<PAGE>
                                                                   EXHIBIT 10.22

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                 FLOW MORTGAGE LOAN SALE AND SERVICING AGREEMENT



                                     between



                             BANK OF AMERICA, N.A.,
                           as Seller and as Servicer,





                                       and





                      MORGAN STANLEY MORTGAGE CAPITAL INC.,
                                  as Purchaser






                                 October 1, 2003



                           Residential Mortgage Loans









================================================================================



<PAGE>


                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                               Page
<S>         <C>                                                                                                <C>
SECTION 1.  Definitions...........................................................................................1
SECTION 2.  Purchase and Conveyance..............................................................................13
SECTION 3.  Mortgage Loan Schedule...............................................................................14
SECTION 4.  Purchase Price.......................................................................................14
SECTION 5.  Examination of Mortgage Files........................................................................14
SECTION 6.  Delivery of Mortgage Loan Documents..................................................................15
   Subsection 6.01  Possession of Mortgage Files.................................................................15
   Subsection 6.02  Books and Records............................................................................15
   Subsection 6.03  Delivery of Mortgage Loan Documents..........................................................16
SECTION 7.  Representations, Warranties and Covenants; Remedies for Breach.......................................18
   Subsection 7.01  Representations and Warranties Regarding Individual Mortgage Loans...........................18
   Subsection 7.02  Seller and Servicer Representations..........................................................31
   Subsection 7.03  Remedies for Breach of Representations and Warranties........................................33
SECTION 8.  Closing Conditions...................................................................................35
SECTION 9.  Closing Documents....................................................................................36
SECTION 10.  Costs...............................................................................................36
SECTION 11.  Administration and Servicing of Mortgage Loans......................................................36
   Subsection 11.01  Servicer to Act as Servicer; Subservicing...................................................36
   Subsection 11.02  Liquidation of Mortgage Loans...............................................................39
   Subsection 11.03  Collection of Mortgage Loan Payments........................................................39
   Subsection 11.04  Establishment of Custodial Account; Deposits in Custodial Account...........................39
   Subsection 11.05  Withdrawals From the Custodial Account......................................................41
   Subsection 11.06  Establishment of Escrow Account; Deposits in Escrow Account.................................42
   Subsection 11.07  Withdrawals From Escrow Account.............................................................43
   Subsection 11.08  Payment of Taxes, Insurance and Other Charges; Collections Thereunder.......................43
   Subsection 11.09  Transfer of Accounts........................................................................44
   Subsection 11.10  Maintenance of Hazard Insurance.............................................................44
   Subsection 11.11  Maintenance of Primary Mortgage Insurance Policy; Claims....................................45
   Subsection 11.12  Fidelity Bond; Errors and Omissions Insurance...............................................45
   Subsection 11.13  Title, Management and Disposition of REO Property...........................................46
   Subsection 11.14  Servicing Compensation......................................................................47
   Subsection 11.15  Distributions...............................................................................47
   Subsection 11.16  Statements to the Purchaser.................................................................47
   Subsection 11.17  Advances by the Servicer....................................................................48
   Subsection 11.18  Assumption Agreements.......................................................................49
   Subsection 11.19  Satisfaction of Mortgages and Release of Mortgage Files.....................................49
   Subsection 11.20  Annual Statement as to Compliance...........................................................50
   Subsection 11.21  Annual Independent Public Accountants' Servicing Report.....................................50
   Subsection 11.22  Servicer Shall Provide Access and Information as Reasonably Required........................50
   Subsection 11.23  Inspections.................................................................................50
   Subsection 11.24  Restoration of Mortgaged Property...........................................................51
SECTION 12.  The Servicer........................................................................................51
   Subsection 12.01  Indemnification; Third Party Claims.........................................................51
   Subsection 12.02  Merger or Consolidation of the Servicer.....................................................52
   Subsection 12.03  Limitation on Liability of the Servicer and Others..........................................52
   Subsection 12.04  Seller and Servicer Not to Resign...........................................................52
</Table>


<PAGE>

<Table>
<Caption>
                                                                                                               Page
                                                                                                               ----
<S>         <C>                                                                                                <C>
SECTION 13.  Default.............................................................................................53
   Subsection 13.01  Events of Default...........................................................................53
   Subsection 13.02  Waiver of Default...........................................................................54
SECTION 14.  Termination.........................................................................................54
   Subsection 14.01  Termination.................................................................................54
   Subsection 14.02  Successors to the Servicer..................................................................55
SECTION 15.  Notices.............................................................................................56
SECTION 16.  Severability Clause.................................................................................56
SECTION 17.  No Partnership......................................................................................57
SECTION 18.  Counterparts........................................................................................57
SECTION 19.  Governing Law.......................................................................................57
SECTION 20.  Intention of the Parties............................................................................57
SECTION 21.  Waivers.............................................................................................58
SECTION 22.  Exhibits............................................................................................58
SECTION 23.  General Interpretive Principles.....................................................................58
SECTION 24.  Reproduction of Documents...........................................................................58
SECTION 25.  Amendment...........................................................................................59
SECTION 26.  Confidentiality.....................................................................................59
SECTION 27.  Entire Agreement....................................................................................59
SECTION 28.  Further Agreements; Securitization..................................................................59
SECTION 29.  Successors and Assigns..............................................................................61
SECTION 30.  Non-Solicitation....................................................................................62
SECTION 31.  Protection of Consumer Information..................................................................63
</Table>


                                       ii

<PAGE>



                                    EXHIBITS



EXHIBIT 1         MORTGAGE LOAN DOCUMENTS
EXHIBIT 2         CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 3         [RESERVED]
EXHIBIT 4         FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 5         FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT 6         SELLER'S UNDERWRITING GUIDELINES
EXHIBIT 7         FORM OF LOST NOTE AFFIDAVIT
EXHIBIT 8         FORM OF MONTHLY REMITTANCE REPORT
EXHIBIT 9         FORM OF TERM SHEET
EXHIBIT 10        FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 11        FORM OF OPINION OF COUNSEL TO SELLER
EXHIBIT 12        FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION
                  AGREEMENT
EXHIBIT 13        FORM OF ANNUAL CERTIFICATION


                                      iii
<PAGE>

                 FLOW MORTGAGE LOAN SALE AND SERVICING AGREEMENT

THIS FLOW MORTGAGE LOAN SALE AND SERVICING AGREEMENT (the "Agreement"), dated
October 1, 2003, is hereby executed by and between MORGAN STANLEY MORTGAGE
CAPITAL INC., a New York corporation, as purchaser (the "Purchaser"), and Bank
of America, N.A., a national banking association, as seller (the "Seller") and
as servicer (the "Servicer").


                                   WITNESSETH:

         WHEREAS, the Seller has agreed to sell from time to time to the
Purchaser, and the Purchaser has agreed to purchase from time to time from the
Seller, certain fixed and adjustable rate, residential, first-lien mortgage
loans (the "Mortgage Loans") as described herein on a servicing-retained basis,
and which shall be delivered as whole loans as provided herein; and

         WHEREAS, the Mortgage Loans will be sold by the Seller and purchased by
the Purchaser as pools or groups of whole loans, servicing retained (each, a
"Mortgage Loan Package") on the various Closing Dates as provided herein; and

         WHEREAS, each of the Mortgage Loans will be secured by a mortgage, deed
of trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the related Mortgage Loan
Schedule which will be annexed to a Term Sheet (as defined herein) on the
related Closing Date; and

         WHEREAS, the Purchaser, the Seller and the Servicer wish to prescribe
the manner of the conveyance, servicing and control of the Mortgage Loans; and

         WHEREAS, following its purchase of the Mortgage Loans from the Seller,
the Purchaser desires to sell some or all of the Mortgage Loans to one or more
purchasers as a whole loan transfer or a public or private, rated or unrated
mortgage pass-through transaction.

         NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser, the Seller and the
Servicer agree as follows:

         SECTION 1. Definitions.

         For purposes of this Agreement, the following capitalized terms shall
have the respective meanings set forth below.

         Adjustable Rate Mortgage Loan: A Mortgage Loan purchased pursuant to
this Agreement, the Mortgage Interest Rate of which is adjusted from time to
time in accordance with the terms of the related Mortgage Note.

         Adjustment Date: As to each Adjustable Rate Mortgage Loan, the date on
which the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note and Mortgage.

         Agency Transfer: A Fannie Mae Transfer or a Freddie Mac Transfer.

<PAGE>

         Agreement: This Flow Mortgage Loan Sale and Servicing Agreement
including all exhibits, schedules, amendments and supplements hereto.

         ALTA: The American Land Title Association or any successor thereto.

         Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by a Qualified
Appraiser, and (ii) the purchase price paid for the related Mortgaged Property
by the Mortgagor with the proceeds of the Mortgage Loan; provided, however, that
in the case of a Refinanced Mortgage Loan, such value of the Mortgaged Property
is based solely upon the value determined by an appraisal made for the
originator of such Refinanced Mortgage Loan at the time of origination of such
Refinanced Mortgage Loan by a Qualified Appraiser.

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

         Business Day: Any day other than a Saturday or Sunday, or a day on
which banking and savings and loan institutions in the States of New York,
California or Virginia are authorized or obligated by law or executive order to
be closed.

