Exhibit 10.34.1


                        MORTGAGE LOAN PURCHASE AGREEMENT
                        --------------------------------



PURCHASER:                   PAINE WEBBER REAL ESTATE SECURITIES INC.

ADDRESS:                     1285 AVENUE OF THE AMERICAS
                             NEW YORK, NEW YORK  10019
                             ATTENTION: _____________________________

SELLER:                      AMERICAN HOME MORTGAGE

ADDRESS:                     12 EAST 49TH STREET, 28TH FLOOR
                             NEW YORK, NEW YORK  10017
                             ATTENTION: _____________________________






DATE OF AGREEMENT:           FEBRUARY 26, 1999
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                                TABLE OF CONTENTS

                                                                          Page
                                                                          ----

Section 1.  Definitions ...................................................  1

Section 2.  Procedures for Purchases of Mortgage Loans ....................  7

Section 3.  Sale of Mortgage Loans to Takeout Investor ....................  8

Section 4.  Servicing of the Mortgage Loans ...............................  9

Section 5.  Trade Assignments ............................................. 11

Section 6.  Transfers of Mortgage Loans by Purchaser ...................... 11

Section 7.  Record Title to Mortgage Loans; Intent of Parties; Security
            Interest ...................................................... 11

Section 8.  Representations and Warranties ................................ 12

Section 9.  Covenants of Seller ........................................... 19

Section 10. Term .......................................................... 22

Section 11. Exclusive Benefit of Parties; Assignment ...................... 22

Section 12. Amendments; Waivers; Cumulative Rights ........................ 22

Section 13. Execution in Counterparts ..................................... 22

Section 14. Effect of Invalidity of Provisions ............................ 22

Section 15. Governing Law ................................................. 22

Section 16. Notices ....................................................... 22

Section 17. Entire Agreement .............................................. 23

Section 18. Costs of Enforcement .......................................... 23

Section 19. Consent to Service ............................................ 23

Section 20. Construction .................................................. 23

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Exhibit A   Loan Purchase Detail

Exhibit B-1 Warehouse Lender's Release

Exhibit B-2 Warehouse Lender's Wire Instructions

Exhibit C-1 Seller's Release

Exhibit C-2 Seller's Wire Instructions

Exhibit D   Purchaser's Wire Instructions to Seller

Exhibit E   UCC- 1 Financing Statement

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                        MORTGAGE LOAN PURCHASE AGREEMENT
                        --------------------------------

            This Mortgage Loan Purchase Agreement ("Agreement"), dated as of the
date set forth on the cover page hereof, between PAINE WEBBER REAL ESTATE
SECURITIES INC. ("Purchaser") and the Seller whose name is set forth on the
cover page hereof ("Seller").

                              PRELIMINARY STATEMENT
                              ---------------------

            Seller may, in its sole discretion, offer to sell to Purchaser from
time to time Mortgage Loans, and Purchaser, in its sole discretion, may agree to
purchase such Mortgage Loans from Seller in accordance with the terms and
conditions set forth in this Agreement. Seller, subject to the terms hereof,
will cause each Mortgage Loan to be purchased by Takeout Investor. During the
period from the purchase of a Mortgage Loan to the sale of the Mortgage Loan to
Takeout Investor, Purchaser expects to rely entirely upon Seller to service each
such Mortgage Loan.

            The parties hereto hereby agree as follows:

            Section 1. Definitions. Capitalized terms used but not defined
herein shall have the meanings set forth in the Custodial Agreement. As used in
this Agreement, the following terms shall have the following meanings:

            "Act of Insolvency": With respect to Seller, (a) the commencement by
Seller as debtor of any case or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar law, or Seller's seeking the
appointment of a receiver, trustee, custodian or similar official for Seller or
any substantial part of its property, or (b) the commencement of any such case
or proceeding against Seller, or another's seeking such appointment, or the
filing against Seller of an application for a protective decree which (1) is
consented to or not timely contested by Seller, (2) results in the entry of an
order for relief, such an appointment, the issuance of such a protective decree
or the entry of an order having a similar effect, or (3) is not dismissed within
sixty (60) days, (c) the making by Seller of a general assignment for the
benefit of creditors, or (d) the admission in writing by Seller that Seller is
unable to pay its debts as they become due or the nonpayment generally by Seller
of its debts as they become due.

            "Applicable Guide": The Takeout Investor's eligibility requirements
for Mortgage Loans, as applicable, and as each may be amended or supplemented
from time to time.

            "Applicable Purchase Agreement": The applicable agreement, providing
for the purchase by Takeout Investor of Mortgage Loans from Seller as such
agreement may be amended from time to time.

            "Assignee": The Chase Manhattan Bank, National Association, as agent
for certain beneficiaries pursuant to certain Repurchase Transaction Tri-Party
Custody Agreements.

            "Assignment of Mortgage Note and Pledge Agreement": With respect to
each Cooperative Loan, an assignment of the related Mortgage Note and Pledge
Agreement.

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            "Assignment of Proprietary Lease": With respect to each Cooperative
Loan, an assignment of the related Proprietary Lease executed by the related
Mortgagor in blank.

            "Business Day": Any day other than (a) a Saturday, Sunday or other
day on which banks located in the City of New York, New York are authorized or
obligated by law or executive order to be closed, or (b) any day on which Paine
Webber Real Estate Securities Inc. is closed for business, provided that notice
thereof shall have been given not less than seven calendar days prior to such
day.

            "Collateral": The Mortgage Loans (including all servicing rights
related thereto), any Custodial Accounts, the Takeout Commitments and the
proceeds of any and all of the foregoing.

            "Commitment Date": The date set forth in a Takeout Commitment as the
commitment date.

            "Commitment Expiration Date": With respect to any Mortgage Loan, the
date occurring 30 calendar days after the Purchase Date.

            "Commitment Requirements": The requirements issued by Takeout
Investor in the Applicable Guide regarding the issuance of Takeout Commitments,
as amended from time to time by Takeout Investor.

            "Conduit": As defined in the Custodial Agreement.

            "Conduit Submission Package": As defined in the Custodial Agreement.

            "Cooperative": The private, non-profit cooperative apartment
corporation which owns all of the real property that comprises the Project,
including the land, separate dwelling units and all common areas.

            "Cooperative Apartment": The specific dwelling unit relating to a
Cooperative Loan.

            "Cooperative Lien Search": A search for (a) federal tax liens,
mechanics' liens, lis pendens, judgments of record or otherwise against (i) the
Cooperative, (ii) the seller of the Cooperative Apartment and (iii) the
Mortgagor if the Cooperative Loan is a Refinanced Loan, (b) filings of Financing
Statements and (c) the deed of the Project into the Cooperative.

            "Cooperative Loan": A Loan that is secured by a first lien on and a
perfected security interest in Cooperative Shares and the related Proprietary
Lease granting exclusive rights to occupy the related Cooperative Apartment in
the building owned by the related Cooperative.

            "Cooperative Shares": The shares of stock issued by the Cooperative,
owned by the Mortgagor, and allocated to a Cooperative Apartment and represented
by a Stock Certificate.

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            "Credit File": All papers and records of whatever kind or
description, whether developed or originated by Seller or others, required to
document or service the Mortgage Loan; provided, however, that such Mortgage
Loan papers, documents and records shall not include any Mortgage Loan papers,
documents or records which are contained in the Conduit Submission Package.

            "Custodial Account": A separate custodial account, established and
maintained by Seller under the conditions set forth in Section 4(b), for the
deposit by Seller of all collections in respect of a Mortgage Loan that are
payable to Purchaser as the owner of the Mortgage Loan.

            "Custodial Agreement": The Mortgage Loan Custodial Agreement, dated
as of the date set forth on the cover sheet thereof, among Seller, Purchaser and
Custodian, as amended from time to time.

            "Custodial Fee": With respect to each Mortgage Loan, the amount set
forth on the related Funding Confirmation as the "Custodial Fee."

