with Section
2.02 of the Pooling and Servicing Agreement, the Custodian shall deliver to the
Seller and the Trustee an Initial Certification in the form annexed hereto as
Exhibit One evidencing receipt (subject to any exceptions noted therein) of a
Mortgage File for each of the Mortgage Loans listed on the Schedule attached
hereto (the "Mortgage Loan Schedule").

         (b)      Within 90 days of the Closing Date, the Custodian agrees, for
the benefit of Certificateholders, to review, in accordance with the provisions
of Section 2.02 of the Pooling and Servicing Agreement, each such document, and
shall deliver to the Seller and the Trustee an Interim Certification in the form
annexed hereto as Exhibit Two to the effect that all such documents have been
executed and received and that such documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule, except for any exceptions listed on
Schedule A attached to such Interim Certification. The Custodian shall be under
no duty or obligation to inspect, review or examine said documents, instruments,
certificates or other papers to determine that the same are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.

         (c)      Not later than 180 days after the Closing Date, the Custodian
shall review the Mortgage Files as provided in Section 2.02 of the Pooling and
Servicing Agreement and deliver to the Seller and the Trustee a Final
Certification in the form annexed hereto as Exhibit Three evidencing the
completeness of the Mortgage Files.

         (d)      In reviewing the Mortgage Files as provided herein and in the
Pooling and Servicing Agreement, the Custodian shall make no representation as
to and shall not be


                                      J-2
<PAGE>


responsible to verify (i) the validity, legality, enforceability, due
authorization, recordability, sufficiency or genuineness of any of the documents
included in any Mortgage File or (ii) the collectibility, insurability,
effectiveness or suitability of any of the documents in any Mortgage File.

         Upon receipt of written request from the Trustee, the Custodian shall
as soon as practicable supply the Trustee with a list of all of the documents
relating to the Mortgage Loans missing from the Mortgage Files.

         Section 2.4 Notification of Breaches of Representations and Warranties.
Upon discovery by the Custodian of a breach of any representation or warranty
made by the Depositor as set forth in the Pooling and Servicing Agreement with
respect to a Mortgage Loan relating to a Mortgage File, the Custodian shall give
prompt written notice to the Depositor, the related Servicer and the Trustee.

         Section 2.5 Custodian to Cooperate: Release of Mortgage Files. Upon
receipt of written notice from the Trustee that the Seller has repurchased a
Mortgage Loan pursuant to Article II of the Pooling and Servicing Agreement, and
a request for release (a "Request for Release") confirming that the purchase
price therefore has been deposited in the Master Servicer Collection Account or
the Distribution Account, then the Custodian agrees to promptly release to the
Seller the related Mortgage File.

         Upon the Custodian's receipt of a Request for Release substantially in
the form of Exhibit H to the Pooling and Servicing Agreement signed by a
Servicing Officer of a Servicer, stating that it has received payment in full of
a Mortgage Loan or that payment in full will be escrowed in a manner customary
for such purposes, the Custodian agrees promptly to release to the Servicer, the
related Mortgage File. The Depositor shall deliver to the Custodian and the
Custodian agrees to review in accordance with the provisions of their Agreement
the Mortgage Note and other documents constituting the Mortgage File with
respect to any Replacement Mortgage Loan.

         From time to time as is appropriate for the servicing or foreclosure of
any Mortgage Loan, including, for this purpose, collection under any Primary
Insurance Policy or LPMI Policy, the Company or the related Servicer, as
applicable, shall deliver to the Custodian a Request for Release signed by a
Servicing Officer requesting that possession of all of the Mortgage File be
released to the Company or the related Servicer, as applicable, and certifying
as to the reason for such release and that such release will not invalidate any
insurance coverage provided in respect of the Mortgage Loan under any of the
Insurance Policies. Upon receipt of the foregoing, the Custodian shall deliver
the Mortgage File to the Company or the related Servicer, as applicable. The
Company or the related Servicer, as applicable, shall cause each Mortgage File
or any document therein so released to be returned to the Custodian when the
need therefore by the Company or the related Servicer, as applicable, no longer
exists, unless (i) the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Master
Servicer Collection Account or the Distribution Account or (ii) the Mortgage
File or such document has been delivered to an attorney, or to a public trustee
or other public official as required by law, for purposes of initiating or
pursuing legal action or


                                      J-3
<PAGE>

other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Company or the related Servicer, as
applicable, has delivered to the Custodian a certificate of a Servicing Officer
certifying as to the name and address of the Person to which such Mortgage File
or such document was delivered and the purpose or purposes of such delivery.

         At any time that the Company or the related Servicer is required to
deliver to the Custodian a Request for Release, the Company or the related
Servicer, as applicable, shall deliver two copies of the Request for Release if
delivered in hard copy or the Company or the related Servicer, as applicable,
may furnish such Request for Release electronically to the Custodian, in which
event the Servicing Officer transmitting the same shall be deemed to have signed
the Request for Release. In connection with any Request for Release of a
Mortgage File because of a repurchase of a Mortgage Loan, such Request for
Release shall be accompanied by an assignment of mortgage, without recourse,
representation or warranty from the Trustee to the Seller (unless such Mortgage
Loan is a MOM Loan) and the related Mortgage Note shall be endorsed without
recourse, representation or warranty by the Trustee and be returned to the
Seller. In connection with any Request for Release of a Mortgage File because of
the payment in full of a Mortgage Loan, such Request for Release shall be
accompanied by a certificate of satisfaction or other similar instrument to be
executed by or on behalf of the Trustee and returned to the Company or the
related Servicer, as applicable.

         Section 2.6 Assumption Agreements. In the event that any assumption
agreement, substitution of liability agreement or sale of servicing agreement is
entered into with respect to any Mortgage Loan subject to this Agreement in
accordance with the terms and provisions of the Pooling and Servicing Agreement,
the Master Servicer, to the extent provided in the Pooling and Servicing
Agreement or the related Servicing Agreement, shall cause the Company or the
related Servicer, as applicable, to notify the Custodian that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which shall be added to
the related Mortgage File and, for all purposes, shall be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting parts thereof.

                                  ARTICLE III
                            CONCERNING THE CUSTODIAN

         Section 3.1 Custodian a Bailee and Agent of the Trustee. With respect
to each Mortgage Note, Mortgage and other documents constituting each Mortgage
File which are delivered to the Custodian, the Custodian is exclusively the
bailee and custodial agent of the Trustee and has no instructions to hold any
Mortgage Note or Mortgage for the benefit of any person other than the Trustee
and the Certificateholders and undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement and in the Pooling and
Servicing Agreement. Except upon compliance with the provisions of Section 2.5
of this Agreement, no Mortgage Note, Mortgage or Mortgage File shall be
delivered by the Custodian to the Company, the Depositor, any Servicer or the
Master Servicer or otherwise released from the possession of the Custodian.


                                      J-4
<PAGE>


         Section 3.2 Custodian May Own Certificates. The Custodian in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Custodian.

         Section 3.3 Master Servicer to Pay Custodian's Fees and Expenses. The
Master Servicer covenants and agrees to pay to the Custodian from time to time,
and the Custodian shall be entitled to, reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, and the Master Servicer will pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ), except any such expense, disbursement or advance as may arise from
its negligence or bad faith or to the extent that such cost or expense is
indemnified by the Depositor pursuant to the Pooling and Servicing Agreement.

         Section 3.4 Custodian May Resign; Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans. Upon receiving such written notice of resignation, the Trustee shall
either take custody of the Mortgage Files itself and give prompt written notice
thereof to the Depositor, the Master Servicer and the Custodian, or promptly
appoint a successor Custodian by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Custodian and one copy to
the successor Custodian. If the Trustee shall not have taken custody of the
Mortgage Files and no successor Custodian shall have been so appointed and have
accepted appointment within 30 days after the giving of such written notice of
resignation, the resigning Custodian may petition any court of competent
jurisdiction for the appointment of a successor Custodian.

         The Trustee may remove the Custodian at any time upon 60 days prior
written notice to Custodian. In such event, the Trustee shall appoint, or
petition a court of competent jurisdiction to appoint, a successor Custodian
hereunder. Any successor Custodian shall be a depository institution subject to
supervision or examination by federal or state authority shall be able to
satisfy the other requirements contained in Section 3.6 and shall be
unaffiliated with the Servicers, the Company and the Depositor.

         Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.4 shall
become effective upon acceptance of appointment by the successor Custodian. The
Trustee shall give prompt notice to the Depositor and the Master Servicer of the
appointment of any successor Custodian. No successor Custodian shall be
appointed by the Trustee without the prior approval of the Depositor and the
Master Servicer.

         Section 3.5 Merger or Consolidation of Custodian. Any Person into which
the Custodian may be merged or converted or with which it may be consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Custodian shall be a party, or any Person succeeding to the business of the
Custodian, shall be the successor of the


                                      J-5
<PAGE>


Custodian 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.

         Section 3.6 Representations of the Custodian. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $15,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.

                                   ARTICLE IV
                            MISCELLANEOUS PROVISIONS

         Section 4.1 Notices. All notices, requests, consents and demands and
other communications required under this Agreement or pursuant to any other
instrument or document delivered hereunder shall be in writing and, unless
otherwise specifically provided, may be delivered personally, by telegram or
telex, or by registered or certified mail, postage prepaid, return receipt
requested, at the addresses specified on the signature page hereof (unless
changed by the particular party whose address is stated herein by similar notice
in writing), in which case the notice will be deemed delivered when received.

         Section 4.2 Amendments. No modification or amendment of or supplement
to this Agreement shall be valid or effective unless the same is in writing and
signed by all parties hereto. The Trustee shall give prompt notice to the
Custodian of any amendment or supplement to the Pooling and Servicing Agreement
and furnish the Custodian with written copies thereof.

         Section 4.3 GOVERNING LAW. THIS AGREEMENT shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to conflict of laws principles thereof other than Section 5-1401 of the New York
General Obligations Law.

         Section 4.4 Recordation of Agreement. 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 and at the Trust's expense, but
only upon direction accompanied by an Opinion of Counsel reasonably satisfactory
to the Depositor to the effect that the failure to effect such recordation is
likely to materially and adversely affect 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 4.5 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


                                      J-6
<PAGE>


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.


                                      J-7
<PAGE>

         IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.


Address:                                     U.S. BANK NATIONAL ASSOCIATION, not
                                             individually but solely as Trustee
One Federal Street, 3rd Floor
Boston, MA 02110
                                             By:___________________________
Attention: Corporate Trust Services,         Name:
BSABS I 2004-AC7                             Title:
Telecopy: (617) 603-6638
Confirmation:

Address:                                     BEAR STEARNS ASSET BACKED
                                             SECURITIES I LLC

383 Madison Avenue                           By:___________________________
New York, New York 10179                     Name:
                                             Title:

Address:                                     EMC MORTGAGE CORPORATION

909 Hidden Ridge Drive, Suite 200            By:___________________________
Irving, Texas 75038                          Name:
                                             Title:

Address:                                     WELLS FARGO BANK,
                                             NATIONAL ASSOCIATION, as Custodian
9062 Old Annapolis Road
Columbia, Maryland 21045                     By:___________________________
                                             Name:
                                             Title:

<PAGE>


STATE OF MASSACHUSETTS      )
                            ) ss:
COUNTY OF SUFFOLK           )


         On the ______ day of November 2004 before me, a notary public in and
for said State, personally appeared _______________, known to me to be a
_________________of U.S. Bank National Association, a national banking
association, one of the parties that executed the within agreement, and also
known to me to be the person who executed the within agreement on behalf of said
party and acknowledged to me that such party 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


[SEAL]

<PAGE>


STATE OF NEW YORK       )
                        ) ss:
COUNTY OF NEW YORK      )


         On the ______ day of November 2004 before me, a notary public in and
for said State, personally appeared ________________, known to me to be a
_____________ of Bear Stearns Asset Backed Securities I LLC, and also known to
me to be the person who executed the within instrument on behalf of said party,
and acknowledged to me that such party 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


[SEAL]

<PAGE>


STATE OF TEXAS       )
                     ) ss:
COUNTY OF DALLAS     )


         On the ______ day of November 2004 before me, a notary public in and
for said State, personally appeared ________________, known to me to be an
authorized representative of EMC Mortgage Corporation, one of the parties that
executed the within instrument, and also known to me to be the person who
executed the within instrument on behalf of said party, and acknowledged to me
that such party 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]

<PAGE>


STATE OF MARYLAND      )
                       ) ss:
COUNTY OF HOWARD       )


         On the ______ day of November 2004 before me, a notary public in and
for said State, personally appeared ____________, known to me to be a
______________________of Wells Fargo Bank, National Association, a national
banking association, one of the parties that executed the within instrument, and
also known to me to be the person who executed it on behalf of said party, and
acknowledged to me that such party 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]

<PAGE>


                       EXHIBIT ONE TO CUSTODIAL AGREEMENT

                     FORM OF CUSTODIAN INITIAL CERTIFICATION


                                                           November 30, 2004

U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, MA 02110

EMC Mortgage Corporation
909 Hidden Ridge Drive, Suite 200
Irving, Texas 75038


Attention: Bear Stearns Asset Backed Securities I LLC, Series 2004-AC7

                  Re:      Custodial Agreement, dated as of November 30, 2004,
                           by and among U.S. Bank National Association, Wells
                           Fargo Bank, National Association, Bear Stearns Asset
                           Backed Securities I LLC and EMC Mortgage Corporation
                           relating to Bear Stearns Asset Backed Securities I
                           Trust 2004-AC7, Asset-Backed Certificates, Series
                           2004-AC7

Ladies and Gentlemen:

         In accordance with Section 2.3(a) of the above-captioned Custodial
Agreement, and subject to Section 2.02(a) of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File (which contains an original Mortgage Note or lost note
affidavit) to the extent required in Section 2.01 of the Pooling and Servicing
Agreement with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule, with any exceptions listed on Schedule A attached hereto.