         Closing Date: The date or dates, set forth in the related Term Sheet,
on which the Purchaser from time to time shall purchase and the Seller from time
to time shall sell the Mortgage Loans identified on the related Mortgage Loan
Schedule therein.

         CLTA: The California Land Title Association or any other successor
thereto.

         Closing Documents: The documents required to be delivered on each
Closing Date pursuant to Section 9.

         Code: The Internal Revenue Code of 1986, as amended, or any successor
statute thereto.

         Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking (whether permanent or temporary) of all or part of a
Mortgaged Property by exercise of the power of condemnation or the right of
eminent domain, to the extent not required to be released to a Mortgagor in
accordance with the terms of the related Mortgage Loan Documents.

         Consumer Information: Information including, but not limited to, all
personal information about the Mortgagors that is supplied to the Seller by or
on behalf of the Mortgagors.

         Conventional Mortgage Loan: Any Mortgage Loan that is not a FHA
Mortgage Loan or VA Mortgage Loan.


                                       2
<PAGE>

         Convertible Mortgage Loan: An Adjustable Rate Mortgage Loan that by its
terms and subject to certain conditions allows the Mortgagor to convert the
adjustable Mortgage Interest Rate thereon to a fixed Mortgage Interest Rate.

         Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.

         Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.

         Cooperative Loan Documents: With respect to any Cooperative Loan, (i)
the Cooperative Shares, together with a stock power in blank; (ii) the original
executed Security Agreement and the assignment of the Security Agreement
endorsed in blank; (iii) the original executed Proprietary Lease and the
assignment of the Proprietary Lease endorsed in blank; (iv) the original
executed Recognition Agreement and the assignment of the Recognition Agreement
(or a blanket assignment of all Recognition Agreements) endorsed in blank; (v)
the executed UCC-1 financing statement with evidence of recording thereon, which
has been filed in all places required to perfect the security interest in the
Cooperative Shares and the Proprietary Lease; and (vi) the Seller's executed
UCC-3 financing statements (or copies thereof) or other appropriate UCC
financing statements required by state law, evidencing a complete and unbroken
chain of title from the mortgagee to the Seller with evidence of recording
thereon (or in a form suitable for recordation).

         Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the Cooperative Shares of the Cooperative Corporation.

         Cooperative Shares: Shares issued by a Cooperative Corporation.

         Cooperative Unit: A single family dwelling located in a Cooperative
Property.

         Custodial Account: As defined in Subsection 11.04.

         Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents. If more than one Custodial Agreement is in effect at
any given time, all of the individual Custodial Agreements shall collectively be
referred to as the "Custodial Agreement."

         Custodian: Deutsche Bank Trust Company Americas, a New York banking
corporation, and its successors in interest, or any successor to the Custodian
under the Custodial Agreement as therein provided.

         Customary Servicing Procedures: Procedures (including collection
procedures) that the Servicer customarily employs and exercises in servicing and
administering mortgage loans for its own account and which are in accordance
with accepted mortgage servicing practices of prudent


                                       3
<PAGE>

lending institutions, the Fannie Mae Guides and, with respect to the
Non-Conventional Mortgage Loans, FHA or VA regulations, as applicable.

         Cut-off Date: With respect to each Mortgage Loan, the first day of the
month of the related Closing Date as set forth in the related Term Sheet.

         Cut-off Date Principal Balance: The aggregate Stated Principal Balance
of the Mortgage Loans, set forth in the related Term Sheet, as of the related
Cut-off Date which is determined after the application, to the reduction of
principal, of payments of principal due on or before the related Cut-off Date,
whether or not collected, and of Principal Prepayments received before the
related Cut-off Date.

         Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with
a Substitute Mortgage Loan in accordance with this Agreement.

         Determination Date: With respect to each Remittance Date, the 15th day
(or, if such 15th day is not a Business Day, the following Business Day) of the
month in which such Remittance Date occurs.

         Due Date: With respect to each Remittance Date, the first day of the
calendar month in which such Remittance Date occurs, which is the day on which
the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

         Due Period: With respect to each Remittance Date and any Mortgage Loan,
the period beginning on the second day of the month preceding such Remittance
Date, and ending on the first day of the month in which such Remittance Date
occurs.

         Eligible Investments: Any one or more of the following obligations or
securities:

(i) direct obligations of, and obligations fully guaranteed by the United States
of America or any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the United
States of America;

(ii) (a) demand or time deposits, federal funds or bankers' acceptances issued
by any depository institution or trust company incorporated under the laws of
the United States of America or any state thereof and subject to supervision and
examination by federal and/or state banking authorities, provided that the
commercial paper and/or the short-term deposit rating and/or the long-term
unsecured debt obligations or deposits of such depository institution or trust
company at the time of such investment or contractual commitment providing for
such investment are rated in one of the two highest rating categories by each
Rating Agency and (b) any other demand or time deposit or certificate of deposit
that is fully insured by the FDIC;

(iii) repurchase obligations with a term not to exceed thirty (30) days and with
respect to (a) any security described in clause (i) above and entered into with
a depository institution or trust company (acting as principal) described in
clause (ii)(a) above;

(iv) securities bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States of America or any state thereof
that are rated in one of the two


                                       4
<PAGE>

highest rating categories by each Rating Agency at the time of such investment
or contractual commitment providing for such investment; provided, however, that
securities issued by any particular corporation will not be Eligible Investments
to the extent that investments therein will cause the then outstanding principal
amount of securities issued by such corporation and held as Eligible Investments
to exceed 10% of the aggregate outstanding principal balances of all of the
Mortgage Loans and Eligible Investments;

(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) which are rated
in one of the two highest rating categories by each Rating Agency at the time of
such investment;

(vi) any other demand, money market or time deposit, obligation, security or
investment as may be acceptable to each Rating Agency as evidenced in writing by
each Rating Agency; and

(vii) any money market funds the collateral of which consists of obligations
fully guaranteed by the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America (which may
include repurchase obligations secured by collateral described in clause (i))
and other securities and which money market funds are rated in one of the two
highest rating categories by each Rating Agency;

provided, however, that no instrument or security shall be an Eligible
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par or if such
investment or security is purchased at a price greater than par.

         Escrow Account: As defined in Subsection 11.06.

         Escrow Payments: The amounts constituting ground rents, taxes,
assessments, Primary Mortgage Insurance Policy premiums, fire and hazard
insurance premiums, flood insurance premiums, condominium charges and other
payments as may be required to be escrowed by the Mortgagor with the Mortgagee
pursuant to the terms of any Mortgage Note or Mortgage.

         Event of Default: Any one of the conditions or circumstances enumerated
in Subsection 13.01.

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

         Fannie Mae Guides: The Fannie Mae Sellers' Guide and the Fannie Mae
Servicers' Guide and all amendments or additions thereto.

         Fannie Mae Transfer: As defined in Section 15.

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


                                       5
<PAGE>

         FHA: The Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto and
including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA regulations.

         FHA Mortgage Loan: A Mortgage Loan that has a MIC issued by HUD/FHA.

         Fidelity Bond: The fidelity bond required to be obtained by the
Servicer pursuant to Subsection 11.12.

         FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989, as amended and in effect from time to time.

         First Remittance Date: With respect to each Mortgage Loan Package, the
18th day (or if such 18th day is not a Business Day, the Business Day
immediately following such 18th day) of the month following the related Closing
Date.

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

         Freddie Mac Guide: The Freddie Mac Single Family Seller/Servicer Guide
and all amendments or additions thereto.

         Freddie Mac Transfer: As defined in Section 15.

         GAAP: Generally accepted accounting principles consistently applied.

         Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in each related Mortgage Note and Mortgage
which amount is added to the Index in order to determine on each Interest Rate
Adjustment Date the related Mortgage Interest Rate.

         HUD: The United States Department of Housing and Urban Development or
any federal agency or official thereof which may from time to time succeed to
the functions thereof with regard to FHA mortgage insurance. The term "HUD," for
purposes of this Agreement, is also deemed to include subdivisions thereof such
as the FHA and Government National Mortgage Association.

         Index: With respect to any Adjustable Rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating interest thereon.

         Initial Rate Cap: As to each Adjustable Rate Mortgage Loan, the maximum
increase or decrease in the Mortgage Interest Rate on the first Adjustment Date
as provided in the related Mortgage Note.


                                       6
<PAGE>

         Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies (including, without limitation, FHA or VA mortgage insurance)
insuring the Mortgage Loan or the related Mortgaged Property.

         Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the related
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.

         LGC: A Loan Guaranty Certificate issued by the VA as a guarantee that
the federal government will repay to the lender a specified percentage of the
loan balance in the event of the borrower's default.

         Lifetime Rate Cap: As to each Adjustable Rate Mortgage Loan, the
maximum Mortgage Interest Rate which shall be as permitted in accordance with
the provisions of the related Mortgage Note. The Mortgage Interest Rate during
the term of each Adjustable Rate Mortgage Loan shall not at any time exceed the
Mortgage Interest Rate at the time of origination of such Adjustable Rate
Mortgage Loan by more than the amount per annum set forth on the related
Mortgage Loan Schedule.

         Liquidation Proceeds: The proceeds received in connection with the
liquidation of a defaulted Mortgage Loan through trustee's sale, foreclosure
sale or otherwise, other than amounts received following the acquisition of REO
Property, Insurance Proceeds and Condemnation Proceeds.