            "Custodian":  The Chase Manhattan Bank, National Association,  and
its permitted successors.

            "Defective Mortgage Loan": A Mortgage Loan that is not in compliance
with the Applicable Guide and this Agreement.

            "Discount": With respect to each Mortgage Loan, the amount set forth
on such related Funding Confirmation as the Discount.

            "Document File": The Credit File and the Conduit Submission Package.

            "Due Date": The day of the month on which the Monthly Payment is due
on a Mortgage Loan.

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

            "Financing Statement": A financing statement in the form of a UCC-l
filed pursuant to the Uniform Commercial Code and sufficient to perfect a
security interest in the applicable state in the Cooperative Shares and Pledge
Instruments.

            "Funding Confirmation": With respect to all Mortgage Loans purchased
by Purchaser from Seller via a single wire funds transaction on a particular
Business Day, the trade confirmation from Purchaser to Seller confirming the
terms of Purchaser's purchase of such Mortgage Loans.

            "Incremental Pass-Through Rate": The amount by which the
Pass-Through Rate is increased upon the occurrence of(i) an Commitment
Expiration Date or (ii) any event giving Purchaser the right to elect a remedy
pursuant to Section 3, which amount shall be set forth in a Funding Confirmation
as the "Incremental Pass-Through Rate".

                                      -3-
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            "Loan Purchase Detail": A loan purchase detail, transmitted via
facsimile in the form of Exhibit A, or transmitted electronically in an
appropriate data layout provided by Purchaser, prepared by Seller, containing
certain information regarding the characteristics of all Mortgage Loans being
offered for sale by Seller on a particular Business Day.

            "Losses": Any and all losses, claims, damages, liabilities or
expenses (including reasonable attorneys' fees) incurred by any person
specified; provided, however, that "Losses" shall not include any losses,
claims, damages, liabilities or expenses which would have been avoided had such
person taken reasonable actions to mitigate such losses, claims, damages,
liabilities or expenses.

            "Monthly Payment": The scheduled monthly payment of principal and
interest on a Mortgage Loan.

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

            "Mortgage Loan": A mortgage loan or Cooperative Loan, which is
subject to this Agreement, and which satisfies the Commitment Requirements as
the same may be modified from time to time.

            "Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage or Pledge Agreement, as the case may be.

            "Mortgaged Property": Either (i) the property subject to the lien of
the Mortgage securing a Mortgage Note or (ii) in the case of a Cooperative Loan
the underlying property securing the Mortgage Note which consists of the
Cooperative Shares and Proprietary Lease.

            "Mortgagor": The obligor on a Mortgage Note.

            "NCUA": The National Credit Union Administration, or any successor
thereto.

            "OTS": The Office of Thrift Supervision, or any successor thereto.

            "Parent Company": A corporation or other entity owning at least 50%
of the outstanding shares of voting stock of Seller.

            "Pass-Through Rate": With respect to each Mortgage Loan, the rate at
which interest is passed through to Purchaser which initially shall be the rate
of interest specified on a Funding Confirmation as the Pass-Through Rate.

            "Performance Fee": With respect to each Mortgage Loan, an amount
equal to the Discount, plus the Yield Compensation Adjustment plus or minus any
other adjustments permitted hereunder, which amount shall be payable to Seller
by Purchaser as compensation to Seller for its services hereunder.

                                      -4-
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            "Pledge Agreement": With respect to each Cooperative Loan, the
specific agreement creating a first lien on and pledge of the Cooperative Shares
and the appurtenant Proprietary Lease securing a Cooperative Loan.

            "Pledge Instruments": With respect to each Cooperative Loan, the
related Stock Power, the Assignment of the Proprietary Lease and the Assignment
of Mortgage Note and Pledge Agreement.

            "Project": With respect to each Cooperative Loan, all real property
owned by the related Cooperative including the land, separate dwelling units and
all common areas.

            "Proprietary Lease": With respect to each Cooperative Loan, a lease
on the related Cooperative Apartment evidencing the possessory interest of the
Mortgagor in such Cooperative Apartment.

            "Purchase Advice": An approved purchase list delivered to Purchaser
by the Takeout Investor via electronic or facsimile transmission, confirming the
amount of Takeout Proceeds allocable to each Mortgage Loan purchased by Takeout
Investor.

            "Purchase Date": With respect to any Mortgage Loan, the date of
payment thereof by Purchaser to Seller of the Purchase Price.

            "Purchase Price": With respect to each Mortgage Loan, an amount
equal to the Trade Principal less an amount equal to the product of the Trade
Principal and the Discount. Accrued interest shall be allocated in accordance
with Section 2(c).

            "Purchaser": Paine Webber Real Estate Securities Inc. and its
successors.

            "Purchaser's Wire Instructions to Seller": The wire instructions,
set forth in a notice delivered by Purchaser to Seller containing the
information set forth in Exhibit D, to be used for the payment of all amounts
due and payable to Purchaser hereunder.

            "Recognition Agreement": With respect to each Cooperative Loan, an
agreement whereby a Cooperative and a lender with respect to a Cooperative Loan
(i) acknowledge that such lender may make, or intends to make, such Cooperative
Loan, and (ii) make certain agreements with respect to such Cooperative Loan.

            "RTC": The Resolution Trust Corporation or any successor thereto.

            "Seller": The Seller whose name is set forth on the cover page
hereof, and its permitted successors hereunder.

            "Seller's Release": A letter in the form of Exhibit C-l, delivered
by Seller when no Warehouse has an interest in a Mortgage Loan, conditionally
releasing all of Seller's interest in a Mortgage Loan upon receipt of payment by
Seller.

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            "Seller's Wire Instructions": The wire instructions, set forth in a
letter in the form of Exhibit C-2, to be used for the payment of funds to Seller
when no Warehouse Lender has an interest in the Mortgage Loans to which such
payment relates.

            "Settlement Date": With respect to any Mortgage Loan, the date the
allocable Pass-Through Rate shall cease to accrue upon payment by Takeout
Investor to Purchaser of the Takeout Proceeds as confirmed by Purchaser's
receipt from Seller of the related Settlement Information in accordance with
Section 3(a).

            "Settlement Information": The Purchase Advice or group of Purchase
Advices which shall identify each Mortgage Loan by the Mortgagor's name, and of
which the aggregate disbursement amount equals the precise dollar amount of
Takeout Proceeds to be received by Purchaser from Agreement.

            "Stock Certificate": With respect to each Cooperative Loan, the
certificate evidencing ownership of the related Cooperative Shares issued by the
Cooperative.

            "Stock Power": With respect to each Cooperative Loan, an assignment
of the related Stock Certificate or an Assignment of the Cooperative Shares
issued by the Cooperative.

            "Successor  Servicer":  An  entity  designated  by  Purchaser,  in
conformity with Section 16, to replace Seller as servicer for Purchaser.

            "Takeout Commitment": Commitment of Seller to sell one or more
Mortgage Loans to Takeout Investor and of Takeout Investor to purchase one or
more Mortgage Loans from Seller.

            "Takeout Investor": The applicable Conduit.

            "Takeout Proceeds": The amount of funds Takeout Investor pays to
Purchaser on a particular Business Day as identified by the related Settlement
Information.

            "Third Party Underwriter": Any third party, including but not
limited to a mortgage loan pool insurer, who underwrites the Mortgage Loan(s)
prior to the purchase by Purchaser.

            "Third Party Underwriter's Certificate": A certificate issued by a
Third Party Underwriter with respect to a Mortgage Loan, certifying that such
Mortgage Loan complies with its underwriting requirements.

            "Trade Price": The trade price set forth on a Takeout Commitment.

            "Trade Principal": With respect to any Mortgage Loan, the
outstanding principal balance of the Mortgage Loan multiplied by a percentage
equal to the Trade Price.

            "Warehouse Lender": Any lender, including, without limitation,
Purchaser, providing financing to the Seller in any fractional amount for the
purpose of originating or purchasing Mortgage Loans which lender has a security
interest in such Mortgage Loans as collateral for the obligations of Seller to
such lender.