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

                                    WELLS FARGO BANK, NATIONAL ASSOCIATION

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Title:______________________________________


                                      J-1-1
<PAGE>


                       EXHIBIT TWO TO CUSTODIAL AGREEMENT

                     FORM OF CUSTODIAN INTERIM CERTIFICATION


                                                                       [DATE]

U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, MA 02110

EMC Mortgage Corporation
909 Hidden Ridge Drive, Suite 200
Irving, Texas 75038


Attention: Bear Stearns Asset Backed Securities I LLC, Series 2004-AC7

                  Re:      Custodial Agreement, dated as of November 30, 2004,
                           by and among U.S. Bank National Association, Wells
                           Fargo Bank, National Association, Bear Stearns Asset
                           Backed Securities I LLC and EMC Mortgage Corporation
                           relating to Bear Stearns Asset Backed Securities I
                           Trust 2004-AC7, Asset-Backed Certificates, Series
                           2004-AC7

Ladies and Gentlemen:

         In accordance with Section 2.3(b) of the above-captioned Custodial
Agreement and subject to Section 2.02(a) of the Pooling and Servicing Agreement,
the undersigned, as Custodian, hereby certifies that it has received a Mortgage
File to the extent required pursuant to Section 2.01 of the Pooling and
Servicing Agreement with respect to each Mortgage Loan listed in the Mortgage
Loan Schedule, and it has reviewed the Mortgage File and the Mortgage Loan
Schedule and has determined that: all required documents have been executed and
received and that such documents relate to the Mortgage Loans identified on the
Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.

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

                                    WELLS FARGO BANK, NATIONAL ASSOCIATION

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Title:______________________________________


                                      J-2-1
<PAGE>


                      EXHIBIT THREE TO CUSTODIAL AGREEMENT

                      FORM OF CUSTODIAN FINAL CERTIFICATION


                                                                [DATE]

U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, MA 02110

EMC Mortgage Corporation
909 Hidden Ridge Drive, Suite 200
Irving, Texas 75038


Attention: Bear Stearns Asset Backed Securities I LLC, Series 2004-AC7

                  Re:      Custodial Agreement, dated as of November 30, 2004,
                           by and among U.S. Bank National Association, Wells
                           Fargo Bank, National Association, Bear Stearns Asset
                           Backed Securities I LLC and EMC Mortgage Corporation
                           relating to Bear Stearns Asset Backed Securities I
                           Trust 2004-AC7, Asset-Backed Certificates, Series
                           2004-AC7

         In accordance with Section 2.3(c) of the above-captioned Custodial
Agreement and, subject to Section 2.02(b) of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File to the extent required pursuant to Section 2.01 of the Pooling
and Servicing Agreement with respect to each Mortgage Loan listed in the
Mortgage Loan Schedule, and it has reviewed the Mortgage File and the Mortgage
Loan Schedule and has determined that: all required documents have been executed
and received and that such documents relate to the Mortgage Loans identified on
the Mortgage Loan Schedule, with any exceptions listed on Schedule A attached
hereto.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement or in the
Pooling and Servicing Agreement, as applicable.

                                    WELLS FARGO BANK, NATIONAL ASSOCIATION

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Title:______________________________________


                                      J-3-1
<PAGE>


                                   SCHEDULE A

                             [Provided Upon Request]










                                      J-3-2
<PAGE>


                                    EXHIBIT K

                          FORM OF COMPANY CERTIFICATION

         This certificate is being delivered pursuant to Section 3.13 of the
Pooling and Servicing Agreement, dated as of November 1, 2004 (the "Agreement"),
among Bear Stearns Asset Backed Securities I LLC, as depositor, EMC Mortgage
Corporation (the "Company"), as seller and servicer, Wells Fargo Bank, National
Association, as master servicer and securities administrator, and U.S. Bank
National Association, as trustee. Capitalized terms used herein and not
otherwise defined have the meanings set forth in the Agreement.

         I certify that:

         (i)      I am a ____________________ of the Company.

         (ii)     Based on my knowledge, the information in the annual statement
                  of compliance furnished in March 20__ pursuant to Section
                  3.13(b) of the Agreement and the annual independent certified
                  public accountants' servicing report delivered pursuant to
                  Section 3.14 thereof (collectively, the "Reports"), and all
                  servicing reports, officer's certificates and other
                  information relating to the EMC 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 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.

         (iii)    The servicing information required to be provided to the
                  Master Servicer by the Company under the Agreement has been
                  provided to the Master Servicer.

         (iv)     I am responsible for reviewing the servicing activities
                  performed by the Company pursuant to this Agreement, and
                  except as disclosed in the Reports, the Company has, as of the
                  date of this certification, fulfilled its obligations under
                  the Agreement.

         (v)      I have disclosed to the Master Servicer all significant
                  deficiencies relating to the Company'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 Agreement.

----------------------
Dated: March __, 20__


                                       K-1
<PAGE>


                                    EXHIBIT L

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

         MORTGAGE LOAN PURCHASE AGREEMENT, dated as of November 30, 2004, as
amended and supplemented by any and all amendments hereto (collectively, "this
Agreement"), by and between EMC MORTGAGE CORPORATION, a Delaware corporation
(the "Mortgage Loan Seller") and BEAR STEARNS ASSET BACKED SECURITIES I LLC, a
Delaware limited liability company (the "Purchaser").

         Upon the terms and subject to the conditions of this Agreement, the
Mortgage Loan Seller agrees to sell, and the Purchaser agrees to purchase,
certain conventional, fixed rate, first lien mortgage loans secured by one- to
four-family residences (collectively, the "Mortgage Loans") as described herein.
The Purchaser intends to deposit the Mortgage Loans into a trust fund (the
"Trust Fund") and create Bear Stearns Asset Backed Securities I Trust 2004-AC7,
Asset-Backed Certificates, Series 2004-AC7 (the "Certificates"), under a pooling
and servicing agreement, to be dated as of November 1, 2004 (the "Pooling and
Servicing Agreement"), among the Purchaser, as Purchaser, the Mortgage Loan
Seller, as seller and company, Wells Fargo Bank, National Association, as master
servicer (the "Master Servicer") and as securities administrator and U.S. Bank
National Association, as trustee (the "Trustee").

         The Purchaser has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (Number 333-113636)
relating to its Mortgage Pass-Through Certificates and the offering of certain
series thereof (including certain classes of the Certificates) from time to time
in accordance with Rule 415 under the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder (the
"Securities Act"). Such registration statement, when it became effective under
the Securities Act, and the prospectus relating to the public offering of
certain classes of the Certificates by the Purchaser (the "Public Offering"), as
each may be amended or supplemented from time to time pursuant to the Securities
Act or otherwise, are referred to herein as the "Registration Statement" and the
"Prospectus," respectively. The "Prospectus Supplement" shall mean that
supplement, dated November 23, 2004, to the Prospectus, dated April 26, 2004,
relating to certain classes of the Certificates. With respect to the Public
Offering of certain classes of the Certificates, the Purchaser and Bear, Stearns
& Co. Inc. ("Bear Stearns") have entered into a terms agreement, dated as of
November 23, 2004, to an underwriting agreement, dated April 28, 2004, between
the Purchaser and Bear Stearns (together, the "Underwriting Agreement").

         Now, therefore, in consideration of the premises and the mutual
agreements set forth herein, the parties hereto agree as follows:

         SECTION 1. Definitions. Certain terms are defined herein. Capitalized
terms used herein but not defined herein shall have the meanings specified in
the Pooling and Servicing Agreement. The following other terms are defined as
follows:


                                       L-1
<PAGE>


         Acquisition Price: Cash in an amount equal to $ * (plus $ * in accrued
interest), and the Retained Certificates.

         Bear Stearns: Bear, Stearns & Co. Inc.

         Closing Date: November 30, 2004.

         Custodial Agreement: An agreement, dated as of November 30, 2004 among
the Depositor, the Seller, the Trustee and the Custodian.

         Cut-off Date Balance: Shall mean $264,327,312.81.

         Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.

         Due Date: With respect to each Mortgage Loan, the date in each month on
which its scheduled payment is due, as set forth in the related Mortgage Note.

         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.

         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.

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

         Mortgage: The mortgage or deed of trust creating a first lien on an
interest in real property securing a Mortgage Note.

         Mortgage File: The items referred to in Exhibit 1 pertaining to a
particular Mortgage Loan and any additional documents required to be added to
such documents pursuant to this Agreement.

         Mortgage Rate: The annual rate of interest borne by a Mortgage Note as
stated therein.

         Mortgagor: The obligor(s) on a Mortgage Note.

         Net Mortgage Rate: For each Mortgage Loan, the Mortgage Rate for such
Mortgage Loan less (i) the Master Servicing Fee Rate, (ii) the Servicing Fee
Rate and (ii) the rate at which the LPMI Fee is calculated, if applicable.

________________
* Please contact Bear Stearns for pricing information.


                                      L-2
<PAGE>


         Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Mortgage Loan Seller or the Purchaser, reasonably acceptable to the
Trustee.

         Person: Any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

         Purchase Price: With respect to any Mortgage Loan required to be
purchased by the Mortgage Loan Seller pursuant to the applicable provisions of
this Agreement, an amount equal to the sum of (i) 100% of the principal
remaining unpaid on such Mortgage Loan as of the date of purchase (including if
a foreclosure has already occurred, the principal balance of the related
Mortgage Loan at the time the Mortgaged Property was acquired), (ii) accrued and
unpaid interest thereon at the Mortgage Rate through and including the last day
of the month of purchase and (iii) any costs and damages (if any) incurred by
the Trust in connection with any violation of such Mortgage Loan of any
predatory lending laws.

         Rating Agencies: Standard & Poor's and Moody's, each a "Rating Agency."

         Replacement Mortgage Loan: A mortgage loan substituted for a Deleted
Mortgage Loan which must meet on the date of such substitution the requirements
stated herein and in the Pooling and Servicing Agreement; upon such
substitution, such mortgage loan shall be a "Mortgage Loan" hereunder.

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

         Standard & Poor's: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. or its successors in interest.

         Value: The value of the Mortgaged Property at the time of origination
of the related Mortgage Loan, such value being the lesser of (i) the value of
such property set forth in an appraisal accepted by the applicable originator of
the Mortgage Loan or (ii) the sales price of such property at the time of
origination.

         Wells Fargo: Wells Fargo Bank, National Association.

         SECTION 2. Purchase and Sale of the Mortgage Loans and Related Rights.

         (a)      Upon satisfaction of the conditions set forth in Section 10
hereof, the Mortgage Loan Seller agrees to sell, and the Purchaser agrees to
purchase Mortgage Loans having an aggregate outstanding principal balance as of
the Cut-off Date equal to the Cut-off Date Balance.

         (b)      The closing for the purchase and sale of the Mortgage Loans
and the closing for the issuance of the Certificates will take place on the
Closing Date at the office of the Purchaser's counsel in New York, New York or
such other place as the parties shall agree.


                                      L-3
<PAGE>


         (c)      Upon the satisfaction of the conditions set forth in Section
10 hereof, on the Closing Date, the Purchaser shall pay to the Mortgage Loan
Seller the Acquisition Price for the Mortgage Loans in immediately available
funds by wire transfer to such account or accounts as shall be designated by the
Mortgage Loan Seller.

         (d)      In addition to the foregoing, on the Closing Date the Mortgage
Loan Seller assigns to the Purchaser all of its right, title and interest in the
Servicing Agreements.