         Loan-to-Value Ratio: With respect to any Mortgage Loan as of any date
of determination, the ratio, expressed as a percentage, the numerator of which
is the outstanding principal balance of such Mortgage Loan and the denominator
of which is the Appraised Value of the related Mortgaged Property.

         LTV: Loan-to-Value Ratio.

         MIC: Mortgage Insurance Certificate issued by HUD/FHA as evidence that
a mortgage has been insured and that a contract of mortgage insurance exists
between HUD/FHA and the lender.

         Monthly Payment: With respect to any Mortgage Loan, the scheduled
payment of principal and interest payable by a Mortgagor under the related
Mortgage Note on each Due Date, which such payment may change on any Adjustment
Date as provided in the related Mortgage Note and Mortgage for any Adjustable
Rate Mortgage Loan.

         Mortgage: With respect to any Mortgage Loan that is not a Cooperative
Loan, the mortgage, deed of trust or other instrument creating a first lien on
the Mortgaged Property securing the Mortgage Note and, with respect to a
Cooperative Loan, the related Security Agreement.

         Mortgage File: With respect to any Mortgage Loan, the items listed in
Exhibit 2 hereto and any additional documents required to be added to the
Mortgage File pursuant to this Agreement.


                                       7
<PAGE>

         Mortgage Interest Rate: With respect to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, including, but not
limited to, the limitations on such interest rate imposed by the Initial Rate
Cap, the Periodic Rate Cap and the Lifetime Rate Cap, if any.

         Mortgage Loan: Each mortgage loan sold, assigned and transferred
pursuant to this Agreement and identified on the applicable Mortgage Loan
Schedule annexed to the related Term Sheet, including, without limitation, the
Mortgage File, the Monthly Payments, Principal Prepayments, Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds,
and all other rights, benefits, proceeds and obligations arising from or in
connection with such mortgage loan.

         Mortgage Loan Documents: With respect to any Mortgage Loan, the
documents listed in Exhibit 1 hereto.

         Mortgage Loan Package: The pool or group of whole loans purchased on a
Closing Date, as described in the Mortgage Loan Schedule annexed to the related
Term Sheet.

         Mortgage Loan Remittance Rate: With respect to any Mortgage Loan, the
annual rate of interest payable to the Purchaser, which shall be equal to the
related Mortgage Interest Rate minus the related Servicing Fee Rate.

         Mortgage Loan Schedule: With respect to each Mortgage Loan Package, the
schedule of Mortgage Loans annexed to the related Term Sheet (and delivered in
electronic format to the Purchaser), such schedule as setting forth the
following information with respect to each Mortgage Loan: (1) the Servicer's
Mortgage Loan identifying number; (2) a code indicating whether the Mortgaged
Property is owner-occupied, a second home or an investment property; (3) the
property type for each Mortgaged Property (e.g. single family residence, a two-
to four-family dwelling, condominium, planned unit development or cooperative)
(4) the original months to maturity and the remaining months to maturity from
the related Cut-off Date; (5) the Loan-to-Value Ratio at origination; (6) the
Mortgage Interest Rate as of the related Cut-off Date; (7) the date on which the
first Monthly Payment was due on the Mortgage Loan, and, if such date is not the
Due Date currently in effect, such Due Date; (8) the stated maturity date; (9)
the amount of the Monthly Payment as of the Cut-off Date; (10) the paid-through
date; (11) the original principal amount of the Mortgage Loan; (12) the Stated
Principal Balance of the Mortgage Loan as of the close of business on the
related Cut-off Date; (13) the Mortgage Loan Remittance Rate as of the Cut-off
Date; (14) a code indicating the purpose of the Mortgage Loan; (15) a code
indicating the documentation style; (16) the Appraised Value; (17) the identity
of the Seller; (18) the Mortgagor's name (19) the street address of the
Mortgaged Property, including the city, state and zip code; (20) the number of
times during the twelve (12) month period preceding the Closing Date that any
Monthly Payment has been received more than thirty (30) days after its Due Date;
(21) a code indicating whether or not the Mortgage Loan is subject to a Primary
Mortgage Insurance Policy; (22) the date on which the Mortgage Loan was
originated; (23) a code indicating whether the Mortgage contains a prepayment
penalty provision together with the type and term of such penalty; (24) a code
indicating the FICO score of the Mortgagor at the time of origination; (25) the
type of Mortgage Loan (i.e. fixed rate, adjustable rate); (26) with respect to
each Adjustable Rate Mortgage Loan, the Gross Margin; (27) with


                                       8
<PAGE>

respect to each Adjustable Rate Mortgage Loan, the Lifetime Rate Cap; (28) with
respect to each Adjustable Rate Mortgage Loan, the Periodic Rate Cap; (29) with
respect to each Adjustable Rate Mortgage Loan, the Initial Rate Cap; (30) with
respect to each Adjustable Rate Mortgage Loan, the Adjustment Date; (31) with
respect to each Adjustable Rate Mortgage Loan, a code indicating the type of
Index; (32) in connection with a condominium unit, a code indicating whether the
condominium project where such unit is located is low-rise or high-rise; (33) a
code indicating whether such Mortgage is insured by the FHA or guaranteed by the
VA; and (34) with respect to any Non-Conventional Mortgage Loan, the related VA
entitlement percentage or FHA case number, as applicable. With respect to the
Mortgage Loans on the Mortgage Loan Schedule in the aggregate, the related
Mortgage Loan Schedule shall set forth the following information, as of the
related Cut-off Date: (i) the number of Mortgage Loans; (ii) the Cut-off Date
Principal Balance; (iii) the weighted average Mortgage Interest Rate of the
Mortgage Loans; (iv) the weighted average months to maturity of the Mortgage
Loans; (v) with respect to each Adjustable Rate Mortgage Loan, the weighted
average Lifetime Rate Cap; and (vi) with respect to each Adjustable Rate
Mortgage Loan, the weighted average Gross Margin.

         Mortgage Note: The original executed note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor including any riders or addenda
thereto.

         Mortgaged Property: With respect to each Mortgage Loan that is not a
Cooperative Loan, the Mortgagor's real property securing repayment of a related
Mortgage Note, consisting of an unsubordinated estate in fee simple or, with
respect to real property located in jurisdictions in which the use of leasehold
estates for residential properties is a widely-accepted practice, a leasehold
estate, in a single parcel or multiple parcels of real property improved by a
Residential Dwelling. With respect to each Cooperative Loan, the Cooperative
Shares allocated to a Cooperative Unit in the related Cooperative Corporation
that were pledged to secure such Cooperative Loan and the related Proprietary
Lease.

         Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.

         Mortgagor: The obligor on a Mortgage Note, who is an owner of the
Mortgaged Property and the grantor or mortgagor named in the Mortgage and such
grantor's or mortgagor's successors in title to the Mortgaged Property.

         NAIC: The National Association of Insurance Commissioners or any
successor organization.

         Non-Conventional Mortgage Loans: The FHA Mortgage Loans and the VA
Mortgage Loans.

         OCC: The Office of the Comptroller of the Currency or any successor.

         Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, a President or a Vice President of the
Person on behalf of whom such certificate is being delivered.


                                       9
<PAGE>

         Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Seller or the Servicer, reasonably acceptable to the Purchaser.

         OTS: The Office of Thrift Supervision or any successor.

         P&I Advance: As defined in Subsection 11.17.

         Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan, the
maximum increase or decrease in the Mortgage Interest Rate, on any Adjustment
Date as provided in the related Mortgage Note.

         Person: An 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 Penalty: With respect to each Mortgage Loan, the penalty if
the Mortgagor prepays such Mortgage Loan as provided in the related Mortgage
Note or Mortgage.

         Primary Mortgage Insurance Policy: A policy of primary mortgage
guaranty insurance issued by an insurer acceptable to Fannie Mae or Freddie Mac
and qualified to do business in the jurisdiction where the Mortgaged Property is
located.

         Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date that is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.

         Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.

         Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Seller pursuant to this Agreement in exchange for the Mortgage
Loans included in the related Mortgage Loan Package, as calculated pursuant to
Section 4 and the related Term Sheet.

         Purchase Price Percentage: For each Mortgage Loan included in a
Mortgage Loan Package, the percentage of par set forth in the related Term Sheet
that is used to calculate the Purchase Price of the Mortgage Loans included in
such Mortgage Loan Package.

         Purchaser: The Person listed as such in the initial paragraph of this
Agreement, together with its successors and assigns as permitted under the terms
of this Agreement.

         Qualification Defect: With respect to a Mortgage Loan, (a) a defective
document in the Mortgage File, (b) the absence of a document in the Mortgage
File, or (c) the breach of any representation, warranty or covenant with respect
to the Mortgage Loan made by the Seller or the Servicer, but, in each case, only
if the affected Mortgage Loan would cease to qualify as a "qualified mortgage"
for purposes of the REMIC Provisions.


                                       10
<PAGE>

         Qualified Appraiser: An appraiser of a Mortgaged Property duly
appointed by the originator of the related Mortgage Loan, who had no interest,
direct or indirect, in such Mortgaged Property or in any loan made on the
security thereof, whose compensation is not affected by the approval or
disapproval of the related Mortgage Loan and who met the qualifications of
Fannie Mae or Freddie Mac and satisfied the requirements of Title XI of FIRREA
and the regulations promulgated thereunder, all in effect on the date the
Mortgage Loan was originated.