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            "Warehouse Lender's Release": A letter in the form of Exhibit B-1,
from a Warehouse Lender to Purchaser, conditionally releasing all of Warehouse
Lender's right, title and interest in certain Mortgage Loans identified therein
upon receipt of payment by Warehouse Lender.

            "Warehouse Lender's Wire Instructions": The wire instructions, set
forth in a letter in the form of Exhibit B-2, from a Warehouse Lender to
Purchaser, setting forth wire instructions for all amounts due and payable to
such Warehouse Lender hereunder.

            "Yield Compensation Adjustment": Subject to any further adjustment
provided in this Agreement, an amount (which may be a negative number) equal to:

                                    A(BC-DE)
                                    --------
                                       360

where (i) A equals the number of days in the period beginning on the Purchase
Date to but not including the Settlement Date, (ii) B equals the principal
amount of the Mortgage Loan, (iii) C equals the interest rate (expressed as a
decimal) on the Mortgage Loan, (iv) D equals the Purchase Price and (v) E equals
the Pass-Through Rate (expressed as a decimal).

            Section 2. Procedures for Purchases of Mortgage Loans. (a)(1)
Purchaser may, in its sole discretion, from time to time, purchase one or more
Mortgage Loans from Seller. Seller shall be deemed to make for the benefit of
Purchaser, as of the applicable dates specified in Section 8, the
representations and warranties set forth in Section 8 in respect of each such
Mortgage Loan.

            (a)(2) Prior to Purchaser's election to purchase any Mortgage Loan,
Purchaser shall have received from Seller a Loan Purchase Detail, either
electronically or via a facsimile transmission, and Custodian shall have
received all applicable documents required by Section 2 of the Custodial
Agreement. The terms and conditions of such purchase shall be set forth in this
Agreement and in each Funding Confirmation.

            (b)(1) If Purchaser elects to purchase any Mortgage Loan, Purchaser
shall pay the amount of the Purchase Price for such Mortgage Loan by wire
transfer of immediately available funds (i) if a Warehouse Lender's Release has
been included in the related Conduit Submission Package, in accordance with the
Warehouse Lender's Wire Instructions or (ii) if there is no Warehouse Lender's
Release included in the related Conduit Submission Package, in accordance with
the Seller's Wire Instructions. If Purchaser is the Warehouse Lender with
respect to a Mortgage Loan, the amount transferred shall be reduced to account
for amounts previously advanced by Purchaser with respect to such Mortgage Loan.
With respect to each Mortgage Loan which Purchaser has elected to purchase,
Custodian shall deliver to Takeout Investor the applicable portion of the
Conduit Submission Package, in the manner and at the time set forth in the
Custodial Agreement. Seller shall thereafter promptly deliver to Takeout
Investor any and all additional documents requested by Takeout Investor to
enable Takeout Investor to make payment to Purchaser of the Takeout Proceeds.

                                      -7-
<PAGE>

            (b)(2) Simultaneously with the payment by Purchaser of the Purchase
Price of a Mortgage Loan, in accordance with the Warehouse Lender's Wire
Instructions or the Seller's Wire Instructions, as applicable, with respect to a
Mortgage Loan, Seller hereby conveys to Purchaser all of Seller's right, title
and interest in and to such Mortgage Loan, free and clear of any lien, claim or
encumbrance.

            (c) With respect to each Mortgage Loan that Purchaser elects to
purchase hereunder, Purchaser shall owe to Seller a Performance Fee. The Yield
Compensation Adjustment component of the Performance Fee shall include an
accrued interest calculation. Purchaser's accrued interest calculation shall be
identical to that of Takeout Investor, therefore the amount of accrued interest
included in a settlement calculation will represent accrued interest paid to
Purchaser and paid by Purchaser.

            (d) Notwithstanding the satisfaction by Seller of the conditions
specified in Section 2(a), Purchaser is not obligated to purchase any Mortgage
Loan offered to it hereunder. In the event that Purchaser rejects a Mortgage
Loan for purchase for any reason and/or does not transmit the Purchase Price,
any Conduit Submission Package delivered to Custodian in anticipation of such
purchase shall be returned by Custodian in accordance with the terms of the
bailee letter under which it was received.

            Section 3. Sale of Mortgage Loans to Takeout Investor. (a)(1) Upon
the sale to Takeout Investor of a Mortgage Loan previously purchased by
Purchaser hereunder, Seller shall cause Takeout Proceeds relating to such
Mortgage Loan to be paid to Purchaser in accordance with Purchaser's Wire
Instructions to Seller.

            (a)(2) All Takeout Proceeds received by Purchaser from Takeout
Investor after 3:00 P.M. New York City time on a Business Day (or at any time on
a day which is not a Business Day) shall be deemed, with regard to determining
the Settlement Date, received by Purchaser on the next succeeding Business Day.

            (b)(1) If any Mortgage Loan is rejected by Takeout Investor because
it is a Defective Mortgage Loan, Seller shall promptly notify Purchaser. If any
Mortgage Loan is a Defective Mortgage Loan on the Purchase Date and in
Purchaser's sole judgement the defects in such Mortgage Loan will not be cured
(or in fact are not cured) by Seller prior to the Commitment Expiration Date,
the Pass-Through Rate applicable to such Defective Mortgage Loan shall, on such
Commitment Expiration Date, increase by the Incremental Pass-Through Rate and
Purchaser, at its election, may require that Seller, upon receipt of notice from
Purchaser, immediately repurchase Purchaser's ownership interest in such
Defective Mortgage Loan by remitting to Purchaser (in immediately available
funds in accordance with Purchaser's instructions) the amount paid by Purchaser
for such Defective Mortgage Loan plus interest at the Pass-Through Rate on the
principal amount thereof from the Purchase Date of such Mortgage Loan to the
date of such repurchase. If at any time prior to the repurchase of a Defective
Mortgage Loan by Seller or the purchase of a Mortgage Loan by Takeout Investor,
Seller receives the Mortgage Note or any other portion of the Conduit Submission
Package, Seller shall promptly forward such Mortgage Note and/or other portion
of the Conduit Submission Package to Purchaser.

                                      -8-
<PAGE>

            (b)(2) If Seller fails to comply with its obligations in the manner
described in Section 3(b)(1), upon receipt by Seller of notice from Purchaser,
Seller's rights and obligations to service Mortgage Loans, as provided in this
Agreement, shall terminate. If an Act of Insolvency occurs at any time, Seller's
rights and obligations to service the Mortgage Loans, as provided in this
Agreement, shall terminate immediately, without any notice or action by
Purchaser. Upon any such termination, Purchaser is hereby authorized and
empowered as the exclusive agent for Seller to sell and transfer such rights to
service the Mortgage Loans for such price and on such terms and conditions as
Purchaser shall reasonably determine, and Seller shall not otherwise attempt to
sell or transfer such rights to service without the prior consent of Purchaser.
Seller shall perform all acts and take all action so that all files and
documents relating to the Mortgage Loans held by Seller, together with all
escrow amounts relating to such Mortgage Loans, are delivered to Successor
Servicer. To the extent that the approval of a Third Party Underwriter or any
other person is required for any such sale or transfer, Seller shall fully
cooperate with Purchaser to obtain such approval. Upon exercise by Purchaser of
its remedies under this Section 3(b)(2), Seller hereby authorizes Purchaser to
receive all amounts paid by any purchaser of such rights to service the Mortgage
Loans and to remit such amounts to Seller subject to Purchaser's rights of
set-off under this Agreement. Upon exercise by Purchaser of its remedies under
this Section 3(b)(2), Purchaser's obligation to pay and Seller's right to
receive any portion of the Performance Fee relating to such Mortgage Loans shall
automatically be canceled and become null and void, provided that such
cancellation shall in no way relieve Sel1er or otherwise affect the obligation
of Seller to indemnify and hold Purchaser harmless as specified in Section 3(c).