         SECTION 3. Mortgage Loan Schedules. The Mortgage Loan Seller agrees to
provide to the Purchaser as of the date hereof a preliminary listing of the
Mortgage Loans (the "Preliminary Mortgage Loan Schedule") setting forth the
information listed on Exhibit 2 to this Agreement with respect to each of the
Mortgage Loans being sold by the Mortgage Loan Seller. If there are changes to
the Preliminary Mortgage Loan Schedule, the Mortgage Loan Seller shall provide
to the Purchaser as of the Closing Date a final schedule (the "Final Mortgage
Loan Schedule") setting forth the information listed on Exhibit 2 to this
Agreement with respect to each of the Mortgage Loans being sold by the Mortgage
Loan Seller to the Purchaser. The Final Mortgage Loan Schedule shall be
delivered to the Purchaser on the Closing Date, shall be attached to an
amendment to this Agreement to be executed on the Closing Date by the parties
hereto and shall be in form and substance mutually agreed to by the Mortgage
Loan Seller and the Purchaser (the "Amendment"). If there are no changes to the
Preliminary Mortgage Loan Schedule, the Preliminary Mortgage Loan Schedule shall
be the Final Mortgage Loan Schedule for all purposes hereof.

         SECTION 4. Mortgage Loan Transfer.

         (a)      The Purchaser will be entitled to all scheduled payments of
principal and interest on the Mortgage Loans due after the Cut-off Date
(regardless of when actually collected) and all payments thereof. The Mortgage
Loan Seller will be entitled to all scheduled payments of principal and interest
on the Mortgage Loans due on or before the Cut-off Date (including payments
collected after the Cut-off Date) and all payments thereof. Such principal
amounts and any interest thereon belonging to the Mortgage Loan Seller as
described above will not be included in the aggregate outstanding principal
balance of the Mortgage Loans as of the Cut-off Date as set forth on the Final
Mortgage Loan Schedule.

         (b)      Pursuant to various conveyancing documents to be executed on
the Closing Date and pursuant to the Pooling and Servicing Agreement, the
Purchaser will assign on the Closing Date all of its right, title and interest
in and to the Mortgage Loans to the Trustee for the benefit of the
Certificateholders. In connection with the transfer and assignment of the
Mortgage Loans, the Mortgage Loan Seller has delivered or will deliver or cause
to be delivered to the Trustee or the Custodian on behalf of the Trustee by the
Closing Date or such later date as is agreed to by the Purchaser and the
Mortgage Loan Seller (each of the Closing Date and such later date is referred
to as a "Mortgage File Delivery Date"), the items of each Mortgage File,
provided, however, that in lieu of the foregoing, the Mortgage Loan Seller may
deliver the following documents, under the circumstances set forth below: (x) in
lieu of the original Mortgage, assignments to the Trustee or intervening
assignments thereof which have been delivered, are being delivered or will upon
receipt of recording information relating to the


                                      L-4
<PAGE>


Mortgage required to be included thereon, be delivered to recording offices for
recording and have not been returned in time to permit their delivery as
specified above, the Mortgage Loan Seller may deliver a true copy thereof with a
certification by the Mortgage Loan Seller or the Master Servicer, on the face of
such copy, substantially as follows: "Certified to be a true and correct copy of
the original, which has been transmitted for recording;" (y) in lieu of the
Mortgage, assignments to the Trustee or intervening assignments thereof, if the
applicable jurisdiction retains the originals of such documents or if the
originals are lost (in each case, as evidenced by a certification from the
Mortgage Loan Seller or the Master Servicer to such effect), the Mortgage Loan
Seller may deliver photocopies of such documents containing an original
certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; and (z) in lieu of the Mortgage
Notes relating to the Mortgage Loans, each identified in the list delivered by
the Purchaser to the Trustee on the Closing Date and attached hereto as Exhibit
5 the Mortgage Loan Seller may deliver lost note affidavits and indemnities of
the Mortgage Loan Seller; and provided further, however, that in the case of
Mortgage Loans which have been prepaid in full after the Cut-off Date and prior
to the Closing Date, the Mortgage Loan Seller, in lieu of delivering the above
documents, may deliver to the Trustee a certification by the Mortgage Loan
Seller or the Master Servicer to such effect. The Mortgage Loan Seller shall
deliver such original documents (including any original documents as to which
certified copies had previously been delivered) or such certified copies to the
Trustee, or the Custodian on behalf of the Trustee, promptly after they are
received. The Mortgage Loan Seller shall cause the Mortgage and intervening
assignments, if any, and the assignment of the Mortgage to be recorded not later
than 180 days after the Closing Date unless such assignment is not required to
be recorded under the terms set forth in Section 6(a) hereof.

         (c)      In connection with the assignment of any Mortgage Loan
registered on the MERS(R) System, the Mortgage Loan Seller further agrees that
it will cause, at the Mortgage Loan Seller's own expense, within 30 days after
the Closing Date, the MERS(R) System to indicate that such Mortgage Loans have
been assigned by the Mortgage Loan Seller to the Purchaser and by the Purchaser
to the Trustee in accordance with this Agreement for the benefit of the
Certificateholders by including (or deleting, in the case of Mortgage Loans
which are repurchased in accordance with this Agreement) in such computer files
(a) the code in the field which identifies the specific Trustee and (b) the code
in the field "Pool Field" which identifies the series of the Certificates issued
in connection with such Mortgage Loans. The Mortgage Loan Seller further agrees
that it will not, and will not permit any Servicer or the Master Servicer to,
and the Master Servicer agrees that it will not, alter the codes referenced in
this paragraph with respect to any Mortgage Loan during the term of the Pooling
and Servicing Agreement unless and until such Mortgage Loan is repurchased in
accordance with the terms of the Pooling and Servicing Agreement.

         (d)      The Mortgage Loan Seller and the Purchaser acknowledge
hereunder that all of the Mortgage Loans and the related servicing (other than
the servicing rights with respect to the GMACM Loans and the SouthTrust Loans),
will ultimately be assigned to U.S. Bank National Association, as Trustee for
the Certificateholders, on the date hereof.


                                      L-5
<PAGE>


         SECTION 5. Examination of Mortgage Files.

         (a)      On or before the Mortgage File Delivery Date, the Mortgage
Loan Seller will have made the Mortgage Files available to the Purchaser or its
agent for examination which may be at the offices of the Trustee or the Mortgage
Loan Seller and/or the Mortgage Loan Seller's custodian. The fact that the
Purchaser or its agent has conducted or has failed to conduct any partial or
complete examination of the Mortgage Files shall not affect the Purchaser's
rights to demand cure, repurchase, substitution or other relief as provided in
this Agreement. In furtherance of the foregoing, the Mortgage Loan Seller shall
make the Mortgage Files available to the Purchaser or its agent from time to
time so as to permit the Purchaser to confirm the Mortgage Loan Seller's
compliance with the delivery and recordation requirements of this Agreement and
the Pooling and Servicing Agreement. In addition, upon request of the Purchaser,
the Mortgage Loan Seller agrees to provide to the Purchaser, Bear Stearns and to
any investors or prospective investors in the Certificates information regarding
the Mortgage Loans and their servicing, to make the Mortgage Files available to
the Purchaser, Bear Stearns and to such investors or prospective investors
(which may be at the offices of the Mortgage Loan Seller and/or the Mortgage
Loan Seller's custodian) and to make available personnel knowledgeable about the
Mortgage Loans for discussions with the Purchaser, Bear Stearns and such
investors or prospective investors, upon reasonable request during regular
business hours, sufficient to permit the Purchaser, Bear Stearns and such
investors or potential investors to conduct such due diligence as any such party
reasonably believes is appropriate.

         (b)      Pursuant to the Pooling and Servicing Agreement, on the
Closing Date the Trustee (or the Custodian as obligated under the Custodial
Agreement), for the benefit of the Certificateholders, will review items of the
Mortgage Files as set forth on Exhibit 1 and will deliver to the Mortgage Loan
Seller an initial certification in the form attached as Exhibit One to the
Custodial Agreement.

         (c)      Within 90 days of the Closing Date, the Trustee or the
Custodian on its behalf shall, in accordance with the provisions of Section 2.02
of the Pooling and Servicing Agreement, deliver to the Seller and the Trustee an
Interim Certification in the form attached as Exhibit Two to the Custodial
Agreement to the effect that all such documents have been executed and received
and that such documents relate to the Mortgage Loans identified on the Mortgage
Loan Schedule, except for any exceptions listed on Schedule A attached to such
Interim Certification. The Custodian shall be under no duty or obligation to
inspect, review or examine said documents, instruments, certificates or other
papers to determine that the same are genuine, enforceable, or appropriate for
the represented purpose or that they have actually been recorded or that they
are other than what they purport to be on their face.

         (d)      The Trustee or the Custodian on its behalf will review the
Mortgage Files within 180 days of the Closing Date and will deliver to the
Mortgage Loan Seller and the Master Servicer, and if reviewed by the Custodian,
the Trustee, a final certification substantially in the form of Exhibit Three to
the Custodial Agreement. If the Trustee or the Custodian on its behalf is unable
to deliver a final certification with respect to the items listed in Exhibit 1
due to any document that is missing, has not been executed, is unrelated,
determined on the basis of the Mortgagor name, original principal balance and
loan number, to the Mortgage Loans identified


                                      L-6
<PAGE>


in the Final Mortgage Loan Schedule (a "Material Defect"), the Trustee or the
Custodian on its behalf shall notify the Mortgage Loan Seller of such Material
Defect. The Mortgage Loan Seller shall correct or cure any such Material Defect
within 90 days from the date of notice from the Trustee of the Material Defect
and if the Mortgage Loan Seller does not correct or cure such Material Defect
within such period and such defect materially and adversely affects the
interests of the Certificateholders in the related Mortgage Loan, the Mortgage
Loan Seller will, in accordance with the terms of the Pooling and Servicing
Agreement, within 90 days of the date of notice, provide the Trustee with a
Replacement Mortgage Loan (if within two years of the Closing Date) or purchase
the related Mortgage Loan at the applicable Purchase Price; provided, however,
that if such defect relates solely to the inability of the Mortgage Loan Seller
to deliver the original security instrument or intervening assignments thereof,
or a certified copy because the originals of such documents, or a certified
copy, have not been returned by the applicable jurisdiction, the Mortgage Loan
Seller shall not be required to purchase such Mortgage Loan if the Mortgage Loan
Seller delivers such original documents or certified copy promptly upon receipt,
but in no event later than 360 days after the Closing Date. The foregoing
repurchase obligation shall not apply in the event that the Mortgage Loan Seller
cannot deliver such original or copy of any document submitted for recording to
the appropriate recording office in the applicable jurisdiction because such
document has not been returned by such office; provided that the Mortgage Loan
Seller shall instead deliver a recording receipt of such recording office or, if
such receipt is not available, a certificate of Mortgage Loan Seller or a
Servicing Officer confirming that such documents have been accepted for
recording, and delivery to the Trustee shall be effected by the Mortgage Loan
Seller within thirty days of its receipt of the original recorded document.

         (e)      At the time of any substitution, the Mortgage Loan Seller
shall deliver or cause to be delivered the Replacement Mortgage Loan, the
related Mortgage File and any other documents and payments required to be
delivered in connection with a substitution pursuant to the Pooling and
Servicing Agreement. At the time of any purchase or substitution, the Trustee
shall (i) assign the selected Mortgage Loan to the Mortgage Loan Seller and
shall release or cause the Custodian to release the documents (including, but
not limited to the Mortgage, Mortgage Note and other contents of the Mortgage
File) in the possession of the Trustee or the Custodian, as applicable relating
to the Deleted Mortgage Loan and (ii) execute and deliver such instruments of
transfer or assignment, in each case without recourse, as shall be necessary to
vest in the Mortgage Loan Seller title to such Deleted Mortgage Loan.

         SECTION 6. Recordation of Assignments of Mortgage.

         (a)      The Mortgage Loan Seller will, promptly after the Closing
Date, cause each Mortgage and each assignment of Mortgage from the Mortgage Loan
Seller to the Trustee, and all unrecorded intervening assignments, if any,
delivered on or prior to the Closing Date, to be recorded in all recording
offices in the jurisdictions where the related Mortgaged Properties are located;
provided, however, the Mortgage Loan Seller need not cause to be recorded any
assignment which relates to a Mortgage Loan that is a MOM Loan or for which the
related Mortgaged Property is located in any jurisdiction under the laws of
which, as evidenced by an Opinion of Counsel delivered by the Mortgage Loan
Seller to the Trustee and the Rating Agencies, the recordation of such
assignment is not necessary to protect the Trustee's interest in


                                      L-7
<PAGE>


the related Mortgage Loan; provided, however, notwithstanding the delivery of
any Opinion of Counsel, each assignment of Mortgage shall be submitted for
recording by the Mortgage Loan Seller in the manner described above, at no
expense to the Trust Fund or Trustee, upon the earliest to occur of (i)
reasonable direction by the Holders of Certificates evidencing Percentage
Interests aggregating not less than 25% of the Trust, (ii) the occurrence of a
Company Default, (iii) the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Mortgage Loan Seller under the Pooling and Servicing Agreement,
(iv) the occurrence of a servicing transfer as described in Section 9.05 of the
Pooling and Servicing Agreement or an assignment of the servicing as described
in Section 8.05(b) of the Pooling and Servicing Agreement or (iv) with respect
to any one assignment of Mortgage, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage.