         Rating Agency: Moody's Investors Service, Inc., Standard & Poor's
Ratings Service, a Division of The McGraw-Hill Companies, Inc., Fitch, Inc. or
any other nationally recognized statistical credit rating agency.

         Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the related Cooperative Corporation and the originator of such
Mortgage Loan to establish the rights of such originator in the related
Cooperative Property.

         Reconstitution Agreement: As defined in Section 15.

         Record Date: The close of business of the last Business Day of the
month preceding the month of the related Remittance Date.

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

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

         Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following such 18th day) of any month,
beginning with the First Remittance Date.

         REO Disposition: The final sale by the Servicer or the Purchaser of an
REO Property.

         REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Subsection 11.13.

         REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed in lieu of foreclosure, as described in Subsection 11.13.

         Repurchase Price: With respect to any Mortgage Loan, an amount equal to
(A) the Stated Principal Balance of such Mortgage Loan as of the date of
repurchase plus (B) accrued interest on such Stated Principal Balance at the
Mortgage Loan Remittance Rate from and including the last Due Date through which
interest has been paid on behalf of the Mortgagor or advanced by the Servicer to
the day prior to such date of repurchase, less amounts received in respect of
such repurchased Mortgage Loan for distribution in connection with such Mortgage
Loan; provided, however, that if at the time of repurchase the Servicer is not
the Seller or an affiliate of the


                                       11
<PAGE>

Seller, the amount described in clause (B) shall be computed at the sum of (i)
the Mortgage Loan Remittance Rate and (ii) the Servicing Fee Rate.

         Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a condominium project or (iv) a one-family dwelling
in a planned unit development, none of which is a Cooperative Property (except
as set forth in the related Term Sheet), mobile home or manufactured home.

         Securities: The securities issued in connection with a Securitization
evidencing beneficial ownership interests in a trust the assets of which include
the Mortgage Loans.

         Securitization: The transfer of the Mortgage Loans to a trust formed as
part of a publicly issued and/or privately placed, rated securitization,
including the issuance of the related Securities.

         Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note that defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.

         Seller: Bank of America, N.A., a national banking association, or its
successor in interest or any successor to the Seller under this Agreement
appointed as herein provided.

         Servicer: Bank of America, N.A., a national banking association, or its
successor in interest or any successor to the Servicer under this Agreement
appointed as herein provided.

         Servicing Advances: All customary, reasonable and necessary
out-of-pocket costs and expenses incurred in the performance by the Servicer of
its servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of the Mortgaged Property if the Mortgaged Property is acquired
in satisfaction of the Mortgage, and (d) payments made by the Servicer with
respect to a Mortgaged Property pursuant to Subsection 11.08.

         Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Servicer, which shall, for each month,
be equal to one-twelfth of the product of the applicable Servicing Fee Rate and
the Stated Principal Balance of such Mortgage Loan. Such fee shall be payable
monthly, computed on the basis of the same principal amount and period
respecting which any related interest payment on a Mortgage Loan is computed,
and, solely in connection with any servicing transfer, shall be pro rated (based
upon the number of days of the related month the Servicer so acted as Servicer
relative to the number of days in that month) for each part thereof. The
obligation of the Purchaser to pay the Servicing Fee is limited to, and payable
solely from, the interest portion (including recoveries with respect to interest
from Liquidation Proceeds and other proceeds, to the extent permitted by
Subsection 11.05) of related Monthly Payments collected by the Servicer, or as
otherwise provided under Subsection 11.05.


                                       12
<PAGE>

         Servicing Fee Rate: With respect to each Mortgage Loan, the per annum
rate set forth on the related Mortgage Loan Schedule or if not specified
thereon, in the related Term Sheet.

         Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished to the Purchaser by the
Servicer, as such list may be amended from time to time.

         Stated Principal Balance: As to each Mortgage Loan as to any date of
determination, (i) the principal balance of the Mortgage Loan at the related
Cut-off Date after giving effect to the principal portion of any Monthly
Payments due on or before such date, whether or not received, as well as any
Principal Prepayments received before such date, minus (ii) all amounts
previously distributed to the Purchaser with respect to the Mortgage Loan
representing payments or recoveries of principal, or advances in lieu thereof.

         Substitute Mortgage Loan: A mortgage loan substituted by the Seller for
a Deleted Mortgage Loan which must, on the date of such substitution, be
approved by the Purchaser and (i) have an outstanding principal balance, after
deduction of the principal portion of the Monthly Payment due in the month of
substitution, not in excess of, and not materially greater or less than, the
outstanding principal balance of the Deleted Mortgage Loan; (ii) have a Mortgage
Interest Rate equal to that of the Deleted Mortgage Loan; (iii) have a
Loan-to-Value Ratio not higher than that of the Deleted Mortgage Loan; (iv) have
a remaining term to maturity not greater than (and not more than one year less
than) that of the Deleted Mortgage Loan; (v) comply with each representation and
warranty set forth in Subsection 7.01; (vi) be current in the payment of
principal and interest; (vii) be secured by a Mortgaged Property of the same
type and occupancy status as secured the Deleted Mortgage Loan; and (viii) have
payment terms that do not vary in any material respect from those of the Deleted
Mortgage Loan.

         Term Sheet: With respect to each Mortgage Loan and Mortgage Loan
Package, the Term Sheet, substantially in the form of Exhibit 9 attached hereto,
confirming the sale by Seller and the purchase by the Purchaser of the Mortgage
Loan Package on the related Closing Date.

         Underwriting Guidelines: The underwriting guidelines of the Seller
attached hereto as Exhibit 6, as may be updated and incorporated into Exhibit 6
from time to time by providing such updates to the Purchaser; provided, however,
any such updates shall apply only to the Mortgage Loans in the Mortgage Loan
Packages which are subject to purchases and sales occurring after such update.

         VA: The Department of Veterans Affairs, an agency of the United States
of America, or any successor thereto, including the Administrator of Veterans
Affairs.

         VA Mortgage Loan: A Mortgage Loan that has a LGC issued by the VA.

         SECTION 2. Purchase and Conveyance.

         The Seller, in exchange for the payment of the applicable Purchase
Price by the Purchaser on the related Closing Date, receipt of which is hereby
acknowledged, hereby sells, transfers, assigns, sets over and conveys to the
Purchaser, without recourse, but subject to the


                                       13
<PAGE>

terms of this Agreement, all of its rights, title and interest in and to the
Mortgage Loans in a Mortgage Loan Package having an aggregate principal balance
on the related Cut-off Date in an amount as set forth in the related Term Sheet,
or in such other amount as agreed by the Purchaser and the Seller as evidenced
by the actual aggregate principal balance of the Mortgage Loan Package accepted
by the Purchaser on the related Closing Date, together with the related Mortgage
Files and all rights and obligations arising under the documents contained
therein.

         With respect to each Mortgage Loan purchased, the Purchaser shall own
and be entitled to receive: (a) all scheduled principal due after the applicable
Cut-off Date, (b) all other payments and/or recoveries of principal collected on
or after the applicable Cut-off Date (provided, however, that all scheduled
payments of principal due on or before the applicable Cut-off Date and collected
by the Servicer after the applicable Cut-off Date shall belong to the Seller)
and (c) all payments of interest on the Mortgage Loans net of the Servicing Fee
(minus that portion of any such interest payment that is allocable to the period
prior to the applicable Cut-off Date).

         For the purposes of this Agreement, payments of scheduled principal and
interest prepaid for a Due Date beyond the related Cut-off Date shall not be
applied to reduce the Stated Principal Balance as of the related Cut-off Date.
Such prepaid amounts (minus the applicable Servicing Fee) shall be the property
of the Purchaser. The Seller shall remit to the Servicer for deposit any such
prepaid amounts into the Custodial Account, which account is established for the
benefit of the Purchaser, for remittance by the Servicer to the Purchaser on the
appropriate Remittance Date. All payments of principal and interest, less the
applicable Servicing Fee, due on a Due Date following the related Cut-off Date
shall belong to the Purchaser.

         SECTION 3. Mortgage Loan Schedule.

         The Seller shall deliver or cause to be delivered to the Purchaser at
least two (2) Business Days prior to the related Closing Date (a) the Mortgage
Loan Schedule (which will be annexed to the related Term Sheet) and (b) to the
extent necessary because of undelivered updates thereto, the Underwriting
Guidelines applicable with respect thereto.

         SECTION 4. Purchase Price.

         The Purchase Price for each Mortgage Loan Package shall be the Purchase
Price Percentage multiplied by an amount equal to the Cut-off Date Principal
Balance of the Mortgage Loans in such Mortgage Loan Package, or as otherwise
calculated pursuant to the related Term Sheet, plus accrued interest on the
Stated Principal Balance of each Mortgage Loan at the weighted average Mortgage
Loan Remittance Rate from the related Cut-off Date through the day immediately
prior to the related Closing Date, inclusive. Such payment shall be made to the
account designated by the Seller by wire transfer of immediately available funds
by 4:00 p.m. Eastern Standard Time on the related Closing Date.

         SECTION 5. Examination of Mortgage Files.