            (b)(3) Each Mortgage Loan required to be delivered Successor
Servicer by Section 3(b)(2) shall be delivered free of any servicing rights in
favor of Seller and free of any title, interest, lien, encumbrance or claim of
any kind of Seller, Seller shall deliver or cause to be delivered all files and
documents relating to each Mortgage Loan held by Seller to Successor Servicer.
Seller shall promptly take such actions and furnish to Purchasers documents that
Purchaser deems necessary or appropriate to enable Purchaser to cure any defect
in each such Mortgage Loan or to enforce such Mortgage Loans, as appropriate.

            (c) Seller agrees to indemnify and hold Purchaser and its assignees
harmless from and against all Losses resulting from or relating to any breach or
failure to perform by Seller of any representation, warranty, covenant, term or
condition made or to be performed by Seller under this Agreement.

            (d) No exercise by Purchaser of its rights under this Section 3
shall relieve Seller of responsibility or liability for any breach of this
Agreement.

            (e) Seller hereby grants Purchaser a right of set-off against the
payment of any amounts that may be due and payable to Purchaser from Seller,
such right to be upon any and all monies or other property of Seller held or
received by Purchaser, or due and owing from Purchaser to Seller.

            Section 4. Servicing of the Mortgage Loans. (a) Seller shall service
and administer each Mortgage Loan on behalf of Purchaser in accordance with
prudent mortgage loan servicing standards and procedures generally accepted in
the mortgage banking industry and

                                      -9-
<PAGE>

in accordance with the requirements of Takeout Investor as though Takeout
Investor's requirement were set forth in independent contract between Seller and
Purchaser, provided that Seller shall at all times comply with applicable law,
and the requirements of any applicable insurer or guarantor so that the
insurance in respect of any Mortgage Loan is not voided or reduced. Seller shall
at all times maintain accurate and complete records of its servicing of each
Mortgage Loan, and Purchaser may, at any time during Seller's business hours on
reasonable notice, examine and make copies of such records. In addition, if a
Mortgage Loan is not purchased by Takeout Investor on or before the Commitment
Expiration Date, Seller shall at Purchaser's request deliver to Purchaser
monthly reports regarding the status of such Mortgage Loan, which reports shall
include, but shall not be limited to, a description of each Mortgage Loan in
default for more than thirty days, and such other circumstances with respect to
any Mortgage Loan (whether or not such Mortgage Loan is included in the
foregoing list) that could materially adversely affect any such Mortgage Loan,
Purchaser's ownership of any such Mortgage Loan or the collateral securing any
such Mortgage Loan. Seller shall deliver such a report to Purchaser every thirty
days until (i) the purchase by Takeout Investor of such Mortgage Loan pursuant
to the related Takeout Commitment or (ii) the exercise by Purchaser of any
remedial election pursuant to Section 3.

            (b) Within five Business Days of written notice from Purchaser,
Seller shall establish and maintain a Custodial Account entitled "[NAME OF
SELLER], in trust for Paine Webber Real Estate Securities Inc. and its assignees
under the Mortgage Loan Purchase Agreement dated [the date of this Agreement]"
and shall promptly deposit into such Custodial Account, in the form received
with any necessary endorsements, all collections received in respect of each
Mortgage Loan that are payable to Purchaser as the owner of each such Mortgage
Loan.

            (c) Amounts deposited in the Custodial Account with respect to any
Mortgage Loan shall be held in trust for Purchaser as the owner of such Mortgage
Loan and shall be released only as follows:

            (1) Except as otherwise provided in this Section 4(c), following
      receipt by Purchaser or its designee of the Takeout Proceeds for such
      Mortgage Loan from Takeout Investor or Seller amounts deposited in the
      Custodial Account shall be paid in accordance with Section 2(c).
      Notwithstanding the foregoing, all amounts deposited in the Custodial
      Account shall be paid to Seller upon the purchase by Takeout Investor of
      the related Mortgage Loan(s) from Purchaser if, and to the extent that,
      the amounts due and payable to Purchaser hereunder have been set off
      against the Purchase Price for the Mortgage Loan or the Performance Fee
      relating to the Mortgage Loan. The amounts paid to Seller (if any)
      pursuant to this Section 4(c)(l) shall constitute Seller's sole
      compensation for servicing the Mortgage Loans as provided in this Section
      4.

            (2) If Successor Servicer is appointed by Purchaser (either under
      the circumstances set forth in Section 3 or otherwise), all amounts
      deposited in the Custodial Account shall be paid to Purchaser promptly
      upon such delivery.

            (3) If a Mortgage Loan is not purchased by Takeout Investor on or
      before the Commitment Expiration Date, during the period thereafter that
      Seller remains as servicer,

                                      -10-
<PAGE>

      all amounts deposited in the Custodial Account shall be released only in
      accordance with a Purchaser's written instructions.

            Section 5. Trade Assignments. Seller hereby assigns to Purchaser,
free of any security interest, lien, claim or encumbrance of any kind, Seller's
rights, under each Takeout Commitment to the full extent permitted by Takeout
Investor, to deliver the Mortgage Loan(s) specified therein to Takeout Investor
and to receive the Takeout Proceeds therefor from Takeout Investor. Purchaser
shall not be deemed to have accepted such rights of Seller which relate to a
particular Mortgage Loan unless and until it purchases the Mortgage Loan, and
nothing set forth herein shall be deemed to impair Purchaser's right to reject
any Mortgage Loan for any reason, in its sole discretion.

            Section 6. Transfers of Mortgage Loans by Purchaser. Purchaser may,
in its sole discretion, assign all of its right, title and interest in or grant
a security interest in any Mortgage Loan sold by Seller hereunder and all rights
of Purchaser under this Agreement and the Custodial Agreement, in respect of
such Mortgage Loan to Assignee, subject only to an obligation on the part of
Assignee to deliver each such Mortgage Loan to Takeout Investor pursuant to
Section 5 or to Purchaser to permit Purchaser or its designee to make delivery
thereof to Takeout Investor pursuant to Section 5. It is anticipated that such
assignment to Assignee will be made by Purchaser, and Seller hereby irrevocably
consents to such assignment. No notice of such assignment shall be given by
Purchaser to Seller or Takeout Investor. Assignment by Purchaser of the Mortgage
Loans as provided in this Section 6 shall not release Purchaser from its
obligations otherwise under this Agreement.

            Without limitation of the foregoing, an assignment of a Mortgage
Loan to Assignee, as described in this Section 6, shall be effective upon
delivery to Assignee of a Conduit Submission Package.

            Section 7. Record Title to Mortgage Loans; Intent of Parties;
Security Interest. (a) From and after the delivery of the related Conduit
Submission Package, and subject to the remedies of Purchaser in Section 3,
Seller shall remain the last named payee or endorsee of each Mortgage Note and
the mortgagee or assignee of record of each Mortgage in trust for the benefit of
Purchaser, for the sole purpose of facilitating the servicing of such Mortgage
Loan.

            (b) Seller shall maintain a complete set of books and records for
each Mortgage Loan which shall be clearly marked to reflect the ownership
interest in each Mortgage Loan of Purchaser.

            (c) Purchaser and Seller confirm that the transactions contemplated
herein are intended to be sales of the Mortgage Loans by Seller to Purchaser
rather than borrowings secured by the Mortgage Loans. In the event, for any
reason, any transaction is construed by any court or regulatory authority as a
borrowing rather than as a sale, the Seller and Purchaser intend that Purchaser
or Assignee, as the case may be, shall have a perfected first priority security
interest in the Collateral, free and clear of adverse claims. In such case,
Seller shall be deemed to have hereby granted to Purchaser or Assignee, as the
case may be, a first priority security interest in and lien upon the Collateral,
free and clear of adverse claims. In such event, this Agreement shall constitute
a security agreement, the Custodian shall be deemed to be an independent

                                      -11-
<PAGE>

custodian for purposes of perfection of the security interest granted to
Purchaser or Assignee, as the case may be, and Purchaser or Assignee, as the
case may be, shall have all of the rights of a secured party under applicable
law. Seller shall, not later than the date of the first purchase of a Mortgage
Loan by Purchaser under this Agreement, deliver to Purchaser a UCC- 1 Financing
Statement, executed by Seller, containing a description of collateral in the
form attached hereto in Exhibit E.