         While each such Mortgage or assignment is being recorded, if necessary,
the Mortgage Loan Seller shall leave or cause to be left with the Trustee or the
Custodian on its behalf a certified copy of such Mortgage or assignment. In the
event that, within 180 days of the Closing Date, the Trustee has not been
provided with an Opinion of Counsel as described above or received evidence of
recording with respect to each Mortgage Loan delivered to the Purchaser pursuant
to the terms hereof or as set forth above and the related Mortgage Loan is not a
MOM Loan, the failure to provide evidence of recording or such Opinion of
Counsel shall be considered a Material Defect, and the provisions of Section
5(c) and (d) shall apply. All customary recording fees and reasonable expenses
relating to the recordation of the assignments of mortgage to the Trustee or the
Opinion of Counsel, as the case may be, shall be borne by the Mortgage Loan
Seller.

         (b)      It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Mortgage Loan Seller to the Purchaser,
as contemplated by this Agreement be, and be treated as, a sale. It is, further,
not the intention of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Mortgage Loan Seller to the Purchaser to secure a debt or
other obligation of the Mortgage Loan Seller. However, in the event that,
notwithstanding the intent of the parties, the Mortgage Loans are held by a
court to continue to be property of the Mortgage Loan Seller, then (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the applicable Uniform Commercial Code; (b) the transfer of
the Mortgage Loans provided for herein shall be deemed to be a grant by the
Mortgage Loan Seller to the Purchaser of a security interest in all of the
Mortgage Loan Seller'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, to the
extent the Purchaser would otherwise be entitled to own such Mortgage Loans and
proceeds pursuant to Section 4 hereof, including all amounts, other than
investment earnings, from time to time held or invested in any accounts created
pursuant to the Pooling and Servicing Agreement, whether in the form of cash,
instruments, securities or other property; (c) the possession by the Purchaser
or the Trustee (or the Custodian on its behalf) of Mortgage Notes and such other
items of property as constitute instruments, money, negotiable documents or
chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9-305 (or
comparable provision) of the applicable Uniform Commercial Code; and (d)
notifications to persons holding such property,


                                      L-8
<PAGE>


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 Purchaser for the purpose of perfecting such security interest under
applicable law. Any assignment of the interest of the Purchaser pursuant to any
provision hereof or pursuant to the Pooling and Servicing Agreement shall also
be deemed to be an assignment of any security interest created hereby. The
Mortgage Loan Seller and the Purchaser shall, to the extent consistent with this
Agreement, take such actions as may be reasonably necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage Loans,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of the Pooling and Servicing Agreement.

         SECTION 7. Representations and Warranties of Mortgage Loan Seller
Concerning the Mortgage Loans. The Mortgage Loan Seller hereby represents and
warrants to the Purchaser as of the Closing Date or such other date as may be
specified below with respect to each Mortgage Loan being sold by it:

         (a)      The information set forth in the Mortgage Loan Schedule on the
Closing Date is complete, true and correct.

         (b)      All payments required to be made prior to the Cut-off Date
with respect to each Mortgage Loan have been made and no Mortgage Loan is
delinquent thirty one or more days; and the Mortgage Loan Seller has not
advanced funds, or induced, solicited or knowingly received any advance of funds
from a party other than the owner of the Mortgaged Property subject to the
Mortgage, directly or indirectly, for the payment of any amount required under
any Mortgage Loan.

         (c)      Except with respect to taxes, insurance and other amounts
previously advanced by a prior servicer with respect to any Mortgage Loan, there
are no delinquent taxes, water charges, sewer rents, assessments, insurance
premiums, leasehold payments, including assessments payable in future
installments, or other outstanding charges affecting the related Mortgaged
Property.

         (d)      The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments which in the case of the Mortgage Loans are in the Mortgage File and
have been or will be recorded, if necessary to protect the interests of the
Trustee, and which have been or will be delivered to the Trustee, all in
accordance with this Agreement. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required by
the related policy. No Mortgagor has been released, in whole or in part, except
in connection with an assumption agreement approved by the title insurer, to the
extent required by the policy, and which assumption agreement in the case of the
Mortgage Loans is part of the Mortgage File.

         (e)      The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of


                                      L-9
<PAGE>


rescission, set-off, counterclaim or defense, including the defense of usury and
no such right of rescission, set-off, counterclaim or defense has been asserted
with respect thereto.

         (f)      All buildings upon, or comprising part of, the Mortgaged
Property are insured by an insurer acceptable to Fannie Mae and Freddie Mac
against loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located, and such insurer
is licensed to do business in the state where the Mortgaged Property is located.
All such insurance policies contain a standard mortgagee clause naming the
originator, its successors and assigns as mortgagee and Mortgage Loan Seller has
received no notice that all premiums thereon have not been paid. If upon
origination of the Mortgage Loan, the Mortgaged Property was, or was
subsequently deemed to be, in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available), which require under applicable law
that a flood insurance policy meeting the requirements of the current guidelines
of the Federal Insurance Administration (or any successor thereto) be obtained,
such flood insurance policy is in effect which policy is with a generally
acceptable carrier in an amount representing coverage not less than the least of
(A) the Stated Principal Balance of the related Mortgage Loan, (B) the minimum
amount required to compensate for damage or loss on a replacement cost basis, or
(C) the maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at Mortgagor's cost and expense and, on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at Mortgagor's cost and expense and to obtain reimbursement
therefor from the Mortgagor.

         (g)      Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real estate settlement
procedures including, the Real Estate Settlement Procedures Act of 1974, as
amended, consumer credit protection, equal credit opportunity or disclosure and
reporting laws and all anti-predatory lending laws applicable to the Mortgage
Loan have been complied with in all material respects.

         (h)      The Mortgage has not been satisfied, canceled, subordinated,
or rescinded, in whole or in part, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such release, cancellation,
subordination or rescission.

         (i)      The Mortgage is a valid, existing and enforceable first lien
on the Mortgaged Property, including all improvements on the Mortgaged Property,
if any, subject only to (1) the lien of current real property taxes and
assessments not yet due and payable, (2) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of the date
of recording being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and which do not adversely affect the Appraised
Value of the Mortgaged Property and (3) other matters to which like properties
are commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage. The Mortgage Loan Seller has
full right to sell and assign the Mortgage to the Purchaser.


                                      L-10
<PAGE>


         (j)      The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency or reorganization or general principles
of equity.

         (k)      All parties to the Mortgage Note and the Mortgage had the
legal capacity to enter into the Mortgage Loan transaction and to execute and
deliver the Mortgage Note and the Mortgage, and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties.

         (l)      The proceeds of the Mortgage Loan have been fully disbursed
and there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage.

         (m)      Immediately prior to the conveyance of the Mortgage Loans by
the Mortgage Loan Seller to the Purchaser hereunder, the Mortgage Loan Seller
was the sole owner and holder of the Mortgage Loan; the related Originator or
the Mortgage Loan Seller or the applicable Servicer was the custodian of the
related escrow account, if applicable; the Mortgage Loan had neither been
assigned nor pledged, and the Mortgage Loan Seller had good and marketable title
thereto, and had full right to transfer and sell the Mortgage Loan and the
related servicing rights to the Purchaser free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest subject to the
applicable servicing agreement and had full right and authority subject to no
interest or participation of, or agreement with, any other party, to sell and
assign the Mortgage Loan and the related servicing rights, subject to the
applicable servicing agreement, to the Purchaser pursuant to the terms of this
Agreement.

         (n)      All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
the Mortgaged Property is located, and (2) organized under the laws of such
state, qualified to do business in such state, a federal savings and loan
association or national bank having principal offices in such state or not
deemed to be doing business in such state under applicable law.

         (o)      The Mortgage Loan is covered by an ALTA lender's title
insurance policy or equivalent form acceptable to the Department of Housing and
Urban Development, or any successor thereto, and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to the
exceptions contained in clause (i) above) the Mortgage Loan Seller (as
assignee), its successors and assigns as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan. Additionally,
such lender's title insurance policy affirmatively insures ingress and egress,
and against encroachments by or upon the Mortgaged Property or any interest
therein. With respect to each Mortgage Loan, the Mortgage Loan Seller (as
assignee) is the sole insured of such lender's title insurance policy, and such


                                      L-11
<PAGE>


lender's title insurance policy is in full force and effect. No claims have been
made under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the Mortgage Loan Seller, has done, by act or
omission, anything which would impair the coverage of such lender's title
insurance policy.

         (p)      Except as provided in clause (b), immediately prior to the
Cut-off Date, there was no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and there was no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration,
and the Mortgage Loan Seller has not waived any default, breach, violation or
event of acceleration.

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

         (r)      All improvements which were considered in any appraisal which
was used in determining the Appraised Value of the related Mortgaged Property
lay wholly within the boundaries and building restriction lines of the Mortgaged
Property, and no improvements on adjoining properties encroach upon the
Mortgaged Property.

         (s)      The origination, servicing and collection practices with
respect to each Mortgage Note and Mortgage including, the establishment,
maintenance and servicing of the escrow accounts and escrow payments, if any,
since origination, have been conducted in all respects in accordance with the
terms of Mortgage Note and in compliance with all applicable laws and
regulations and, unless otherwise required by law or Fannie Mae/Freddie Mac
standards, in accordance with the proper, prudent and customary practices in the
mortgage origination and servicing business. With respect to the escrow accounts
and escrow payments, if any, and an EMC Mortgage Loan all such payments are in
the possession or under the control of the Mortgage Loan Seller (including
pursuant to a Subservicing Agreement) and there exists no deficiencies in
connection therewith for which customary arrangements for repayment thereof have
not been made. Any interest required to be paid pursuant to state and local law
has been properly paid and credited.

         (t)      The Mortgaged Property is free of material damage and waste
and there is no proceeding pending for the total or partial condemnation
thereof.

         (u)      The Mortgage contains customary and enforceable provisions to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
intended to be provided thereby, including, (1) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (2) otherwise by judicial
foreclosure. There is no other exemption available to the Mortgagor which would
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage. The Mortgagor has not notified the Mortgage
Loan Seller and the Mortgage Loan Seller has no knowledge of any relief
requested or allowed to the Mortgagor under the Servicemembers Civil Relief Act.


                                      L-12
<PAGE>


         (v)      The Mortgage Note is not and has not been secured by any
collateral except the lien of the applicable Mortgage.

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

         (x)      No Mortgage Loan contains a permanent or temporary "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan.

         (y)      The Mortgagor has received all disclosure materials required
by applicable law with respect to the making of the Mortgage Loan.

         (z)      No Mortgage Loan was made in connection with the construction
or rehabilitation of a Mortgaged Property.

         (aa)     To the best of Mortgage Loan Seller's knowledge, the Mortgaged
Property is lawfully occupied under applicable law and all inspections, licenses
and certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property and, with respect to the use and occupancy of
the same, including but not limited to certificates of occupancy, have been made
or obtained from the appropriate authorities.

         (bb)     The assignment of Mortgage with respect to a Mortgage Loan is
in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.

         (cc)     The Mortgaged Property consists of a single parcel of real
property with or without a detached single family residence erected thereon, or
an individual condominium unit, or a 2-4 family dwelling, or an individual unit
in a planned unit development as defined by Fannie Mae or a townhouse, each
structure of which is permanently affixed to the Mortgaged Property, and is
legally classified as real estate.

         (dd)     Each Mortgage Loan at the time of origination was underwritten
in general in accordance with guidelines not inconsistent with the guidelines
set forth in the Prospectus Supplement and generally accepted credit
underwriting guidelines.

         (ee)     No error, omission, misrepresentation, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part of the
Mortgage Loan Seller or the related Originator.

         (ff)     None of the Mortgage Loans are (a) loans subject to 12 CFR
Part 226.31, 12 CFR Part 226.32 or 12 CFR Part 226.34 of Regulation Z, the
regulation implementing TILA, which implements the Home Ownership and Equity
Protection Act of 1994 ("HOEPA") or (b) classified and/or defined as a "high
cost home loan" under any federal, state, or local law, including, but not
limited to, the States of Georgia or North Carolina.


                                      L-13
<PAGE>


         (gg)     None of the Mortgage Loans originated on or after October 1,
2002 and before March 7, 2003 was secured by property located in the State of
Georgia.

         (hh)     Each Prepayment Charge is enforceable and was originated in
compliance with all applicable federal, state and local laws.

         (ii)     At the time of origination, each Mortgaged Property was the
subject of an appraisal which conformed to the underwriting requirements of the
originator of the Mortgage Loan and, the appraisal is in a form acceptable to
Fannie Mae or FHLMC.