         At least ten (10) Business Days prior to the related Closing Date, the
Seller shall either (a) deliver to the Purchaser or its designee in escrow, for
examination with respect to each


                                       14
<PAGE>

Mortgage Loan to be purchased, the related Mortgage File, including a copy of
the Assignment of Mortgage, pertaining to each Mortgage Loan, or (b) make the
related Mortgage File available to the Purchaser for examination at such other
location as shall otherwise be acceptable to the Purchaser. Such examination may
be made by the Purchaser or its designee, at its expense, at any reasonable time
before the related Closing Date. Such underwriting by the Purchaser or its
designee shall not impair or diminish the rights of the Purchaser or any of its
successors under this Agreement with respect to a breach of the representations
and warranties contained in this Agreement. If the Purchaser makes such
examination prior to the related Closing Date and determines, in its sole
discretion, that any Mortgage Loans do not conform to any of the requirements
set forth in this Agreement or the applicable Term Sheet, or as an Exhibit
annexed thereto, the Purchaser may delete such Mortgage Loans from the related
Mortgage Loan Schedule, and such Deleted Mortgage Loan (or Deleted Mortgage
Loans) may be replaced by a Substitute Mortgage Loan (or Substitute Mortgage
Loans) acceptable to the Purchaser. The Purchaser may, at its option and without
notice to the Seller, purchase some or all of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Purchaser or
its designee has conducted or has failed to conduct any partial or complete
examination of the Mortgage Files shall not affect the Purchaser's or any of its
successors' rights to demand repurchase or other relief or remedy provided for
in this Agreement.

         SECTION 6. Delivery of Mortgage Loan Documents.

         Subsection 6.01 Possession of Mortgage Files.

         The contents of each Mortgage File required to be retained by the
Servicer to service the Mortgage Loans pursuant to this Agreement and thus not
delivered to the Purchaser or its designee are and shall be held in trust by the
Servicer for the benefit of the Purchaser as the owner thereof. The Servicer's
possession of any portion of each such Mortgage File is at the will of the
Purchaser for the sole purpose of facilitating servicing of the Mortgage Loans
pursuant to this Agreement, and such retention and possession by the Servicer
shall be in a custodial capacity only. The ownership of each Mortgage Note,
Mortgage and the contents of each Mortgage File is vested in the Purchaser and
the ownership of all records and documents with respect to the related Mortgage
Loan prepared by or which come into the possession of the Servicer shall
immediately vest in the Purchaser and shall be retained and maintained, in
trust, by the Servicer at the will of the Purchaser in such custodial capacity
only. The Mortgage File retained by the Servicer with respect to each Mortgage
Loan pursuant to this Agreement shall be appropriately identified in the
Servicer's computer system to reflect clearly the ownership of such related
Mortgage Loan by the Purchaser. The Servicer shall release from its custody the
contents of any Mortgage File retained by it only in accordance with this
Agreement, except when such release is required in connection with a repurchase
of any such Mortgage Loan pursuant to Subsection 7.03 of this Agreement or if
required under applicable law or court order. The Servicer shall deliver to the
Purchaser copies of any documents in a Mortgage File reasonably requested by the
Purchaser within thirty (30) days after the date of such request, at the expense
of the Purchaser.

         Subsection 6.02 Books and Records.

         All rights arising out of the Mortgage Loans including, but not limited
to, all funds received by the Servicer after the related Cut-off Date on or in
connection with a Mortgage Loan


                                       15
<PAGE>

as provided in Section 2 shall be vested in the Purchaser; provided, however,
that all such funds received on or in connection with a Mortgage Loan as
provided in Section 2 shall be received and held by the Servicer in trust for
the benefit of the Purchaser as the owner of the Mortgage Loans pursuant to the
terms of this Agreement.

         As more fully set forth in Section 20, it is the express intention of
the parties that the transactions contemplated by this Agreement be, and be
construed as, a sale of the related Mortgage Loans by the Seller and not a
pledge of the Mortgage Loans by the Seller to the Purchaser to secure a debt or
other obligation of the Seller. Consequently, the sale of each Mortgage Loan
shall be reflected as a purchase on the Purchaser's business records, tax
returns and financial statements, and as a sale of assets on the Seller's
business records, tax returns and financial statements.

         Subsection 6.03 Delivery of Mortgage Loan Documents.

         With respect to each Mortgage Loan, the Seller shall deliver and
release to the Purchaser, or its designee, under a bailee letter, (a) at least
two (2) Business Days prior to the related Closing Date (or such later date as
the Purchaser may reasonably request), the original Mortgage Note endorsed in
blank and the original Assignment of Mortgage assigned in blank and (b) the
other Mortgage Loan Documents within a reasonable time following the related
Closing Date. To the extent that any such Mortgage Loan Documents have been
delivered for recording and have not yet been returned to the Seller by the
applicable recording office, the Seller shall, promptly following receipt by it
of such Mortgage Loan Documents from the applicable recording office, deliver
such documents to the Purchaser or its designee; provided, however, that the
original recorded document or a clerk-certified copy thereof shall be delivered
to the Purchaser no later than one year following the related Closing Date,
subject to the following paragraph.

         In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
the Purchaser or its designee within one year following the related Closing
Date, and in the event that the Seller does not cure such failure within sixty
(60) days after receipt of written notification of such failure from the
Purchaser, the related Mortgage Loan shall, upon the request of the Purchaser,
be repurchased by the Seller at a price and in the manner specified in
Subsection 7.03. The foregoing repurchase obligation shall not apply in the
event the Seller cannot cause the Servicer to deliver such original or
clerk-certified copy of any document submitted for recordation to the
appropriate public recording office within the specified period due to a delay
caused by the recording office in the applicable jurisdiction; provided that the
Seller shall cause the Servicer instead to deliver a recording receipt of such
recording office or, if such recording receipt is not available, an Officer's
Certificate of a servicing officer of the Servicer, confirming that such
document has been accepted for recording and that the Servicer shall immediately
deliver such document upon receipt; and, provided further, that if the Seller
cannot cause the Servicer to deliver such original or clerk-certified copy of
any document submitted for recordation to the appropriate public recording
office within the specified time for any reason within twelve (12) months after
receipt of written notification of such failure from the Purchaser, the Seller
shall repurchase the related Mortgage Loan at the price and in the manner
specified in Subsection 7.03.


                                       16
<PAGE>

         To the extent received by it, the Servicer shall promptly forward to
the Purchaser, or its designee, original documents evidencing an assumption,
modification, consolidation or extension of any Mortgage Loan entered into in
accordance with this Agreement.

         Within ninety (90) days after the related Closing Date, the Seller
shall, or shall cause the Servicer to, with respect to the Non-Conventional
Mortgage Loans, deliver to the Purchaser or its designee the original MIC or
LGC, or an Officer's Certificate, which shall (i) state that the MIC or LGC has
not been delivered to the Purchaser or its designee due solely to a delay by the
insuring agency, (ii) state the amount of time generally required by the
insuring agency to process the MIC or LGC and (iii) specify the date the MIC or
LGC will be delivered to the Purchaser or its designee. The Seller shall be
required to deliver the MIC or LGC to the Purchaser or its designee by the date
specified in clause (iii) above.

         If the Seller, the Purchaser or the Custodian finds any document or
documents constituting a part of a Mortgage File pertaining to a Mortgage Loan
to be defective (or missing) in any material respect, and such defect or missing
document materially and adversely affects the value of the related Mortgage Loan
or the interests of the Purchaser therein, the party discovering such defect
shall promptly so notify the Seller. The Seller shall have a period of ninety
(90) days after receipt of such written notice within which to correct or cure
any such defect. The Seller hereby covenants and agrees that, if any material
defect cannot be corrected or cured and materially and adversely affects the
value of the related Mortgage Loan or the interests of the Purchaser, the Seller
will, upon the expiration of the applicable cure period described above,
repurchase the related Mortgage Loan in the manner set forth in Subsection 7.03;
provided, however, that with respect to any Mortgage Loan, if such defect
constitutes a Qualification Defect, any such repurchase must take place within
seventy-five (75) days of the date such defect is discovered; provided, further,
that the foregoing repurchase obligation shall not apply in the event the Seller
cannot deliver such items due to a delay caused by the recording office in the
applicable jurisdiction; and provided, further, that the Seller shall deliver
instead a recording receipt of such recording office or, if such recording
receipt is not available, an Officer's Certificate from the Seller confirming
that such documents have been accepted for recording. Any such document shall be
delivered to the Purchaser or its designee promptly upon receipt thereof from
the related recording office.

         Notwithstanding the foregoing, with respect to a Mortgage Loan, if, at
the end of such 90-day period, the Seller delivers an Officer's Certificate to
the Purchaser certifying that the Seller is using good faith efforts to correct
or cure such defect and identifying progress made, then the Purchaser shall
grant the Seller an extension to correct or cure such defect. The extension
shall not extend beyond (1) if the defect is a Qualification Defect, the date
that is seventy-five (75) days after the date the defect is discovered, or, (2)
if the defect is not a Qualification Defect, the date that is thirty (30) days
beyond the original 90-day cure period. If the defect is not a Qualification
Defect, additional 30-day extensions may be obtained pursuant to the same
procedure, as long as the Seller demonstrates continued progress toward a
correction or cure; provided that no extension shall be granted beyond one
hundred eighty (180) days from the date on which the Seller received the
original notice of the defect.