            Section 8. Representations and Warranties. (a) Seller hereby
represents and warrants to Purchaser as of the date hereof and as of the date of
each delivery of a Conduit Submission Package that:

            (i) Seller is duly organized, validly existing and in good standing
      under the laws of the state of its organization or of the United States of
      America and has all licenses necessary to carry on its business as now
      being conducted and is licensed, qualified and in good standing in the
      state where the Mortgaged Property is located if the laws of such state
      require licensing or qualification in order to conduct business of the
      type conducted by Seller. Seller has all requisite power and authority
      (including, if applicable, corporate power) to execute and deliver this
      Agreement and to perform in accordance herewith; the execution, delivery
      and performance of this Agreement (including all instruments of transfer
      to be delivered pursuant to this Agreement) by Seller and the consummation
      of the transactions contemplated hereby have been duly and validly
      authorized; this Agreement evidences the valid, binding and enforceable
      obligation of Seller; and all requisite action (including, if applicable,
      corporate action) has been taken by Seller to make this Agreement valid
      and binding upon Seller in accordance with its terms;

            (ii) No approval of the transactions contemplated by this Agreement
      from the OTS, the NCUA, the FDIC or any similar federal or state
      regulatory authority having jurisdiction over Seller is required, or if
      required, such approval has been obtained. There are no actions or
      proceedings pending or affecting Seller which would adversely affect its
      ability to perform hereunder. The transfers, assignments and conveyances
      provided for herein are not subject to the bulk transfer or any similar
      statutory provisions in effect in any applicable jurisdiction;

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

            (iv) This Agreement, the Custodial Agreement and every document to
      be executed by Seller pursuant to this Agreement is and will be valid,
      binding and subsisting obligations of Seller, enforceable in accordance
      with their respective terms. No consents or approvals are required to be
      obtained by Seller or its Parent Company for the execution, delivery and
      performance of this Agreement or the Custodial Agreement by Seller;

                                      -12-
<PAGE>

            (v) Purchaser will be the sole owner of the related Mortgage Loan,
      free and clear of any lien, claim or encumbrance; and

            (vi) All information relating to Seller that Seller has delivered or
      caused to be delivered to Purchaser, including, but not limited to, all
      documents related to this Agreement, the Custodial Agreement or Seller's
      financial statements, does not contain any untrue statement of a material
      fact or omit to state a material fact necessary to make the statements
      made therein or herein in light of the circumstances under which they were
      made, not misleading; and

            (vii) There is no action, suit, proceeding, inquiry or
      investigation, at law or in equity, or before, or by any court, public
      board or body pending or, to Seller's knowledge, threatened against or
      affecting Seller (or, to Seller's knowledge, any basis therefor) wherein
      an unfavorable decision, ruling or finding would adversely affect the
      validity of enforceability of this Agreement, the Custodial Agreement or
      any agreement or instrument to which Seller is a party and which is used
      or contemplated for use in the consummation of the transactions
      contemplated hereby, would adversely affect the proceedings of Seller in
      connection herewith or would or could materially and adversely affect
      Seller's ability to carry out its obligations hereunder.

            (b) Seller hereby represents, warrants and covenants to Purchaser
with respect to each Mortgage Loan as of the related Purchase Date that:

            (i) The Mortgage Loan conforms in all respects to the requirements
      of this Agreement, the Commitment Requirements and all other requirements
      of Takeout Investor;

            (ii) Seller is the sole owner and holder of the Mortgage Loan free
      and clear of any and all liens, claims, defenses, offsets, pledges,
      encumbrances, charges or security interests of any nature and has full
      right and authority, subject to no interest or participation of, or
      agreement with, any other party, to sell and assign the same pursuant to
      this Agreement;

            (iii) No servicing agreement has been entered into with respect to
      the Mortgage Loan, or any such servicing agreement has been terminated and
      there are no restrictions, contractual or governmental, which would impair
      the ability of Purchaser or Purchaser's designees from servicing the
      Mortgage Loan;

            (iv) Each Mortgage is a valid and subsisting first or second lien on
      the property therein described as indicated on the related Loan Purchase
      Detail delivered by Seller to Purchaser, and the Mortgaged Property is
      free and clear of all encumbrances and liens having priority over the lien
      of the Mortgage except for liens for real estate taxes and special
      assessments not yet due and payable and, in the case of any second lien,
      the mortgage that secures the related first lien mortgage loan. Any pledge
      account, security agreement, chattel mortgage or equivalent document
      related to, and delivered to Purchaser with the Mortgage, establishes in
      Seller a valid and subsisting first lien on the

                                      -13-
<PAGE>

      property described therein, and Seller has full right to sell and assign
      the same to Purchaser;

            (v) Neither Seller nor any prior holder of the Mortgage or, with
      respect to Cooperative Loans, the Pledge Agreement, Proprietary Lease and
      Pledge Instruments, has modified the Mortgage or, with respect to
      Cooperative Loans, the Pledge Agreement, Proprietary Lease and Pledge
      Instruments, in any material respect; satisfied, canceled or subordinated
      the Mortgage or, with respect to Cooperative Loans, the Pledge Agreement,
      Proprietary Lease and Pledge Instruments, in whole or in part; released
      the Mortgaged Property in whole or in part from the lien of the Mortgage
      or Pledge Agreement; or executed any instrument of release, cancellation,
      modification or satisfaction unless such release, cancellation,
      modification or satisfaction does not adversely affect the value of the
      Mortgage Loan and is contained in the related Document File;

            (vi) The Mortgage Loan is not in default, and all Monthly Payments
      due prior to the Purchase Date and all taxes, governmental assessments,
      insurance premiums, water, sewer and municipal charges, leasehold payments
      or ground rents have been paid. Seller has not advanced funds, or induced
      or solicited any advance of funds by a party other than the Mortgagor
      directly or indirectly, for the payment of any amount required by the
      Mortgage Loan. The collection practices used by each entity which has
      serviced the Mortgage Loan have been in all respects legal, proper,
      prudent, and customary in the mortgage servicing business. With respect to
      escrow deposits and payments in those instances where such were required,
      there exist no deficiencies in connection therewith for which customary
      arrangements for repayment thereof have not been made and no escrow
      deposits or payments or other charges or payments have been capitalized
      under any Mortgage or Pledge Agreement, as the case may be, or the related
      Mortgage Note;

            (vii) There is no default, breach, violation or event of
      acceleration existing under the Mortgage or Pledge Agreement, as the case
      may be, or the related Mortgage Note and no event which, with the passage
      of time or with notice and the expiration of any grace or cure period,
      would constitute a default, breach, violation or event of acceleration;
      and Seller has not waived any default, breach, violation or event of
      acceleration;

            (viii) The Mortgage Loan is 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, the Mortgage or,
      with respect to each Cooperative Loan. the Pledge Agreement, the
      Proprietary Lease and Pledge Instruments, or the exercise of any right
      thereunder, render either the Mortgage Note, the Mortgage or, with respect
      to each Cooperative Loan, the Pledge Agreement, the Proprietary Lease and
      Pledge Instruments, unenforceable, in whole or in part, or subject to any
      right of 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;

            (ix) The Mortgage Note and the related Mortgage or Pledge Agreement
      are genuine and each is the legal, valid and binding obligation of the
      maker thereof, enforceable in accordance with its terms. All parties to
      the Mortgage Note and the