         (jj)     No Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in Appendix E of the Standard & Poor's
Glossary For File Format For LEVELS(R) Version 5.6 Revised attached hereto as
Exhibit 6).

         (kk)     None of the Mortgage Loans that are secured by property
located in the State of Illinois are in violation of the provisions of the
Illinois Interest Act.

         It is understood and agreed that the representations and warranties set
forth in this Section 7 will inure to the benefit of the Purchaser, its
successors and assigns, notwithstanding any restrictive or qualified endorsement
on any Mortgage Note or assignment of Mortgage or the examination of any
Mortgage File. Upon any substitution for a Mortgage Loan, the representations
and warranties set forth above shall be deemed to be made by the Mortgage Loan
Seller as to any Replacement Mortgage Loan as of the date of substitution.

         Upon discovery or receipt of notice by the Mortgage Loan Seller, the
Purchaser or the Trustee of a breach of any representation or warranty of the
Mortgage Loan Seller set forth in this Section 7 which materially and adversely
affects the value of the interests of the Purchaser, the Certificateholders or
the Trustee in any of the Mortgage Loans delivered to the Purchaser pursuant to
this Agreement, the party discovering or receiving notice of such breach shall
give prompt written notice to the others. In the case of any such breach of a
representation or warranty set forth in this Section 7, within 90 days from the
date of discovery by the Mortgage Loan Seller, or the date the Mortgage Loan
Seller is notified by the party discovering or receiving notice of such breach
(whichever occurs earlier), the Mortgage Loan Seller will (i) cure such breach
in all material respects, (ii) purchase the affected Mortgage Loan at the
applicable Purchase Price or (iii) if within two years of the Closing Date,
substitute a qualifying Replacement Mortgage Loan in exchange for such Mortgage
Loan; provided that, (A) in the case of a breach of the representation and
warranty concerning the Mortgage Loan Schedule contained in clause (a) of this
Section 7, if such breach is material and relates to any field on the Mortgage
Loan Schedule which identifies any Prepayment Charge or (B) in the case of a
breach of the representation contained in clause (hh) of this Section 7, then,
in each case, in lieu of purchasing such Mortgage Loan from the Trust Fund at
the Purchase Price, the Mortgage Loan Seller shall pay the amount of the
Prepayment Charge (net of any amount previously collected by or paid to the
Trust Fund in respect of such Prepayment Charge) from its own funds and without
reimbursement therefor, and the Mortgage Loan Seller shall have no obligation to
repurchase or substitute for such Mortgage Loan. The obligations of the Mortgage
Loan Seller to cure, purchase or substitute a qualifying Replacement Mortgage
Loan shall constitute the Purchaser's, the Trustee's and the Certificateholder's
sole and exclusive remedy under this


                                      L-14
<PAGE>


Agreement or otherwise respecting a breach of representations or warranties
hereunder with respect to the Mortgage Loans, except for the obligation of the
Mortgage Loan Seller to indemnify the Purchaser for such breach as set forth in
and limited by Section 13 hereof.

         Any cause of action against the Mortgage Loan Seller or relating to or
arising out of a breach by the Mortgage Loan Seller of any representations and
warranties made in this Section 7 shall accrue as to any Mortgage Loan upon (i)
discovery of such breach by the Mortgage Loan Seller or notice thereof by the
party discovering such breach and (ii) failure by the Mortgage Loan Seller to
cure such breach, purchase such Mortgage Loan or substitute a qualifying
Replacement Mortgage Loan pursuant to the terms hereof.

         SECTION 8. Representations and Warranties Concerning the Mortgage Loan
Seller. As of the date hereof and as of the Closing Date, the Mortgage Loan
Seller represents and warrants to the Purchaser as to itself in the capacity
indicated as follows:

                  (a)      the Mortgage Loan Seller (i) is a corporation duly
         organized, validly existing and in good standing under the laws of the
         State of Delaware and (ii) is qualified and in good standing to do
         business in each jurisdiction where such qualification is necessary,
         except where the failure so to qualify would not reasonably be expected
         to have a material adverse effect on the Mortgage Loan Seller's
         business as presently conducted or on the Mortgage Loan Seller's
         ability to enter into this Agreement and to consummate the transactions
         contemplated hereby;

                  (b)      the Mortgage Loan Seller has full power to own its
         property, to carry on its business as presently conducted and to enter
         into and perform its obligations under this Agreement;

                  (c)      the execution and delivery by the Mortgage Loan
         Seller of this Agreement have been duly authorized by all necessary
         action on the part of the Mortgage Loan Seller; and neither the
         execution and delivery of this Agreement, nor the consummation of the
         transactions herein contemplated, nor compliance with the provisions
         hereof, will conflict with or result in a breach of, or constitute a
         default under, any of the provisions of any law, governmental rule,
         regulation, judgment, decree or order binding on the Mortgage Loan
         Seller or its properties or the charter or by-laws of the Mortgage Loan
         Seller, except those conflicts, breaches or defaults which would not
         reasonably be expected to have a material adverse effect on the
         Mortgage Loan Seller's ability to enter into this Agreement and to
         consummate the transactions contemplated hereby;

                  (d)      the execution, delivery and performance by the
         Mortgage Loan Seller of this Agreement and the consummation of the
         transactions contemplated hereby do not require the consent or approval
         of, the giving of notice to, the registration with, or the taking of
         any other action in respect of, any state, federal or other
         governmental authority or agency, except those consents, approvals,
         notices, registrations or other actions as have already been obtained,
         given or made and, in connection with the recordation of the Mortgages,
         powers of attorney or assignments of Mortgages not yet completed;


                                      L-15
<PAGE>


                  (e)      this Agreement has been duly executed and delivered
         by the Mortgage Loan Seller and, assuming due authorization, execution
         and delivery by the Purchaser, constitutes a valid and binding
         obligation of the Mortgage Loan Seller enforceable against it in
         accordance with its terms (subject to applicable bankruptcy and
         insolvency laws and other similar laws affecting the enforcement of the
         rights of creditors generally);

                  (f)      there are no actions, suits or proceedings pending
         or, to the knowledge of the Mortgage Loan Seller, threatened against
         the Mortgage Loan Seller, before or by any court, administrative
         agency, arbitrator or governmental body (i) with respect to any of the
         transactions contemplated by this Agreement or (ii) with respect to any
         other matter which in the judgment of the Mortgage Loan Seller will be
         determined adversely to the Mortgage Loan Seller and will if determined
         adversely to the Mortgage Loan Seller materially and adversely affect
         the Mortgage Loan Seller's ability to perform its obligations under
         this Agreement; and the Mortgage Loan Seller is not in default with
         respect to any order of any court, administrative agency, arbitrator or
         governmental body so as to materially and adversely affect the
         transactions contemplated by this Agreement; and

                  (g)      the Mortgage Loan Seller's Information (as defined in
         Section 13(a) hereof) does not include any untrue statement of a
         material fact or omit to state a material fact necessary in order to
         make the statements made, in light of the circumstances under which
         they were made, not misleading.

         SECTION 9. Representations and Warranties Concerning the Purchaser. As
of the date hereof and as of the Closing Date, the Purchaser represents and
warrants to the Mortgage Loan Seller as follows:

                  (a)      the Purchaser (i) is a limited liability company duly
         organized, validly existing and in good standing under the laws of the
         State of Delaware and (ii) is qualified and in good standing to do
         business in each jurisdiction where such qualification is necessary,
         except where the failure so to qualify would not reasonably be expected
         to have a material adverse effect on the Purchaser's business as
         presently conducted or on the Purchaser's ability to enter into this
         Agreement and to consummate the transactions contemplated hereby;

                  (b)      the Purchaser has full power to own its property, to
         carry on its business as presently conducted and to enter into and
         perform its obligations under this Agreement;

                  (c)      the execution and delivery by the Purchaser of this
         Agreement have been duly authorized by all necessary action on the part
         of the Purchaser; and neither the execution and delivery of this
         Agreement, nor the consummation of the transactions herein
         contemplated, nor compliance with the provisions hereof, will conflict
         with or result in a breach of, or constitute a default under, any of
         the provisions of any law, governmental rule, regulation, judgment,
         decree or order binding on the Purchaser or its properties or the
         certificate of formation or limited liability company agreement of the
         Purchaser, except those conflicts, breaches or defaults which would not
         reasonably be


                                      L-16
<PAGE>


         expected to have a material adverse effect on the Purchaser's ability
         to enter into this Agreement and to consummate the transactions
         contemplated hereby;

                  (d)      the execution, delivery and performance by the
         Purchaser of this Agreement and the consummation of the transactions
         contemplated hereby do not require the consent or approval of, the
         giving of notice to, the registration with, or the taking of any other
         action in respect of, any state, federal or other governmental
         authority or agency, except those consents, approvals, notices,
         registrations or other actions as have already been obtained, given or
         made;

                  (e)      this Agreement has been duly executed and delivered
         by the Purchaser and, assuming due authorization, execution and
         delivery by the Mortgage Loan Seller, constitutes a valid and binding
         obligation of the Purchaser enforceable against it in accordance with
         its terms (subject to applicable bankruptcy and insolvency laws and
         other similar laws affecting the enforcement of the rights of creditors
         generally);

                  (f)      there are no actions, suits or proceedings pending
         or, to the knowledge of the Purchaser, threatened against the
         Purchaser, before or by any court, administrative agency, arbitrator or
         governmental body (i) with respect to any of the transactions
         contemplated by this Agreement or (ii) with respect to any other matter
         which in the judgment of the Purchaser will be determined adversely to
         the Purchaser and will if determined adversely to the Purchaser
         materially and adversely affect the Purchaser's ability to perform its
         obligations under this Agreement; and the Purchaser is not in default
         with respect to any order of any court, administrative agency,
         arbitrator or governmental body so as to materially and adversely
         affect the transactions contemplated by this Agreement; and

                  (g)      the Purchaser's Information (as defined in Section
         13(b) hereof) does not include any untrue statement of a material fact
         or omit to state a material fact necessary in order to make the
         statements made, in light of the circumstances under which they were
         made, not misleading.

         SECTION 10. Conditions to Closing.

                  (a)      The obligations of the Purchaser under this Agreement
         will be subject to the satisfaction, on or prior to the Closing Date,
         of the following conditions:

                           (1)      Each of the obligations of the Mortgage Loan
         Seller required to be performed at or prior to the Closing Date
         pursuant to the terms of this Agreement shall have been duly performed
         and complied with in all material respects; all of the representations
         and warranties of the Mortgage Loan Seller under this Agreement shall
         be true and correct as of the date or dates specified in all material
         respects; and no event shall have occurred which, with notice or the
         passage of time, would constitute a default under this Agreement or the
         Pooling and Servicing Agreement; and the Purchaser shall have received
         certificates to that effect signed by authorized officers of the
         Mortgage Loan Seller.


                                      L-17
<PAGE>


                           (2)      The Purchaser shall have received all of the
         following closing documents, in such forms as are agreed upon and
         reasonably acceptable to the Purchaser, duly executed by all
         signatories other than the Purchaser as required pursuant to the
         respective terms thereof:

                                    (i)      If required pursuant to Section 3
         hereof, the Amendment dated as of the Closing Date and any documents
         referred to therein;

                                    (ii)     If required pursuant to Section 3
         hereof, the Final Mortgage Loan Schedule containing the information set
         forth on Exhibit 2 hereto, one copy to be attached to each counterpart
         of the Amendment;

                                    (iii)    The Pooling and Servicing
         Agreement, in form and substance reasonably satisfactory to the Trustee
         and the Purchaser, and all documents required thereby duly executed by
         all signatories;

                                    (iv)     A certificate of an officer of the
         Mortgage Loan Seller dated as of the Closing Date, in a form reasonably
         acceptable to the Purchaser, and attached thereto the resolutions of
         the Mortgage Loan Seller authorizing the transactions contemplated by
         this Agreement, together with copies of the articles of incorporation,
         bylaws and certificate of good standing of the Mortgage Loan Seller;

                                    (v)      One or more opinions of counsel
         from the Mortgage Loan Seller's counsel otherwise in form and substance
         reasonably satisfactory to the Purchaser, the Trustee and each Rating
         Agency;

                                    (vi)     A letter from each of the Rating
         Agencies giving each Class of Certificates set forth on Schedule A
         hereto the rating set forth therein; and

                                    (vii)    Such other documents, certificates
         (including additional representations and warranties) and opinions as
         may be reasonably necessary to secure the intended ratings from each
         Rating Agency for the Certificates.

                           (3)      The Certificates to be sold to Bear Stearns
         pursuant to the Underwriting Agreement shall have been issued and sold
         to Bear Stearns.