         Notwithstanding the foregoing, with respect to a Mortgage Loan, the
failure of the Purchaser to notify the Seller of any defective or missing
document in a Mortgage File within


                                       17
<PAGE>

such 90-day period, or the failure of the Purchaser to require the Seller to
cure or repurchase the related Mortgage Loan upon expiration of such 90-day
period, shall not constitute a waiver of its rights hereunder, including the
rights with respect to a Mortgage Loan, to require the Seller to repurchase the
affected Mortgage Loan and the right to indemnification pursuant to Subsection
7.03 hereof.

         Notwithstanding the foregoing, to the extent that the Custodian
certifies as to any document as being delivered to it pursuant to the Custodial
Agreement in a non-defective state and such document subsequently becomes
missing or defective, the Seller shall not be obligated to repurchase the
related Mortgage Loan by reason of such missing or defective document, to
redeliver such document to the Custodian or to correct any such defect.

         All initial recording fees, if any, for the Assignments of Mortgage and
any other fees or costs in transferring all original documents to the Custodian
or, upon written request of the Purchaser, to the Purchaser or the Purchaser's
designee shall be paid by the Purchaser in accordance with the provisions of
Section 10 hereof.

         SECTION 7. Representations, Warranties and Covenants; Remedies for
Breach.

         Subsection 7.01 Representations and Warranties Regarding Individual
         Mortgage Loans.

         The Seller and, solely if specified below, the Servicer, hereby
represent and warrant to the Purchaser that, except as otherwise set forth in
the PPTA (as defined below), if any, or any Exhibit or Schedule thereto, as to
each Mortgage Loan, as of the related Closing Date or such other date specified
herein:

                  (a) The information set forth in the Mortgage Loan Schedule
         annexed to the related Term Sheet and the information contained in the
         related electronic data file delivered by the Seller to the Purchaser
         is true, correct and complete in all material respects.

                  (b) There are no defaults by the Seller, the Servicer or any
         prior originator in complying with the terms of the Mortgage, and all
         taxes, ground rents, governmental assessments, insurance premiums,
         leasehold payments, water, sewer and municipal charges which previously
         became due and owing have been paid, or escrow funds have been
         established in an amount sufficient to pay for every such escrowed item
         which remains unpaid and which has been assessed but is not yet due and
         payable. The Seller has not advanced funds, or induced, solicited or
         knowingly received any advance of funds by a party other than the
         Mortgagor, directly or indirectly, for the payment of any amount
         required under the Mortgage Loan, except for interest accruing from the
         date of the Mortgage Note or date of disbursement of the Mortgage Loan
         proceeds, whichever is earlier, to the day which precedes by one month
         the related Due Date of the first installment of principal and
         interest.

                  (c) 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 have been recorded in the applicable public
         recording office required by law or if necessary to maintain the lien
         priority of the Mortgage, and which have been delivered to


                                       18
<PAGE>

         the Purchaser or such other Person as the Purchaser has designated in
         writing; the substance of any such waiver, alteration or modification
         has been approved by the insurer under the Primary Mortgage Insurance
         Policy, if any, by the title insurer, to the extent required by the
         related policy, with respect to the Non-Conventional Mortgage Loans,
         FHA or VA, as applicable, and is reflected on the related Mortgage Loan
         Schedule. No other instrument of waiver, alteration or modification has
         been executed, and no Mortgagor has been released, in whole or in part,
         except in connection with an assumption agreement approved by the
         insurer under the Primary Mortgage Insurance Policy, if any, by the
         title insurer, to the extent required by the policy, with respect to
         the Non-Conventional Mortgage Loans, FHA or VA, as applicable, and
         which assumption agreement is a part of the Mortgage File and is
         reflected on the related Mortgage Loan Schedule.

                  (d) The Mortgage Note and the Mortgage are not subject to any
         right of rescission, set-off, counterclaim or defense, including,
         without limitation, 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 either the Mortgage Note or the Mortgage
         unenforceable, in whole or in part, or subject to any right of
         rescission, set-off, counterclaim or defense, including, without
         limitation, the defense of usury, and no such right of rescission,
         set-off, counterclaim or defense has been asserted with respect
         thereto; and the Mortgagor was not a debtor in any state or federal
         bankruptcy or insolvency proceeding at the time the Mortgage Loan was
         originated.

                  (e) All buildings or other customarily insured improvements
         upon the Mortgaged Property are insured by an insurer generally
         acceptable to, with respect to the Conventional Mortgage Loans, Fannie
         Mae and to prudent mortgage lending institutions, and with respect to
         the Non-Conventional Mortgage Loans, FHA, VA, Fannie Mae or prudent
         mortgage lending institutions, as applicable, against loss by fire,
         hazards of extended coverage and such other hazards as are provided for
         in the Fannie Mae Guides as well as all additional requirements set
         forth herein, pursuant to an insurance policy conforming to the
         requirements of Customary Servicing Procedures and providing coverage
         in an amount equal to the lesser of (i) the full insurable value of the
         Mortgaged Property or (ii) the outstanding principal balance owing on
         the Mortgage Loan. All such insurance policies are in full force and
         effect and contain a standard mortgagee clause naming the originator of
         the Mortgage Loan, its successors and assigns as mortgagee and all
         premiums thereon have been paid. If the Mortgaged Property is in an
         area identified on a flood hazard map or flood insurance rate map
         issued by the Federal Emergency Management Agency as having special
         flood hazards (and such flood insurance has been made available), a
         flood insurance policy meeting the requirements of the current
         guidelines of the Federal Insurance Administration is in effect which
         policy conforms to the requirements of Fannie Mae or Freddie Mac. The
         Mortgage obligates the Mortgagor thereunder to maintain all such
         insurance at the 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 the Mortgagor's cost and expense and to seek
         reimbursement therefor from the Mortgagor. Where required by state law
         or regulation, the Mortgagor has been given an opportunity to choose
         the carrier of the required hazard insurance, provided the policy is
         not a "master" or "blanket" hazard insurance policy covering a
         condominium, or any


                                       19
<PAGE>

         hazard insurance policy covering the common facilities of a planned
         unit development. The hazard insurance policy is the valid and binding
         obligation of the insurer, is in full force and effect, and will be in
         full force and effect and inure to the benefit of the Purchaser upon
         the consummation of the transactions contemplated by this Agreement.
         The Seller has not engaged in, and has no knowledge of the Mortgagor's
         having engaged in, any act or omission which would impair the coverage
         of any such policy, the benefits of the endorsement provided for
         herein, or the validity and binding effect of either including, without
         limitation, no unlawful fee, commission, kickback or other unlawful
         compensation or value of any kind has been or will be received,
         retained or realized by any attorney, firm or other person or entity,
         and no such unlawful items have been received, retained or realized by
         the Seller.

                  (f) Any and all requirements of any federal, state or local
         law including, without limitation, usury, truth in lending, real estate
         settlement procedures, consumer credit protection, predatory or abusive
         lending, equal credit opportunity, fair housing or disclosure laws
         applicable to the origination and servicing of the Mortgage Loans,
         including, without limitation, any provisions relating to Prepayment
         Penalties, have been complied with; the consummation of the
         transactions contemplated hereby will not involve the violation of any
         such laws or regulations; the Servicer maintains, and shall maintain,
         evidence of such compliance as required by applicable law or regulation
         and shall make such evidence available for inspection at the Servicer's
         office during normal business hours upon reasonable advance notice.

                  (g) The Mortgage has not been satisfied, canceled,
         subordinated or rescinded, in whole or in part (other than as to
         Principal Prepayments in full which may have been received on or after
         the related Cut-off Date and prior to the related Closing Date), 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 satisfaction, cancellation, subordination,
         rescission or release. Neither the Seller nor the Servicer has waived
         the performance by the Mortgagor of any action, if the Mortgagor's
         failure to perform such action would cause the Mortgage Loan to be in
         default, and neither the Seller nor the Servicer has waived any default
         of the Mortgagor.

                  (h) With respect to a Mortgage Loan that is not secured by an
         interest in a leasehold estate, the Mortgaged Property is a fee simple
         estate that consists of a single parcel of real property with a
         detached single family residence erected thereon, or a two- to
         four-family dwelling, or an individual residential condominium unit in
         a condominium project, or an individual unit in a planned unit
         development, or an individual unit in a residential cooperative housing
         corporation; provided, however, that any condominium unit, planned unit
         development or residential cooperative housing corporation shall
         conform with the Underwriting Guidelines. At the date of origination of
         the related Mortgage Loan, no portion of the related Mortgaged Property
         was used for commercial purposes, and, to the Seller's knowledge, since
         the date of origination of such Mortgage Loan, no portion of the
         related Mortgaged Property has been used for commercial purposes;
         provided, that Mortgaged Properties which contain a home office shall
         not be considered as being used for commercial purposes as long as the
         Mortgaged Property has not been altered for commercial purposes and is
         not storing any chemicals or raw


                                       20
<PAGE>

         materials other than those commonly used for homeowner repair,
         maintenance and/or household purposes. None of the Mortgaged Properties
         are manufactured homes, log homes, mobile homes, geodesic domes or
         other unique property types.