                                      -14-
<PAGE>

      related Mortgage or Pledge Agreement had legal capacity to execute the
      Mortgage Note and the related Mortgage or Pledge Agreement and each
      Mortgage Note and related Mortgage or Pledge Agreement have been duly and
      properly executed by the Mortgagor. No Mortgagor is a partnership, trust
      or corporation;

            (x) The Mortgage Loan meets, or is exempt from, applicable state or
      federal laws, regulations and other requirements pertaining to usury, and
      the Mortgage Loan is not usurious;

            (xi) Any and all requirements of any federal, state or local law
      including, without limitation, truth-in-lending, real estate settlement
      procedures, consumer credit protection, equal credit opportunity or
      disclosure laws applicable to the Mortgage Loan have been complied with,
      and Seller shall deliver to Purchaser upon demand, evidence of compliance
      with all such requirements;

            (xii) Either: (i) Seller and every other holder of the Mortgage or
      Pledge Agreement, as the case may be, if any, were authorized to transact
      and do business in the jurisdiction in which the Mortgaged Property is
      located at all times when such party held the Mortgage or Pledge
      Agreement, as the case may be; or (ii) the loan of mortgage funds, the
      acquisition of the Mortgage or Pledge Agreement, as the case may be, (if
      Seller was not the original lender), the holding of the Mortgage or Pledge
      Agreement, as the case may be, and the transfer of the Mortgage or Pledge
      Agreement, as the case may be, did not constitute the transaction of
      business or the doing of business in such jurisdiction;

            (xiii) The proceeds of the Mortgage Loan have fully disbursed, there
      is no requirement for future advances thereunder and any and all
      requirements as to completion of any on-site or off-site improvements and
      as to disbursements of any escrow funds, therefore, have been complied
      with. All costs, fees and expenses incurred in making, or closing or
      recording the Mortgage Loans were paid;

            (xiv) The related Mortgage or Pledge Agreement, as the case may be,
      contains customary and enforceable provisions such as to render the rights
      and remedies of the holder thereof adequate for the realization against
      the Mortgaged Property of the benefits of the security, including, (i) in
      the case of a Mortgage designated as a deed of trust, by trustee's sale,
      and (ii) otherwise by judicial foreclosure. There is no homestead or 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 or Pledge Agreement, as the case may be;

            (xv) The Mortgage Loan was originated free of any "original issue
      discount" with respect to which the owner of the Mortgage Loan could be
      deemed to have income pursuant to Sections 1271 et seq. of the Internal
      Revenue Code;

            (xvi) Each Mortgage Loan was originated by an institution that is
      eligible to issue Mortgage Loans under the Applicable Guide;

            (xvii) With respect to any Mortgage that is a first lien at
      origination, the Mortgaged Property was free and clear of all mechanics'
      and materialmen's liens or liens

                                      -15-
<PAGE>

      in the nature thereof which are or could be prior to the Mortgage lien,
      and no rights are outstanding that under law could give rise to any such
      lien;

            (xviii) At origination, all of the improvements which were included
      for the purpose of determining the appraised value of the Mortgaged
      Property lay wholly within the boundaries and building restriction lines
      of such property, and no improvements on adjoining properties encroach
      upon the Mortgaged Property;

            (xix) At origination, no improvement located on or being part of the
      Mortgaged Property was in violation of any applicable zoning law or
      regulation 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 and fire underwriting
      certificates, had been made or obtained from the appropriate authorities
      and the Mortgaged Property was lawfully occupied under applicable law. No
      improvement located on or being part of the Mortgaged Property is in
      violation of any applicable zoning law or regulation and all inspections,
      licenses and certificates required to be made or issued with respect to
      Property, and with respect to the use and occupancy of the same, including
      but not limited to certificates of occupancy and fire underwriting
      certificates, have been made or obtained from the appropriate authorities
      and the Mortgaged Property is lawfully occupied under applicable law;

            (xx) There is no proceeding pending for the total or partial
      condemnation of the Mortgaged Property and said property is undamaged by
      waste, fire, earthquake or earth movement, windstorm, flood, tornado or
      other casualty;

            (xxi) All buildings upon the Mortgaged Property are insured against
      loss by fire, hazards of extended coverage and such other hazards as are
      customary in the area where the Mortgaged Property is located, pursuant to
      fire and hazard insurance policies with extended coverage or other
      insurance required by the Applicable Purchase Agreement, in an amount at
      least equal to the greater of (i) the outstanding principal balance of the
      Mortgage Loan or (ii) the maximum insurable value (replacement cost
      without deduction for depreciation) of the improvements constituting the
      Mortgaged Property. If applicable laws limit the amount of such insurance
      to the replacement cost of the improvements constituting the Mortgaged
      Property or to some other amount, then such insurance is in an amount
      equal to the maximum allowed by such laws. Such insurance amount is
      sufficient to prevent the Mortgagor or the loss payee under the policy
      from becoming a co-insurer. The insurer issuing such insurance is
      acceptable pursuant to the Applicable Purchase Agreement. All individual
      insurance policies contain a standard mortgagee clause naming Seller, its
      successors and assigns, as mortgagee and all premiums thereon have been
      paid. Each Mortgage or Pledge Agreement, as the case may be, obligates the
      Mortgagor thereunder to maintain all such insurance at Mortgagor's cost
      and expense, and upon the Mortgagor's failure to do so, authorizes the
      holder of the Mortgage or Pledge Agreement, as the case may be, to obtain
      and maintain such insurance at Mortgagor's cost and expense and to seek
      reimbursement therefor from the Mortgagor. Any flood insurance required by
      applicable law has been obtained;

                                      -16-
<PAGE>

            (xxii) The related Mortgage Note is payable on the Due Date of each
      month in self-amortizing monthly installments of principal and interest,
      with interest payable in arrears, providing for full amortization by
      maturity, over an original term of not more than thirty years;

            (xxiii) Except to the extent not required by the Applicable Guide,
      at the time that the related Mortgage Loan was made the Mortgagor
      represented that the Mortgagor would occupy such Mortgaged Property as
      Mortgagor's primary residence;

            (xxiv) Except with respect to Cooperative Loans, the Mortgaged
      Property consists of a single parcel of real property;

            (xxv) There are no circumstances or conditions with respect to the
      Mortgage or Pledge Agreement, as the case may be, the Mortgaged Property,
      the Mortgagor or the Mortgagor's credit standing that can be reasonably
      expected to cause Takeout Investor or private institutional investors to
      regard the Mortgage Loan as an unacceptable investment, cause the Mortgage
      Loan to become delinquent or adversely affect the value or marketability
      of the Mortgage Loan;

            (xxvi) The Document File contains or shall contain prior to the
      Commitment Expiration Date each of the documents and instruments specified
      to be included therein duly executed and in due and proper form and each
      such document or instrument is in form acceptable to Takeout Investor.
      Each Mortgage Note, Mortgage and Pledge Agreement are on forms approved by
      Takeout Investor;

            (xxvii) Except with respect to Cooperative Loans, each Mortgage Loan
      is covered by a mortgage title insurance policy acceptable to Takeout
      Investor, issued by, and the valid and binding obligation of, a title
      insurer acceptable to Takeout Investor, and qualified to do business in
      the jurisdiction where the property subject to the Mortgage is located,
      insuring Seller, its successors and assigns, as to the first priority lien
      of the Mortgage in the original principal amount of the Mortgage Loan.
      Seller is the named insured and the sale insured of such mortgage title
      insurance policy, the assignment to Purchaser of Seller's interest in such
      mortgage title insurance policy does not require the consent of or
      notification to the insurer, such mortgage title insurance policy is in
      full force and effect and will be in full force and effect and inure to
      the benefit of Purchaser upon the consummation of the transactions
      contemplated by this Agreement and no claims have been made under such
      mortgage title insurance policy and no prior holder of the related
      Mortgage, including Seller, has done, by act or omission, anything which
      would impair the coverage of such mortgage title insurance policy;