                           (4)      The Mortgage Loan Seller shall have
         furnished to the Purchaser such other certificates of its officers or
         others and such other documents and opinions of counsel to evidence
         fulfillment of the conditions set forth in this Agreement and the
         transactions contemplated hereby as the Purchaser and its counsel may
         reasonably request.

                  (b)      The obligations of the Mortgage Loan Seller under
         this Agreement shall be subject to the satisfaction, on or prior to the
         Closing Date, of the following conditions:

                           (1)      The obligations of the Purchaser required to
         be performed by it on or prior to the Closing Date pursuant to the
         terms of this Agreement shall have been duly


                                      L-18
<PAGE>


         performed and complied with in all material respects, and all of the
         representations and warranties of the Purchaser under this Agreement
         shall be true and correct in all material respects as of the date
         hereof and as of the Closing Date, and no event shall have occurred
         which would constitute a breach by it of the terms of this Agreement,
         and the Mortgage Loan Seller shall have received a certificate to that
         effect signed by an authorized officer of the Purchaser.

                           (2)      The Mortgage Loan Seller shall have received
         copies of all of the following closing documents, in such forms as are
         agreed upon and reasonably acceptable to the Mortgage Loan Seller, duly
         executed by all signatories other than the Mortgage Loan Seller as
         required pursuant to the respective terms thereof:

                                    (i)      If required pursuant to Section 3
         hereof, the Amendment dated as of the Closing Date and any documents
         referred to therein;

                                    (ii)     The Pooling and Servicing
         Agreement, in form and substance reasonably satisfactory to the
         Mortgage Loan Seller, and all documents required thereby duly executed
         by all signatories;

                                    (iii)    A certificate of an officer of the
         Purchaser dated as of the Closing Date, in a form reasonably acceptable
         to the Mortgage Loan Seller, and attached thereto the written consent
         of the member of the Purchaser authorizing the transactions
         contemplated by this Agreement and the Pooling and Servicing Agreement,
         together with copies of the Purchaser's certificate of formation,
         limited liability company agreement, and evidence as to the good
         standing of the Purchaser dated as of a recent date;

                                    (iv)     One or more opinions of counsel
         from the Purchaser's counsel in form and substance reasonably
         satisfactory to the Mortgage Loan Seller; and

                                    (v)      Such other documents, certificates
         (including additional representations and warranties) and opinions as
         may be reasonably necessary to secure the intended rating from each
         Rating Agency for the Certificates.

         SECTION 11. Fees and Expenses. Subject to Section 16 hereof, the
Mortgage Loan Seller shall pay on the Closing Date or such later date as may be
agreed to by the Purchaser (i) the fees and expenses of the Mortgage Loan
Seller's attorneys and the reasonable fees and expenses of the Purchaser's
attorneys, (ii) the fees and expenses of Deloitte & Touche LLP, (iii) the fee
for the use of Purchaser's Registration Statement based on the aggregate
original principal amount of the Certificates and the filing fee of the
Commission as in effect on the date on which the Registration Statement was
declared effective, (iv) the fees and expenses including counsel's fees and
expenses in connection with any "blue sky" and legal investment matters, (v) the
fees and expenses of the Trustee which shall include without limitation the fees
and expenses of the Trustee (and the fees and disbursements of its counsel) with
respect to (A) legal and document review of this Agreement, the Pooling and
Servicing Agreement, the Certificates and related agreements, (B) attendance at
the Closing and (C) review of the Mortgage Loans to be performed by the Trustee
or the Custodian on its behalf, (vi) the expenses for printing or otherwise
reproducing the Certificates, the Prospectus and the Prospectus Supplement,
(vii) the


                                      L-19
<PAGE>


fees and expenses of each Rating Agency (both initial and ongoing), (viii) the
fees and expenses relating to the preparation and recordation of mortgage
assignments (including intervening assignments, if any and if available, to
evidence a complete chain of title from the originator to the Trustee) from the
Mortgage Loan Seller to the Trustee or the expenses relating to the Opinion of
Counsel referred to in Section 6(a) hereof, as the case may be, and (ix)
Mortgage File due diligence expenses and other out-of-pocket expenses incurred
by the Purchaser in connection with the purchase of the Mortgage Loans and by
Bear Stearns in connection with the sale of the Certificates. The Mortgage Loan
Seller additionally agrees to pay directly to any third party on a timely basis
the fees provided for above which are charged by such third party and which are
billed periodically.

         SECTION 12. Accountants' Letters.

         (a)      Deloitte & Touche LLP will review the characteristics of a
sample of the Mortgage Loans described in the Final Mortgage Loan Schedule and
will compare those characteristics to the description of the Mortgage Loans
contained in the Prospectus Supplement under the captions "Summary--The Mortgage
Loans" and "The Mortgage Pool" and in Schedule A thereto. The Mortgage Loan
Seller will cooperate with the Purchaser in making available all information and
taking all steps reasonably necessary to permit such accountants to complete the
review and to deliver the letters required of them under the Underwriting
Agreement. Deloitte & Touche LLP will also confirm certain calculations as set
forth under the caption "Yield, Prepayment and Maturity Considerations" in the
Prospectus Supplement.

         (b)      To the extent statistical information with respect to the
Mortgage Loan Seller's servicing portfolio is included in the Prospectus
Supplement under the caption "Servicing of the Mortgage Loans--EMC--Delinquency
and Foreclosure Experience of EMC," a letter from the certified public
accountant for the Mortgage Loan Seller will be delivered to the Purchaser dated
the date of the Prospectus Supplement, in the form previously agreed to by the
Mortgage Loan Seller and the Purchaser, with respect to such statistical
information.

         SECTION 13. Indemnification.

                  (a)      The Mortgage Loan Seller shall indemnify and hold
         harmless the Purchaser and its directors, officers and controlling
         persons (as defined in Section 15 of the Securities Act) from and
         against any loss, claim, damage or liability or action in respect
         thereof, to which they or any of them may become subject, under the
         Securities Act or otherwise, insofar as such loss, claim, damage,
         liability or action arises out of, or is based upon (i) any untrue
         statement of a material fact contained in the Mortgage Loan Seller's
         Information as identified in Exhibit 3, the omission to state in the
         Prospectus Supplement or Prospectus (or any amendment thereof or
         supplement thereto approved by the Mortgage Loan Seller and in which
         additional Mortgage Loan Seller's Information is identified), in
         reliance upon and in conformity with Mortgage Loan Seller's Information
         a material fact required to be stated therein or necessary to make the
         statements therein in light of the circumstances in which they were
         made, not misleading, (ii) any representation or warranty assigned or
         made by the Mortgage Loan Seller in Section 7 or Section 8 hereof
         being, or alleged to be, untrue or incorrect, or (iii) any failure by
         the


                                      L-20
<PAGE>


         Mortgage Loan Seller to perform its obligations under this Agreement;
         and the Mortgage Loan Seller shall reimburse the Purchaser and each
         other indemnified party for any legal and other expenses reasonably
         incurred by them in connection with investigating or defending or
         preparing to defend against any such loss, claim, damage, liability or
         action.

         The foregoing indemnity agreement is in addition to any liability which
the Mortgage Loan Seller otherwise may have to the Purchaser or any other such
indemnified party.

                  (b)      The Purchaser shall indemnify and hold harmless the
         Mortgage Loan Seller and its respective directors, officers and
         controlling persons (as defined in Section 15 of the Securities Act)
         from and against any loss, claim, damage or liability or action in
         respect thereof, to which they or any of them may become subject, under
         the Securities Act or otherwise, insofar as such loss, claim, damage,
         liability or action arises out of, or is based upon (i) any untrue
         statement of a material fact contained in the Purchaser's ------------
         Information as identified in Exhibit 4, the omission to state in the
         Prospectus Supplement or Prospectus (or any amendment thereof or
         supplement thereto approved by the Purchaser and in which additional
         Purchaser's Information is identified), in reliance upon and in
         conformity with the Purchaser's Information, a material fact required
         to be stated therein or necessary to make the statements therein in
         light of the circumstances in which they were made, not misleading,
         (ii) any representation or warranty made by the Purchaser in Section 9
         hereof being, or alleged to be, untrue or incorrect, or (iii) any
         failure by the Purchaser to perform its obligations under this
         Agreement; and the Purchaser shall reimburse the Mortgage Loan Seller,
         and each other indemnified party for any legal and other expenses
         reasonably incurred by them in connection with investigating or
         defending or preparing to defend any such loss, claim, damage,
         liability or action. The foregoing indemnity agreement is in addition
         to any liability which the Purchaser otherwise may have to the Mortgage
         Loan Seller, or any other such indemnified party.

                  (c)      Promptly after receipt by an indemnified party under
         subsection (a) or (b) above of notice of the commencement of any
         action, such indemnified party shall, if a claim in respect thereof is
         to be made against the indemnifying party under such subsection, notify
         each party against whom indemnification is to be sought in writing of
         the commencement thereof (but the failure so to notify an indemnifying
         party shall not relieve it from any liability which it may have under
         this Section 13 except to the extent that it has been prejudiced in any
         material respect by such failure or from any liability which it may
         have otherwise). In case any such action is brought against any
         indemnified party, and it notifies an indemnifying party of the
         commencement thereof, the indemnifying party will be entitled to
         participate therein and, to the extent it may elect by written notice
         delivered to the indemnified party promptly (but, in any event, within
         30 days) after receiving the aforesaid notice from such indemnified
         party, to assume the defense thereof with counsel reasonably
         satisfactory to such indemnified party. Notwithstanding the foregoing,
         the indemnified party or parties shall have the right to employ its or
         their own counsel in any such case, but the fees and expenses of such
         counsel shall be at the expense of such indemnified party or parties
         unless (i) the employment of such counsel shall have been authorized in
         writing by one of the


                                      L-21
<PAGE>


         indemnifying parties in connection with the defense of such action,
         (ii) the indemnifying parties shall not have employed counsel to have
         charge of the defense of such action within a reasonable time after
         notice of commencement of the action, or (iii) such indemnified party
         or parties shall have reasonably concluded that there is a conflict of
         interest between itself or themselves and the indemnifying party in the
         conduct of the defense of any claim or that the interests of the
         indemnified party or parties are not substantially co-extensive with
         those of the indemnifying party (in which case the indemnifying parties
         shall not have the right to direct the defense of such action on behalf
         of the indemnified party or parties), in any of which events such fees
         and expenses shall be borne by the indemnifying parties (provided,
         however, that the indemnifying party shall be liable only for the fees
         and expenses of one counsel in addition to one local counsel in the
         jurisdiction involved. Anything in this subsection to the contrary
         notwithstanding, an indemnifying party shall not be liable for any
         settlement or any claim or action effected without its written consent;
         provided, however, that such consent was not unreasonably withheld.

                  (d)      If the indemnification provided for in paragraphs (a)
         and (b) of this Section 13 shall for any reason be unavailable to an
         indemnified party in respect of any loss, claim, damage or liability,
         or any action in respect thereof, referred to in Section 13, then the
         indemnifying party shall in lieu of indemnifying the indemnified party
         contribute to the amount paid or payable by such indemnified party as a
         result of such loss, claim, damage or liability, or action in respect
         thereof, in such proportion as shall be appropriate to reflect the
         relative benefits received by the Mortgage Loan Seller on the one hand
         and the Purchaser on the other from the purchase and sale of the
         Mortgage Loans, the offering of the Certificates and the other
         transactions contemplated hereunder. No person found liable for a
         fraudulent misrepresentation shall be entitled to contribution from any
         person who is not also found liable for such fraudulent
         misrepresentation.

                  (e)      The parties hereto agree that reliance by an
         indemnified party on any publicly available information or any
         information or directions furnished by an indemnifying party shall not
         constitute negligence, bad faith or willful misconduct by such
         indemnified party.

         SECTION 14. Notices. All demands, notices and communications hereunder
shall be in writing but may be delivered by facsimile transmission subsequently
confirmed in writing. Notices to the Mortgage Loan Seller shall be directed to
EMC Mortgage Corporation, 909 Hidden Ridge Drive, Suite 200 Irving, Texas 75038,
(Telecopy: (972-444-2880)), and notices to the Purchaser shall be directed to
Bear Stearns Asset Backed Securities I LLC, 383 Madison Avenue, New York, New
York 10179, (Telecopy: (212-272-7206)), Attention: Chief Counsel; or to any
other address as may hereafter be furnished by one party to the other party by
like notice. Any such demand, notice or communication hereunder shall be deemed
to have been received on the date received at the premises of the addressee (as
evidenced, in the case of registered or certified mail, by the date noted on the
return receipt) provided that it is received on a business day during normal
business hours and, if received after normal business hours, then it shall be
deemed to be received on the next business day.