                  (i) The Mortgage is a valid, existing, perfected and
         enforceable first lien on the Mortgaged Property, including all
         improvements on the Mortgaged Property, free and clear of all adverse
         claims, liens and encumbrances having priority over the lien of the
         Mortgage, subject only to (i) the lien of current real property taxes
         and assessments not yet due and payable, (ii) 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 either (A) specifically referred to in the
         lender's title insurance policy delivered to the originator of the
         Mortgage Loan or (B) which do not adversely affect the Appraised Value
         of the Mortgaged Property and (iii) other matters to which like
         properties are commonly subject which do not individually or in the
         aggregate materially interfere with the benefits of the security
         intended to be provided by the Mortgage or the use, enjoyment, value or
         marketability of the related Mortgaged Property. Any security
         agreement, chattel mortgage or equivalent document related to and
         delivered in connection with the Mortgage Loan establishes and creates
         a valid, existing and enforceable first lien and first priority
         security interest on the property described therein and the Seller has
         the full right to sell and assign the same to the Purchaser. With
         respect to any Cooperative Loan, the Security Agreement is a valid,
         subsisting and enforceable first priority security interest on the
         related Cooperative Shares securing the Mortgage Note, subject only to
         (a) liens of the related residential Cooperative Corporation for unpaid
         assessments representing the Mortgagor's pro rata share of the related
         residential Cooperative Corporation'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 interest intended to be provided by such Security
         Agreement.

                  (j) The Mortgage Note, the related Mortgage and, in the case
         of a Cooperative Loan, the related Security Agreement, are original and
         genuine and each is the legal, valid and binding obligation of the
         maker thereof, enforceable in all respects in accordance with its terms
         except as enforceability may be limited by (i) bankruptcy, insolvency,
         liquidation, receivership, moratorium, reorganization or other similar
         laws affecting the enforcement of the rights of creditors and (ii)
         general principles of equity, whether enforcement is sought in a
         proceeding in equity or at law and the Seller has taken all action
         necessary to transfer such rights of enforceability to the Purchaser.

                  (k) All parties to the Mortgage Note, the Mortgage and, in the
         case of a Cooperative Loan, the related Security Agreement, had the
         legal capacity to enter into the Mortgage Loan 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.
         Either the Mortgagor is a natural person or the related co-borrower or
         guarantor is a natural person.


                                       21
<PAGE>

                  (l) The proceeds of the Mortgage Loan have been fully
         disbursed to or for the account of the Mortgagor and there is no
         obligation for the Mortgagee to advance additional funds 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 have been
         paid, and the Mortgagor is not entitled to any refund of any amounts
         paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage.

                  (m) The Seller and all other parties which have had any
         interest in the Mortgage Loan, 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 any qualification requirements of,
         with respect to the Non-Conventional Mortgage Loans, FHA or VA, as
         applicable, and (2) either (i) organized under the laws of such state,
         or (ii) qualified to do business in such state, or (iii) a federal
         savings and loan association, a savings bank or a national bank having
         a principal office in such state, or (3) not doing business in such
         state.

                  (n) The Mortgage Loan is covered by an ALTA or CLTA lender's
         title insurance policy, acceptable to, with respect to the Conventional
         Mortgage Loans, Fannie Mae or Freddie Mac, and with respect to the
         Non-Conventional Mortgage Loans, FHA or VA, as applicable, issued by a
         title insurer acceptable to, with respect to the Conventional Mortgage
         Loans, Fannie Mae or Freddie Mac, and with respect to the
         Non-Conventional Mortgage Loans, FHA or VA, as applicable, and
         qualified to do business in the jurisdiction where the Mortgaged
         Property is located, insuring (subject to the exceptions contained in
         (h)(i), (ii) and (iii) above) the Seller, its successors and assigns as
         to the first priority lien of the Mortgage in the original principal
         amount of the Mortgage Loan and, with respect to any Adjustable Rate
         Mortgage Loan, against any loss by reason of the invalidity or
         unenforceability of the lien resulting from the provisions of the
         Mortgage providing for adjustment in the Mortgage Interest Rate or
         Monthly Payment. Where required by state law or regulation, the
         Mortgagor has been given the opportunity to choose the carrier of the
         required mortgage title insurance. 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. The Seller and its successors and assigns are the sole
         insureds of such lender's title insurance policy, and such lender's
         title insurance policy is in full force and effect and will be in full
         force and effect upon the consummation of the transactions contemplated
         by this Agreement and will inure to the benefit of the Purchaser and
         its assigns without any further act. No claims have been made under
         such lender's title insurance policy, and the Seller has not done, by
         act or omission, anything which would impair the coverage of such
         lender's title insurance policy, including without limitation, no
         unlawful fee, commission, kickback or other unlawful compensation or
         value of any kind has been or will be received, retained or realized by
         any attorney, firm or other person or entity, and no such unlawful
         items have been received, retained or realized by the Seller.


                                       22
<PAGE>

                  (o) There is no default, breach, violation or event of
         acceleration existing under the Mortgage or the 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 permitting acceleration, and neither the Seller nor
         the Servicer has waived any default, breach, violation or event
         permitting acceleration.

                  (p) There are no mechanics' or similar liens or claims 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 or coordinate
         with, the lien of the related Mortgage.

                  (q) All improvements which were considered 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.

                  (r) The Mortgage Loan was originated by a mortgagee approved
         by the Secretary of Housing and Urban Development pursuant to Sections
         203 and 211 of the National Housing Act, a savings and loan
         association, a savings bank, a commercial bank, credit union, insurance
         company or other similar institution which is supervised and examined
         by a federal or state authority.

                  (s) Principal payments on the Mortgage Loan commenced no more
         than sixty (60) days after the proceeds of the Mortgage Loan were
         disbursed. The Mortgage Loans identified on the related Mortgage Loan
         Schedule have an original term to maturity of not more than thirty (30)
         years, with interest payable in arrears on the first day of the month.
         As to each Adjustable Rate Mortgage Loan, on each applicable Adjustment
         Date, the Mortgage Interest Rate will be adjusted to equal the sum of
         the Index plus the applicable Gross Margin, rounded up or down as
         provided in the Mortgage Note; provided, however, that the Mortgage
         Interest Rate will not increase or decrease by more than the Initial
         Rate Cap on the first Adjustment Date or the Periodic Rate Cap on any
         subsequent Adjustment Date, and will in no event exceed the Lifetime
         Rate Cap. Each Mortgage Note evidencing a Mortgage Loan other than an
         Adjustable Rate Mortgage Loan requires a Monthly Payment which is
         sufficient to amortize the original principal balance fully over the
         original term thereof and to pay interest at the related Mortgage
         Interest Rate. Each Mortgage Note evidencing an Adjustable Rate
         Mortgage Loan requires a monthly payment which is sufficient (i) during
         the period prior to the first adjustment to the Mortgage Interest Rate,
         to amortize the original principal balance fully over the original term
         thereof and to pay interest at the related Mortgage Interest Rate, and
         (ii) during the period following each Adjustment Date, to amortize the
         outstanding principal balance fully as of the first day of such period
         over the then remaining term of such Mortgage Note and to pay interest
         at the related Mortgage Interest Rate. No Mortgage Note evidencing an
         Adjustable Rate Mortgage Loan permits negative amortization. Interest
         on the Mortgage Note is calculated on the basis of a 360-day year
         consisting of twelve 30-day months. Unless otherwise indicated in the
         related Term Sheet, no Mortgage Loan is a Convertible Mortgage Loan.


                                       23
<PAGE>

                  (t) There is no proceeding pending or, to the Seller's
         knowledge, threatened for the total or partial condemnation of the
         Mortgaged Property and such property is in good repair and is undamaged
         by waste, fire, earthquake or earth movement, windstorm, flood, tornado
         or other casualty, so as to affect adversely the value of the Mortgaged
         Property as security for the Mortgage Loan or the use for which the
         premises were intended.

                  (u) The Mortgage and related Mortgage Note contain 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 provided thereby, including
         (i) in the case of a Mortgage designated as a deed of trust, by
         trustee's sale, and (ii) otherwise by judicial foreclosure. At the date
         of origination of the related Mortgage Loan, the related Mortgaged
         Property was, and as of the related Closing Date the related Mortgaged
         Property is, not subject to any bankruptcy proceeding or foreclosure
         proceeding and the Mortgagor, as of the date of origination of such
         Mortgage Loan had, and as of the related Closing Date has, not filed
         for protection under applicable bankruptcy laws. There is no homestead
         or other exemption or right available to the Mortgagor or any other
         person which would interfere with the right to sell the Mortgaged
         Property at a trustee's sale or the right to foreclose the Mortgage.

                  (v) The Mortgage Note and Mortgage are on forms acceptable to,
         with respect to the Conventional Mortgage Loans, Fannie Mae or Freddie
         Mac, and with respect to the Non-Conventional Mortgage Loans, FHA or
         VA, as applicable, at the time of origination and were underwritten in
         conformance with the Underwriting Guidelines in effect at the time of
         origination with exceptions thereto exercised in a reasonable manner as
         permitted under the Underwriting Guidelines.

                  (w) The Mortgage Note is not and has not been secured by any
         collateral except the lien of the corresponding Mortgage on the
         Mortgaged Property and the security interest of any applicable security
         agreement or chattel mortgage referred to in (h) above.