            (xxviii) The loan-to-value ratio of each Mortgage Loan does not
      exceed the maximum loan-to-value ratio permitted by the Applicable Guide.
      All provisions of each related primary mortgage insurance policy have been
      and are being complied with, and such policy is written with a private
      mortgage insurance company acceptable to the Takeout Investor, is the
      binding obligation of such insurer, is in full force and effect, and all
      premiums due thereunder have been paid. Seller has not engaged in any act
      or omission, and Seller has no knowledge of any act or omission by or on
      behalf of the

                                      -17-
<PAGE>

      related Mortgagor or any other person, which act or omission would impair
      the coverage or validity of any such primary mortgage insurance policy,
      the benefit of the endorsement provided for in the Applicable Guide, or
      the validity or binding effect of either. Any Mortgage Loan subject to a
      primary mortgage insurance policy obligates the Mortgagor thereunder to
      maintain such primary mortgage insurance policy and to pay all premiums
      and charges in connection therewith. The interest rate for the Mortgage
      Loan is net of any such insurance premiums;

            (xxix) With respect to each Cooperative Loan, each Pledge Agreement
      creates a valid, enforceable and subsisting first security interest in the
      Collateral securing the related Mortgage Note subject only to (a) the lien
      of the related Cooperative for unpaid assessments representing the
      Obligor's pro rata share of the Cooperative's payments for its blanket
      mortgage, current and future real property taxes, insurance premiums,
      maintenance fees and other assessments to which like collateral is
      commonly subject and (b) other matters to which like collateral is
      commonly subject which do not materially interfere with the benefits of
      the security intended to be provided by the Pledge Agreement; provided,
      however, that the appurtenant Proprietary Lease may be subordinated or
      otherwise subject to the lien of any mortgage on the Project. There are no
      liens against or security interests in the Collateral which have priority
      over the lender's security interest in the Collateral, and such priority
      interest cannot be created in the future;

            (xxx) With respect to each Cooperative Loan, all parties to the
      Mortgage Note and the Mortgage Loan had legal capacity to execute and
      deliver the Mortgage Note, the Pledge Agreement, the Proprietary Lease,
      the Stock Power, the Recognition Agreement, the Financing Statement and
      the Assignment of the Proprietary Lease and such documents have been duly
      and properly executed by such parties. Each Stock Power (i) has all
      signatures guaranteed or (ii) if all signatures are not guaranteed, then
      such Cooperative Shares will be transferred by the stock transfer agent of
      the Cooperative if the Company undertakes to convert the ownership of the
      collateral securing the related Cooperative Loan;

            (xxxi) With respect to each Cooperative Loan, there is no default in
      complying with the terms of the Mortgage Note, the Pledge Agreement and
      the Proprietary Lease and all maintenance charges and assessments
      (including assessments payable in the future installments, which
      previously became due and owing) have been paid. The Company has the right
      under the terms of the Mortgage Note, Pledge Agreement and Recognition
      Agreement to pay any maintenance charges or assessments owed by the
      Mortgagor;

            (xxxii) With respect to each Cooperative Loan, a Cooperative Lien
      Search has been made by a company competent to make the same which company
      is acceptable to FNMA and qualified to do business in the jurisdiction
      where the Cooperative Apartment is located and each entity that holds
      title (fee or an acceptable leasehold estate) to the real property and
      improvements constituting the Cooperative Apartment qualifies as a
      "cooperative housing corporation" as defined in Section 216 of the Code;

                                      -18-
<PAGE>

            (xxxiii) With respect to each Cooperative Loan, (i) the terms of the
      related Proprietary Lease is longer than the terms of the Cooperative
      Loan, (ii) there is no provision in any Proprietary Lease which requires
      the Mortgagor to offer for sale the Cooperative Shares owned by such
      Mortgagor first to the Cooperative, (iii) there is no prohibition in any
      Proprietary Lease against pledging the Cooperative Shares or assigning the
      Proprietary Lease and (iv) the Recognition Agreement is on a form of
      agreement published by the Aztech Document Systems, Inc. or includes
      provisions which are no less favorable to the lender than those contained
      in such agreement; and

            (xxxiv) With respect to each Cooperative Loan, the related
      Cooperative Apartment, is lawfully occupied under applicable law; all
      inspections, licenses and certificates required to be made or issued with
      respect to all occupied portions of the Cooperative Apartment and the
      related Project 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.

            The representations and warranties of Seller in this Section 8 are
unaffected by and supersede any provision in any endorsement of any Mortgage
Loan or in any assignment with respect to such Mortgage Loan to the effect that
such endorsement or assignment is without recourse or without representation or
warranty. With respect to each Mortgage Loan purchased by Purchaser hereunder,
to the extent that any representation or warranty made by Seller is either not
required by Takeout Investor or is waived by Takeout Investor, Purchaser hereby
agrees to waive such representation or warranty if such Mortgage Loan is
purchased by Takeout Investor from Purchaser, in accordance with the terms of
the related Takeout Commitment.

            Section 9. Covenants of Seller. Seller hereby covenants and agrees
with Purchaser as follows:

            (a)   Seller shall deliver to Purchaser:

            (i) Within one hundred twenty (120) days after the end of each
      fiscal year of Seller, consolidated balance sheets of Seller and its
      consolidated subsidiaries and the related consolidated statements of
      income showing the financial condition of Seller and its consolidated
      subsidiaries as of the close of such fiscal year and the results of
      operations during such year, and a consolidated statement of cash flows,
      as of the close of such fiscal year, setting forth, in each case, in
      comparative form the corresponding figures for the preceding year, all the
      foregoing consolidated financial statements to be reported on by, and to
      carry the report (acceptable in form and content to Purchaser) of an
      independent public accountant of national standing acceptable to
      Purchaser;

            (ii) Within sixty (60) days after the end of each of the first three
      fiscal quarters of each fiscal year of Seller, unaudited consolidated
      balance sheets and consolidated statements of income, all to be in a form
      acceptable to Purchaser, showing the financial condition and results of
      operations of Seller and its consolidated subsidiaries on a consolidated
      basis as of the end of each such quarter and for the then elapsed portion
      of the fiscal year. setting forth, in each case, in comparative form the
      corresponding figures for the corresponding periods of the preceding
      fiscal year, certified by a financial officer

                                      -19-
<PAGE>

      of Seller (acceptable to Purchaser) as presenting fairly the financial
      position and results of operations of Seller and its consolidated
      subsidiaries and as having been prepared in accordance with generally
      accepted accounting principles consistently applied, in each case, subject
      to normal year-end audit adjustments;

            (iii) Promptly upon receipt thereof, a copy of each other report
      submitted to Seller by its independent public accountants in connection
      with any annual, interim or special audit of Seller;

            (iv) Promptly upon becoming aware thereof, notice of (l) the
      commencement of, or any determination in, any legal, judicial or
      regulatory proceedings, (2) any dispute between Seller or its Parent
      Company and any governmental or regulatory body, (3) any event or
      condition, which, in any case of (1) or (2) if adversely determined, would
      have a material adverse effect on (A) the validity or enforceability of
      this Agreement, (B) the financial condition or business operations of
      Seller, or (C) the ability of Seller to fulfill its obligations under this
      Agreement or (4) any material adverse change in the business, operations,
      prospects or financial condition of Seller, including, without limitation,
      the insolvency of Seller or its Parent Company;

            (v) Promptly upon becoming available, copies of all financial
      statements. reports, notices and proxy statements sent by its Parent
      Company, Seller or any of Seller's consolidated subsidiaries in a general
      mailing to their respective stockholders and of all reports and other
      material (including copies of all registration statements under the
      Securities Act of 1933, as amended) filed by any of them with any
      securities exchange or with the Securities and Exchange Commission or any
      governmental authority succeeding to any or all of the functions of said
      Commission;

            (vi) Promptly upon becoming available, copies of any press releases
      issued by its Parent Company or Seller and copies of any annual and
      quarterly financial reports and any reports on Form H-(b) 12 which its
      Parent Company or Seller may be required to file with the OTS or the RTC
      or comparable reports which a Parent Company or Seller may be required to
      file with the FDIC or any other federal banking agency containing such
      financial statements and other information concerning such Parent
      Company's or Seller's business and affairs as is required to be included
      in such reports in accordance with the rules and regulations of the OTS,
      the RTC, the FDIC or such other banking agency, as may be promulgated from
      time to time;

            (vii) Such supplements to the aforementioned documents and such
      other information regarding the operations, business, affairs and
      financial condition of its Parent Company, Seller or any of Seller's
      consolidated subsidiaries as Purchaser may request; and

            (viii) A copy of (1) the articles of incorporation of Seller and any
      amendments thereto, certified by the Secretary of State of Seller's state
      of incorporation, (2) a copy of Seller's by-laws, together with any
      amendments thereto, (3) a copy of the resolutions adopted by Seller's
      Board of Directors authorizing Seller to enter into this Agreement and the
      Custodial Agreement and authorizing one or more of Seller's officers to
      execute

                                      -20-
<PAGE>

      the documents related to this Agreement and Custodial Agreement, and (4) a
      certificate of incumbency and signature of each officer of Seller
      executing any document in connection with this Agreement.