                                      L-22
<PAGE>


         SECTION 15. Transfer of Mortgage Loans. The Purchaser retains the right
to assign the Mortgage Loans and any or all of its interest under this Agreement
to the Trustee without the consent of the Mortgage Loan Seller, and, upon such
assignment, the Trustee shall succeed to the applicable rights and obligations
of the Purchaser hereunder; provided, however, the Purchaser shall remain
entitled to the benefits set forth in Sections 11, 13 and 17 hereto and as
provided in Section 2(a). Notwithstanding the foregoing, the sole and exclusive
right and remedy of the Trustee with respect to a breach of representation or
warranty of the Mortgage Loan Seller shall be the cure, purchase or substitution
obligations of the Mortgage Loan Seller contained in Sections 5 and 7 hereof.

         SECTION 16. Termination. This Agreement may be terminated (a) by the
mutual consent of the parties hereto prior to the Closing Date, (b) by the
Purchaser, if the conditions to the Purchaser's obligation to close set forth
under Section 10(a) hereof are not fulfilled as and when required to be
fulfilled or (c) by the Mortgage Loan Seller, if the conditions to the Mortgage
Loan Seller's obligation to close set forth under Section 10(b) hereof are not
fulfilled as and when required to be fulfilled. In the event of termination
pursuant to clause (b), the Mortgage Loan Seller shall pay, and in the event of
termination pursuant to clause (c), the Purchaser shall pay, all reasonable
out-of-pocket expenses incurred by the other in connection with the transactions
contemplated by this Agreement. In the event of a termination pursuant to clause
(a), each party shall be responsible for its own expenses.

         SECTION 17. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Mortgage Loan Seller
submitted pursuant hereto, shall remain operative and in full force and effect
and shall survive delivery of the Mortgage Loans to the Purchaser (and by the
Purchaser to the Trustee). Subsequent to the delivery of the Mortgage Loans to
the Purchaser, the Mortgage Loan Seller's representations and warranties
contained herein with respect to the Mortgage Loans shall be deemed to relate to
the Mortgage Loans actually delivered to the Purchaser and included in the Final
Mortgage Loan Schedule and any Replacement Mortgage Loan and not to those
Mortgage Loans deleted from the Preliminary Mortgage Loan Schedule pursuant to
Section 3 hereof prior to the Closing.

         SECTION 18. Severability. If any provision of this Agreement shall be
prohibited or invalid under applicable law, this Agreement shall be ineffective
only to such extent, without invalidating the remainder of this Agreement.

         SECTION 19. Counterparts. This Agreement may be executed in
counterparts, each of which will be an original, but which together shall
constitute one and the same agreement.

         SECTION 20. Amendment. This Agreement cannot be amended or modified in
any manner without the prior written consent of each party.

         SECTION 21. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES


                                      L-23
<PAGE>


THEREOF OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

         SECTION 22. Further Assurances. Each of the parties agrees to execute
and deliver such instruments and take such actions as another party may, from
time to time, reasonably request in order to effectuate the purpose and to carry
out the terms of this Agreement including any amendments hereto which may be
required by either Rating Agency.

         SECTION 23. Successors and Assigns.

         (a)      This Agreement shall bind and inure to the benefit of and be
enforceable by the Mortgage Loan Seller and the Purchaser and their permitted
successors and assigns and, to the extent specified in Section 13 hereof, Bear
Stearns, and their directors, officers and controlling persons (within the
meaning of federal securities laws). The Mortgage Loan Seller acknowledges and
agrees that the Purchaser may assign its rights under this Agreement (including,
without limitation, with respect to the Mortgage Loan Seller's representations
and warranties respecting the Mortgage Loans) to the Trustee. Any person into
which the Mortgage Loan Seller may be merged or consolidated (or any person
resulting from any merger or consolidation involving the Mortgage Loan Seller),
any person resulting from a change in form of the Mortgage Loan Seller or any
person succeeding to the business of the Mortgage Loan Seller, shall be
considered the "successor" of the Mortgage Loan Seller hereunder and shall be
considered a party hereto without the execution or filing of any paper or any
further act or consent on the part of any party hereto. Except as provided in
the two preceding sentences, this Agreement cannot be assigned, pledged or
hypothecated by either party hereto without the written consent of the other
parties to this Agreement and any such assignment or purported assignment shall
be deemed null and void.

         SECTION 24. The Mortgage Loan Seller. The Mortgage Loan Seller will
keep in full force and effect its existence, all rights and franchises as a
corporation under the Laws of the State of its incorporation and will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is necessary to perform its obligations
under this Agreement.

         SECTION 25. Entire Agreement. This Agreement contains the entire
agreement and understanding between the parties with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof.

         SECTION 26. No Partnership. Nothing herein contained shall be deemed or
construed to create a partnership or joint venture between the parties hereto.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      L-24
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective duly authorized officers as of the date first
above written.

                                             EMC MORTGAGE CORPORATION


                                             By:________________________________
                                             Name:______________________________
                                             Title:_____________________________


                                             BEAR STEARNS ASSET BACKED
                                             SECURITIES I LLC


                                             By:________________________________
                                             Name:______________________________
                                             Title:_____________________________

<PAGE>


                                    EXHIBIT 1
                            CONTENTS OF MORTGAGE FILE

         With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser or its designee, and which shall be delivered to the Purchaser or its
designee pursuant to the terms of this Agreement.

                  (i)      The original Mortgage Note, including any riders
         thereto, endorsed without recourse to the order of "U.S. Bank National
         Association", as Trustee for certificateholders of Bear Stearns Asset
         Backed Securities I LLC Asset-Backed Certificates, Series 2004-AC7,"
         and showing to the extent available to the Mortgage Loan Seller an
         unbroken chain of endorsements from the original payee thereof to the
         Person endorsing it to the Trustee;

                  (ii)     the original Mortgage and, if the related Mortgage
         Loan is a MOM Loan, noting the presence of the MIN and language
         indicating that such Mortgage Loan is a MOM Loan, which shall have been
         recorded (or if the original is not available, a copy), with evidence
         of such recording indicated thereon (or if clause (x) in the proviso
         below applies, shall be in recordable form);

                  (iii)    unless the Mortgage Loan is a MOM Loan, the
         assignment (either an original or a copy, which may be in the form of a
         blanket assignment if permitted in the jurisdiction in which the
         Mortgaged Property is located) to the Trustee of the Mortgage with
         respect to each Mortgage Loan in the name of "U.S. Bank National
         Association", as Trustee for certificateholders of Bear Stearns Asset
         Backed Securities I LLC Asset-Backed Certificates, Series 2004-AC7,"
         which shall have been recorded (or if clause (x) in the proviso below
         applies, shall be in recordable form);

                  (iv)     an original or a copy of all intervening assignments
         of the Mortgage, if any, to the extent available to the Mortgage Loan
         Seller, with evidence of recording thereon;

                  (v)      the original policy of title insurance or mortgagee's
         certificate of title insurance or commitment or binder for title
         insurance, if available, or a copy thereof, or, in the event that such
         original title insurance policy is unavailable, a photocopy thereof, or
         in lieu thereof, a current lien search on the related Mortgaged
         Property and

                  (vi)     originals or copies of all available assumption,
         modification or substitution agreements, if any.

         Provided, however, that in lieu of the foregoing, the Mortgage Loan
Seller may deliver the following documents, under the circumstances set forth
below: x) if any Mortgage, assignment thereof to the Trustee or intervening
assignments thereof have been delivered or are being delivered to recording
offices for recording and have not been returned in time to permit their
delivery as specified above, the Purchaser may deliver a true copy thereof with
a certification by the Mortgage Loan Seller or the title company issuing the
commitment for title insurance, on the face of such copy, substantially as
follows: "Certified to be a true and correct


                                     E-1-1
<PAGE>


copy of the original, which has been transmitted for recording"; and (y) in lieu
of the Mortgage Notes relating to the Mortgage Loans identified in the list set
forth in Exhibit J, the Purchaser may deliver a lost note affidavit and
indemnity and a copy of the original note, if available; and provided, further,
however, that in the case of Mortgage Loans which have been prepaid in full
after the Cut-Off Date and prior to the Closing Date, the Purchaser, in lieu of
delivering the above documents, may deliver to the Trustee and its Custodian a
certification of a Servicing Officer to such effect and in such case shall
deposit all amounts paid in respect of such Mortgage Loans, in the Master
Servicer Collection Account or in the Distribution Account on the Closing Date.
In the case of the documents referred to in clause (x) above, the Purchaser
shall deliver such documents to the Trustee or its Custodian promptly after they
are received. The Mortgage Loan Seller shall cause, at its expense, the Mortgage
and intervening assignments, if any, and to the extent required in accordance
with the foregoing, the assignment of the Mortgage to the Trustee to be
submitted for recording promptly after the Closing Date; provided that the
Mortgage Loan Seller need not cause to be recorded any assignment (a) in any
jurisdiction under the laws of which, as evidenced by an Opinion of Counsel
addressed to the Trustee delivered by the Mortgage Loan Seller to the Trustee
and the Rating Agencies, the recordation of such assignment is not necessary to
protect the Trustee's interest in the related Mortgage Loan or (b) if MERS is
identified on the Mortgage or on a properly recorded assignment of the Mortgage
as mortgagee of record solely as nominee for Mortgage Loan Seller and its
successors and assigns. In the event that the Mortgage Loan Seller, the
Purchaser or the Master Servicer gives written notice to the Trustee that a
court has recharacterized the sale of the Mortgage Loans as a financing, the
Mortgage Loan Seller shall submit or cause to be submitted for recording as
specified above or, should the Mortgage Loan Seller fail to perform such
obligations, the Master Servicer shall cause each such previously unrecorded
assignment to be submitted for recording as specified above at the expense of
the Trust. In the event a Mortgage File is released to the Company or the
related Servicer as a result of such Person having completed a Request for
Release, the Custodian shall, if not so completed, complete the assignment of
the related Mortgage in the manner specified in clause (iii) above.


                                     E-1-2
<PAGE>


                                    EXHIBIT 2
                       MORTGAGE LOAN SCHEDULE INFORMATION

         The Preliminary and Final Mortgage Loan Schedules shall set forth the
following information with respect to each Mortgage Loan:

                  (i)      the loan number;

                  (ii)     the Mortgage Rate in effect as of the Cut-off Date;

                  (iii)    the Servicer (or the Company, if it services the
                           Mortgage Loan), the Servicing Fee Rate and the Master
                           Servicing Fee Rate;

                  (iv)     the LPMI Fee, if applicable;

                  (v)      the Net Mortgage Rate in effect as of the Cut-off
                           Date;

                  (vi)     the maturity date;

                  (vii)    the original principal balance;

                  (viii)   the Cut-off Date Balance;

                  (ix)     the original term;

                  (x)      the remaining term;

                  (xi)     the property type; and

                  (xii)    the MIN with respect to each Mortgage Loan.

Such schedule shall also set forth the aggregate Cut-off Date Principal Balance
for all of the Mortgage Loans.


                                     E-2-1
<PAGE>


                                    EXHIBIT 3
                       MORTGAGE LOAN SELLER'S INFORMATION

         All information in the Prospectus Supplement described under the
following captions: "SUMMARY - The Mortgage Loans," "THE MORTGAGE POOL,"
"SERVICING OF THE MORTGAGE LOANS - EMC" and "SCHEDULE A - Mortgage Loan
Statistical Data."










                                     E-3-1
<PAGE>


                                    EXHIBIT 4
                             PURCHASER'S INFORMATION

         All information in the Prospectus Supplement and the Prospectus, except
the Mortgage Loan Seller's Information.










                                      E-4-1
<PAGE>


                                    EXHIBIT 5
                             SCHEDULE OF LOST NOTES

                             Available Upon Request










                                      E-5-1
<PAGE>


                                    EXHIBIT 6


                                                       REVISED OCTOBER 18, 2004


APPENDIX E - STANDARD & POOR'S ANTI-PREDATORY LENDING CATEGORIZATION

Standard & Poor's has categorized loans governed by anti-predatory lending laws
in the Jurisdictions listed below into three categories based upon a combination
of factors that include (a) the risk exposure associated with the assignee
liability and (b) the tests and thresholds set forth in those laws. Note that
certain loans classified by the relevant statute as Covered are included in
Standard & Poor's High Cost Loan Category because they included thresholds and
tests that are typical of what is generally considered High Cost by the
industry.


<TABLE>
<CAPTION>
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------
State/Jurisdiction      Name of Anti-Predatory                              Category under Applicable
                        Lending Law/Effective Date                          Anti-Predatory Lending Law
---------------------   -------------------------------------------------   --------------------------------
<S>                     <C>                                                 <C>
Arkansas                Arkansas  Home Loan  Protection Act, Ark. Code      High Cost Home Loan
                        Ann. ss.ss. 23-53-101 et seq.

                        Effective July 16, 2003
---------------------   -------------------------------------------------   --------------------------------
Cleveland Heights, OH   Ordinance  No.  72-2003 (PSH), Mun. Code  ss.ss.    Covered Loan
                        757.01 et seq.

                        Effective June 2, 2003
---------------------   -------------------------------------------------   --------------------------------
Colorado                Consumer Equity Protection, Colo. Stat. Ann.        Covered Loan
                        ss.ss. 5-3.5-101 et seq.

                        Effective for covered loans offered or entered
                        into  on  or  after   January  1,  2003.   Other
                        provisions  of the Act  took  effect  on June 7,
                        2002
---------------------   -------------------------------------------------   --------------------------------
Connecticut             Connecticut  Abusive Home Loan Lending Practices    High Cost Home Loan
                        Act, Conn. Gen. Stat. ss.ss. 36a-746 et seq.

                        Effective October 1, 2001
---------------------   -------------------------------------------------   --------------------------------
District of Columbia    Home  Loan   Protection   Act,   D.C.               Covered Loan
                        Code  ss.ss. 26-1151.01 et seq.

                        Effective for loans closed on or after January
                        28, 2003
---------------------   -------------------------------------------------   --------------------------------
</TABLE>


                                     E-6-1
<PAGE>


<TABLE>
<CAPTION>
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------
State/Jurisdiction      Name of Anti-Predatory                              Category under Applicable
                        Lending Law/Effective Date                          Anti-Predatory Lending Law
---------------------   -------------------------------------------------   --------------------------------
<S>                     <C>                                                 <C>
Florida                 Fair Lending Act,  Fla.  Stat.  Ann. ss.ss.         High Cost Home Loan
                        494.0078 et seq.

                        Effective October 2, 2002
---------------------   -------------------------------------------------   --------------------------------
Georgia (Oct.  1,       Georgia  Fair  Lending  Act, Ga. Code Ann. ss.ss.   High Cost Home Loan
2002 - Mar. 6, 2003)    7-6A-1 et seq.

                        Effective October 1, 2002 - March 6, 2003
---------------------   -------------------------------------------------   --------------------------------
Georgia as amended      Georgia  Fair  Lending  Act, Ga.  Code Ann. ss.ss.  High Cost Home Loan
(Mar. 7, 2003           7-6A-1 et seq.
- current)
                        Effective  for loans closed on or after March 7,
                        2003
---------------------   -------------------------------------------------   --------------------------------
HOEPA Section 32        Home  Ownership  and  Equity  Protection  Act of    High Cost Loan
                        1994, 15 U.S.C. ss. 1639, 12 C.F.R.  ss.ss. 226.32
                        and 226.34

                        Effective October 1, 1995, amendments October
                        1, 2002
---------------------   -------------------------------------------------   --------------------------------
Illinois                High Risk Home Loan Act, Ill. Comp.  Stat.  tit.    High Risk Home Loan
                        815, ss.ss. 137/5 et seq.

                        Effective  January 1, 2004  (prior to this date,
                        regulations under  Residential  Mortgage License
                        Act effective from May 14, 2001)
---------------------   -------------------------------------------------   --------------------------------
Indiana                 Indiana Home Loan  Practices Act, Ind. Code Ann.    High Cost Home Loan
                        ss.ss. 24-9-1-1 et seq.

                        Effective for loans originated on or after
                        January 1, 2005.
---------------------   -------------------------------------------------   --------------------------------
Kansas                  Consumer   Credit  Code, Kan. Stat. Ann.  ss.ss.    High  Loan  to  Value  Consumer
                        16a-1-101 et seq.                                   Loan (id. ss. 16a-3-207) and;
                                                                            ---------------------------------
                        Sections 16a-1-301 and 16a-3-207 became             High APR  Consumer  Loan (id. ss.
                        effective April 14, 1999; Section 16a-3-308a        16a-3-308a)
                        became effective July 1, 1999
---------------------   -------------------------------------------------   --------------------------------
Kentucky                2003 KY H.B.  287 - High Cost Home Loan Act, Ky.    High Cost Home Loan
                        Rev. Stat. ss.ss. 360.100 et seq.

                        Effective June 24, 2003
---------------------   -------------------------------------------------   --------------------------------
</TABLE>


                                     E-6-2
<PAGE>


<TABLE>
<CAPTION>
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------
State/Jurisdiction      Name of Anti-Predatory                              Category under Applicable
                        Lending Law/Effective Date                          Anti-Predatory Lending Law
---------------------   -------------------------------------------------   --------------------------------
<S>                     <C>                                                 <C>
Maine                   Truth in Lending,  Me. Rev. Stat. tit. 9-A, ss.ss.  High Rate High Fee Mortgage
                        8-101 et seq.

                        Effective September 29, 1995 and as amended
                        from time to time
---------------------   -------------------------------------------------   --------------------------------
Massachusetts           Part 40 and  Part  32, 209 C.M.R. ss.ss. 32.00 et   High Cost Home Loan
                        seq. and 209 C.M.R. ss.ss. 40.01 et seq.

                        Effective  March 22, 2001 and amended  from time
                        to time
---------------------   -------------------------------------------------   --------------------------------
                        Massachusetts Predatory Home Loan Practices Act     High Cost Home Mortgage Loan
                        Mass. Gen. Laws ch. 183C,  ss.ss. 1 et seq.

                        Effective November 7, 2004
---------------------   -------------------------------------------------   --------------------------------
Nevada                  Assembly  Bill  No.  284, Nev. Rev. Stat. ss.ss.    Home Loan
                        598D.010 et seq.

                        Effective October 1, 2003
---------------------   -------------------------------------------------   --------------------------------
New Jersey              New Jersey Home Ownership  Security Act of 2002,    High Cost Home Loan
                        N.J. Rev. Stat. ss.ss. 46:10B-22 et seq.

                        Effective for loans closed on or after November
                        27, 2003
---------------------   -------------------------------------------------   --------------------------------
New Mexico              Home Loan  Protection  Act, N.M. Rev. Stat. ss.ss.  High Cost Home Loan
                        58-21A-1 et seq.

                        Effective as of January 1, 2004; Revised as of
                        February 26, 2004
---------------------   -------------------------------------------------   --------------------------------
New York                N.Y. Banking Law Article 6-l                        High Cost Home Loan

                        Effective for applications made on or after
                        April 1, 2003
---------------------   -------------------------------------------------   --------------------------------
</TABLE>


                                     E-6-3
<PAGE>


<TABLE>
<CAPTION>
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------
State/Jurisdiction      Name of Anti-Predatory                              Category under Applicable
                        Lending Law/Effective Date                          Anti-Predatory Lending Law
---------------------   -------------------------------------------------   --------------------------------
<S>                     <C>                                                 <C>
North Carolina          Restrictions  and  Limitations on High Cost Home    High Cost Home Loan
                        Loans, N.C. Gen. Stat. ss.ss. 24-1.1E et seq.

                        Effective July 1, 2000; amended October 1,
                        2003 (adding open-end lines of credit)
---------------------   -------------------------------------------------   --------------------------------
Ohio                     H.B. 386  (codified  in various  sections of the   Covered Loan
                        Ohio Code), Ohio Rev. Code Ann. ss.ss. 1349.25 et
                        seq.

                        Effective May 24, 2002
---------------------   -------------------------------------------------   --------------------------------
Oklahoma                Consumer   Credit  Code   (codified  in  various    Subsection 10 Mortgage
                        sections of Title 14A)

                        Effective July 1, 2000; amended effective
                        January 1, 2004
---------------------   -------------------------------------------------   --------------------------------
South Carolina          South  Carolina  High  Cost  and  Consumer  Home    High Cost Home Loan
                        Loans Act, S.C. Code Ann. ss.ss. 37-23-10 et seq.

                        Effective for loans taken on or after January
                        1, 2004
---------------------   -------------------------------------------------   --------------------------------
West Virginia           West  Virginia   Residential   Mortgage  Lender,    West  Virginia   Mortgage  Loan
                        Broker and  Servicer Act, W. Va. Code Ann. ss.ss.   Act Loan
                        31-17-1 et seq.

                        Effective June 5, 2002
---------------------   -------------------------------------------------   --------------------------------
</TABLE>


<TABLE>
<CAPTION>
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------
State/Jurisdiction      Name of Anti-Predatory                              Category under Applicable
                        Lending Law/Effective Date                          Anti-Predatory Lending Law
---------------------   -------------------------------------------------   --------------------------------
<S>                     <C>                                                 <C>
Georgia  (Oct.  1,      Georgia  Fair  Lending Act, Ga. Code Ann. ss.ss.    Covered Loan
2002 - Mar. 6, 2003)    7-6A-1 et seq.

                        Effective October 1, 2002 - March 6, 2003
---------------------   -------------------------------------------------   --------------------------------
</TABLE>


                                     E-6-4
<PAGE>


<TABLE>
<CAPTION>
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------
State/Jurisdiction      Name of Anti-Predatory                              Category under Applicable
                        Lending Law/Effective Date                          Anti-Predatory Lending Law
---------------------   -------------------------------------------------   --------------------------------
<S>                     <C>                                                 <C>
New Jersey              New Jersey Home Ownership  Security Act of 2002,    Covered Home Loan
                        N.J. Rev. Stat. ss.ss. 46:10B-22 et seq.

                        Effective November 27, 2003 - July 5, 2004
---------------------   -------------------------------------------------   --------------------------------
</TABLE>


                                     E-6-5
<PAGE>


<TABLE>
<CAPTION>
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------
State/Jurisdiction      Name of Anti-Predatory                              Category under Applicable
                        Lending Law/Effective Date                          Anti-Predatory Lending Law
---------------------   -------------------------------------------------   --------------------------------
<S>                     <C>                                                 <C>
Georgia  (Oct.  1,      Georgia  Fair  Lending Act, Ga. Code Ann. ss.ss.    Home Loan
2002 - Mar. 6, 2003)    7-6A-1 et seq.

                        Effective October 1, 2002 - March 6, 2003
---------------------   -------------------------------------------------   --------------------------------
Indiana                 Indiana Home Loan  Practices Act, Ind. Code Ann.    Home Loan
                        ss.ss. 24-9-1-1 et seq.

                        Effective for loans originated on or after
                        January 1, 2005.
---------------------   -------------------------------------------------   --------------------------------
New Jersey              New Jersey Home Ownership  Security Act of 2002,    Home Loan
                        N.J. Rev. Stat. ss.ss. 46:10B-22 et seq.

                        Effective for loans closed on or after November
                        27, 2003
---------------------   -------------------------------------------------   --------------------------------
New Mexico              Home Loan  Protection Act, N.M. Rev. Stat. ss.ss.   Home Loan
                        58-21A-1 et seq.

                        Effective as of January 1, 2004; Revised as of
                        February 26, 2004
---------------------   -------------------------------------------------   --------------------------------
North Carolina          Restrictions  and  Limitations on High Cost Home    Consumer Home Loan
                        Loans, N.C. Gen. Stat. ss.ss. 24-1.1E et seq.

                        Effective July 1, 2000; amended October 1,
                        2003 (adding open-end lines of credit)
---------------------   -------------------------------------------------   --------------------------------
South Carolina          South  Carolina  High  Cost  and                    Consumer Home Loan
---------------------   -------------------------------------------------   --------------------------------
</TABLE>


                                      E-6-5
<PAGE>


<TABLE>
<CAPTION>
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------------------
State/Jurisdiction      Name of Anti-Predatory                              Category under Applicable
                        Lending Law/Effective Date                          Anti-Predatory Lending Law
---------------------   -------------------------------------------------   --------------------------------
<S>                     <C>                                                 <C>
                        Consumer  Home Loans Act, S.C. Code Ann. ss.ss.
                        37-23-10 et seq.

                        Effective for loans taken on or after January
                        1, 2004
---------------------   -------------------------------------------------   --------------------------------
</TABLE>


                                      E-6-6
<PAGE>


                                   SCHEDULE A
                                   ----------

                 REQUIRED RATINGS FOR EACH CLASS OF CERTIFICATES
                 -----------------------------------------------

                               Public Certificates
                               -------------------

      Class                   Moody's                     S&P
      -----                   -------                     ---
       A-1                      Aaa                       AAA
       A-2                      Aaa                       AAA
       A-3                      Aaa                       AAA
       M-1                      Aa2                       AA
       M-2                      A2                         A
       M-3                      A3                        A-
       B1                      Baa1                      BBB+
       B2                      Baa2                       BBB
       B3                      Baa3                      BBB-

None of the above ratings has been lowered, qualified or withdrawn since the
dates of issuance of such ratings by the Rating Agencies.


                              Private Certificates
                              --------------------

     Class                      Moody's                      S&P
     -----                      -------                      ---
       P                       Not Rated                  Not Rated
       C                       Not Rated                  Not Rated
      R-1                      Not Rated                  Not Rated
      R-2                      Not Rated                  Not Rated
      R-3                      Not Rated                  Not Rated


                                      A-1