            (b) The consideration received by the Seller upon the sale of each
Mortgage Loan will constitute reasonably equivalent value and fair consideration
for the ownership interest in the Mortgage Loan.

            (c) Neither the Seller nor any affiliate thereof will acquire at any
time any Mortgage Loan or any other economic interest in or obligation with
respect to any Mortgage Loan.

            (d) Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, the Seller will report each sale of a Mortgage Loan
to the Purchaser as a sale of the ownership interest in the Mortgage Loan. The
Seller has been advised by or has confirmed with its independent public
accountants that the foregoing transactions will be so classified under GAAP.

            (e) The Seller will be solvent at all relevant times prior to, and
will not be rendered insolvent by, any sale of a Mortgage Loan to the Purchaser.

            (f) The Seller will not sell any Mortgage Loan to the Purchaser with
any intent to hinder, delay or defraud any of the Seller's creditors.

            (g) Seller shall comply, in all material respects, with all laws,
rules and regulations to which it is or may become subject.

            (h) Seller shall, upon request of Purchaser, promptly execute and
deliver to Purchaser all such other and further documents and instruments of
transfer, conveyance and assignment, and shall take such other action as
Purchaser may require more effectively to transfer, convey, assign to and vest
in Purchaser and to put Purchaser in possession of the property to be
transferred, conveyed, assigned and delivered hereunder and otherwise to carry
out more effectively the intent of the provisions under this Agreement.

            (i) Seller shall ensure that all Takeout Proceeds paid by Takeout
Investor resulting from Takeout Commitments that relate to Mortgage Loans
purchased by Purchaser pursuant to the terms of this Agreement are paid to
Purchaser by Takeout Investor in accordance with Purchaser's Wire Instructions
to Seller.

            (j) The consideration received by Seller upon sale of each Mortgage
Loan will constitute reasonably equivalent value and fair consideration for the
Mortgage Loan.

            (k) The Seller acknowledges that the Purchaser has the right to
perform continuing due diligence reviews with respect to the Mortgage Loans, for
purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and the Seller agrees that upon
reasonable (but no less than one (1) Business Day's) prior notice to the Seller,
the Purchaser or its authorized representatives will be permitted during normal
business hours to examine, inspect, make copies of, and make extracts of, the
Mortgage Files and

                                      -21-
<PAGE>

any and all documents, records, agreements, instruments or information relating
to such Mortgage Loans in possession, or under the control, of the Seller and/or
Custodian. The Seller also shall make available to the Purchaser a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Mortgage Files and Mortgage Loans. The Seller and Purchaser
further agree that all out-of-pocket costs and expenses incurred by the
Purchaser in connection with the Purchaser's activities pursuant to this Section
9(k) shall be paid for by the Seller, provided that, Purchaser shall pay any
such costs if such due diligence is conducted more often than two (2) times in a
calendar year.

            Section 10. Term. This Agreement shall continue in effect until
terminated as to future transactions by written instruction signed by either
Seller or Purchaser and delivered to the other, provided that no termination
will affect the obligations hereunder as to any of the Mortgage Loans with
respect to which Conduit Submission Packages have been delivered to Custodian
pursuant to the terms of this Agreement or the Custodial Agreement.

            Section 11. Exclusive Benefit of Parties; Assignment. This Agreement
is for the exclusive benefit of the parties hereto and their respective
successors and assigns and shall not be deemed to give any legal or equitable
right to any other person, including the Custodian. Except as provided in
Section 6, no rights or obligations created by this Agreement may be assigned by
any party hereto without the prior written consent of the other parties.

            Section 12. Amendments; Waivers; Cumulative Rights. This Agreement
may be amended from time to time only by written agreement of Seller and
Purchaser. Any forbearance, failure or delay by either party in exercising any
right, power or remedy hereunder shall not be deemed to be a waiver thereof, and
any single or partial exercise by Purchaser of any right, power or remedy
hereunder shall not preclude the further exercise thereof. Every right, power
and remedy of Purchaser shall continue in full force and effect until
specifically waived by Purchaser in writing. No right, power or remedy shall be
exclusive, and each such right, power or remedy shall be cumulative and in
addition to any other right, power or remedy, whether conferred hereby or
hereafter available at law or in equity or by statute or otherwise.

            Section 13. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.

            Section 14. Effect of Invalidity of Provisions. In case any one or
more of the provisions contained in this Agreement should be or become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall in
no way be affected, prejudiced or disturbed thereby.

            Section 15. 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 rules.

            Section 16. Notices. Any notices, consents, elections, directions
and other communications given under this Agreement shall be in writing and
shall be deemed to have been duly given when telecopied or delivered by
overnight courier to, personally delivered to, or

                                      -22-
<PAGE>

on the third day following the placing thereof in the mail, first class postage
prepaid to, the respective addresses set forth on the cover page hereof for
Seller and Purchaser, or to such other address as either party shall give notice
to the other party pursuant to this Section 16. Notices to Assignee shall be
given to such address as Assignee shall provide to Seller in writing.

            Section 17. Entire Agreement. This Agreement, the Funding
Confirmations and the Custodial Agreement contain the entire agreement between
the parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements between them, oral or written, of any
nature whatsoever with respect to the subject matter hereof.

            Section 18. Costs of Enforcement. In addition to any other indemnity
specified in this Agreement, in the event of a breach by Seller of this
Agreement, the Custodial Agreement or a Takeout Commitment, Seller agrees to pay
the reasonable attorneys' fees and expenses of Purchaser and, when applicable,
Assignee incurred as a consequence of such breach.

            Section 19. Consent to Service. Each party irrevocably consents to
the service of process by registered or certified mail, postage prepaid, to it
at its address given in or pursuant to Section 16.

            Section 20. Construction. The headings in this Agreement are for
convenience only and are not intended to influence its construction. References
to Sections, Exhibits and Annexes in this Agreement are to the Sections of and
Exhibits to this Agreement. The Exhibits are part of this Agreement, and are
incorporated herein by reference. The singular includes the plural, the plural
the singular, and the words "and" and "or" are used in the conjunctive or
disjunctive as the sense and circumstances may require.

                                      -23-
<PAGE>

            IN WITNESS WHEREOF Purchaser and Seller have duly executed this
Agreement as of the date and year set forth on the cover page hereof.


                                   PAINE WEBBER REAL ESTATE
                                      SECURITIES INC.



                                   By: /s/ George A. Mangiaracina
                                       ----------------------------------------
                                       Name:   GEORGE A. MANGIARACINA
                                       Title:  SENIOR VICE PRESIDENT


                                   AMERICAN HOME MORTGAGE
                                      (Seller's Name)



                                   By: /s/ Michael Strauss
                                       ----------------------------------------
                                       Name:    Michael Strauss
                                       Title:   President
                                       Address: (if different from cover page):


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