                  (x) The Mortgage File contains an appraisal of the related
         Mortgaged Property, in a form acceptable to, with respect to the
         Conventional Mortgage Loans, Fannie Mae or Freddie Mac, and with
         respect to the Non-Conventional Mortgage Loans, FHA or VA, as
         applicable, and such appraisal complies with the requirements of
         FIRREA, and was made and signed, prior to the approval of the Mortgage
         Loan application, by a Qualified Appraiser.

                  (y) 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
         Purchaser to the trustee under the deed of trust, except in connection
         with a trustee's sale after default by the Mortgagor.


                                       24
<PAGE>

                  (z) The Mortgage Loan is not a graduated payment mortgage loan
         and the Mortgage Loan does not have a shared appreciation, balloon
         payment or other contingent interest feature, nor does it contain any
         "buydown" provision which is currently in effect.

                  (aa) The Mortgage contains an enforceable provision for the
         acceleration of the payment of the unpaid principal balance of the
         Mortgage Loan in the event that the Mortgaged Property is sold or
         transferred without the prior written consent of the mortgagee
         thereunder.

                  (bb) The Mortgagor has received all disclosure materials
         required by applicable law with respect to the making of mortgage loans
         of the same type as the Mortgage Loan and rescission materials required
         by applicable law if the Mortgage Loan is a Refinanced Mortgage Loan
         and has acknowledged receipt of such materials to the extent required
         by applicable law and such documents will remain in the Mortgage File.

                  (cc) No Mortgage Loan has an LTV at origination in excess of
         95%. Each Conventional Mortgage Loan with an LTV at origination in
         excess of 80% will be subject to a Primary Mortgage Insurance Policy,
         issued by an insurer acceptable to Fannie Mae or Freddie Mac at the
         time of origination, which insures that portion of the Conventional
         Mortgage Loan in excess of the portion of the Appraised Value of the
         Mortgaged Property as required by Fannie Mae. Each Non-Conventional
         Mortgage Loan with an LTV at origination in excess of 80% will be
         subject to a Primary Mortgage Insurance Policy, issued by an insurer
         acceptable to FHA or VA, as applicable, at the time of origination,
         which insures that portion of the Non-Conventional Mortgage Loan in
         excess of the portion of the Appraised Value of the Mortgaged Property
         as required by FHA or VA, as applicable. All provisions of such Primary
         Mortgage Insurance Policy have been and are being complied with, such
         policy is in full force and effect, and all premiums due thereunder
         have been paid. Any Mortgage subject to any such Primary Mortgage
         Insurance Policy obligates the Mortgagor thereunder to maintain such
         insurance and to pay all premiums and charges in connection therewith
         at least until the LTV of such Mortgage Loan is reduced to less than
         80%. The Mortgage Interest Rate for the Mortgage Loan does not include
         any such insurance premium. No Mortgage Loan requires payment of such
         premiums, in whole or in part, by the Purchaser.

                  (dd) The Mortgaged Property 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
         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 and no improvement
         located on or part of the Mortgaged Property is in violation of any
         zoning law or regulation.

                  (ee) The Assignment of Mortgage is in recordable form and is
         acceptable for recording under the laws of the jurisdiction in which
         the Mortgaged Property is located.

                  (ff) All payments required to be made prior to the related
         Cut-off Date for such Mortgage Loan under the terms of the Mortgage
         Note have been made, the Mortgage Loan has not been dishonored, there
         are no material defaults under the terms of


                                       25
<PAGE>

         the Mortgage Loan and no Mortgage Loan has been more than thirty (30)
         days delinquent more than once in the twelve month period immediately
         prior to the related Cut-off Date.

                  (gg) None of the Seller, the Servicer or any prior originator
         or servicer has advanced funds, or induced, solicited or knowingly
         received any advance from any party other than the Mortgagor, directly
         or indirectly, for the payment of any amount due under the Mortgage
         Loan.

                  (hh) With respect to each Mortgage Loan, the Seller is in
         possession of a complete Mortgage File except for the documents which
         have been delivered to the Purchaser or which have been submitted for
         recording and not yet returned.

                  (ii) Immediately prior to the payment of the related Purchase
         Price, the Seller was the sole owner and holder of the Mortgage Loans
         and the indebtedness evidenced by the Mortgage Note. The Mortgage
         Loans, including the Mortgage Note and the Mortgage, were not assigned
         or pledged by the Seller and the Seller had good and marketable title
         thereto, and the Seller had full right to transfer and sell the
         Mortgage Loans to the Purchaser free and clear of any encumbrance,
         participation interest, lien, equity, pledge, claim or security
         interest and had full right and authority subject to no interest or
         participation in, or agreement with any other party to sell or
         otherwise transfer the Mortgage Loans. Following the sale of the
         Mortgage Loans, the Purchaser will own such Mortgage Loan free and
         clear of any encumbrance, equity, participation interest, lien, pledge,
         charge, claim or security interest. The Seller intends to relinquish
         all rights to monitor, possess and control the Mortgage Loan except in
         connection with the servicing of the Mortgage Loan by the Servicer as
         set forth in this Agreement. After the related Closing Date, neither
         the Seller nor the Servicer will have any right to modify or alter the
         terms of the sale of the Mortgage Loans and neither the Seller nor the
         Servicer will have any obligation or right to repurchase the Mortgage
         Loans, except as provided in this Agreement or as otherwise agreed to
         by the Seller, the Servicer and the Purchaser.

                  (jj) Any future advances made prior to the related Cut-off
         Date have been consolidated with the outstanding principal amount
         secured by the Mortgage, and the secured principal amount, as
         consolidated, bears a single interest rate and single repayment term.
         The lien of the Mortgage securing the consolidated principal amount is
         expressly insured as having first lien priority by a title insurance
         policy, an endorsement to the policy insuring the mortgagee's
         consolidated interest or by other title evidence acceptable to, with
         respect to the Conventional Mortgage Loans, Fannie Mae and Freddie Mac,
         and with respect to the Non-Conventional Mortgage Loans, FHA or VA, as
         applicable. The consolidated principal amount does not exceed the
         original principal amount of the Mortgage Loan.

                  (kk) The Mortgage Loan was underwritten in accordance with the
         Underwriting Guidelines in effect at the time of origination with
         exceptions thereto exercised in a reasonable manner.

                  (ll) With respect to a Mortgage Loan that is not a Cooperative
         Loan, the Mortgaged Property is located in the state identified in the
         related Mortgage Loan


                                       26
<PAGE>

         Schedule and consists of a parcel of real property with a detached
         single family residence erected thereon, or a two- to four-family
         dwelling, or an individual condominium unit, or an individual unit in a
         planned unit development; provided, however, that any condominium
         project or planned unit development generally conforms with the
         Underwriting Guidelines regarding such dwellings (or underlying
         Cooperative Property, in the case of a Cooperative Loan), and with
         respect to the Non-Conventional Mortgage Loans, the applicable HUD or
         VA requirements regarding such dwellings (or underlying Cooperative
         Property, in the case of a Cooperative Loan), and no residence or
         dwelling is a mobile home or manufactured dwelling.

                  (mm) If the Mortgaged Property is a condominium unit or a
         planned unit development (other than a de minimis planned unit
         development) such condominium or planned unit development project meets
         Fannie Mae or Freddie Mac eligibility requirements for sale to Fannie
         Mae or Freddie Mac, as the case may be, or is located in a condominium
         or planned unit development project which has received Fannie Mae or
         Freddie Mac project approval or as to which Fannie Mae's and Freddie
         Mac's eligibility requirements have been waived. With respect to the
         Non-Conventional Mortgage Loans, if the Mortgaged Property is a
         condominium or planned unit development (other than a de minimis
         planned unit development) such condominium or planned unit development
         project meets HUD or VA eligibility requirements or is located in a
         condominium or planned unit development project which has received HUD
         or VA project approval and the representations and warranties required
         by HUD or VA with respect to such condominium or planned unit
         development have been made and remain true and correct in all material
         respects

                  (nn) The Seller used no adverse selection procedures in
         selecting the Mortgage Loan from among the outstanding first-lien,
         residential mortgage loans owned by it which were available for
         inclusion in the Mortgage Loans.

                  (oo) Each Mortgage Loan is a "qualified mortgage" within
         Section 860G(a)(3) of the Code.

                  (pp) With respect to each Mortgage where a lost note affidavit
         has been delivered in place of the related Mortgage Note, the related
         Mortgage Note is no longer in existence. Each such lost note affidavit
         is substantially in the form attached hereto as Exhibit 7.

                  (qq) No fraud, error, omission, misrepresentation, negligence
         or similar occurrence with respect to the Mortgage Loan has taken place
         on the part of the Seller, the Servicer or any originator or servicer
         or the Mortgagor or on the part of any other party involved in the
         origination of the Mortgage Loan.

                  (rr) The origination practices used by the Seller and the
         collection and servicing practices used by the Servicer with respect to
         each Mortgage Loan have been in all respects legal, proper, prudent and
         customary in the mortgage origination and servicing industry and the
         collection and servicing practices used by the Servicer have


                                       27
<PAGE>

         been acceptable to Fannie Mae and Freddie Mac and with respect to the
         Non-Conventional Mortgage Loans, FHA or VA, as applicable.

                  (ss) The Mortgagor is not in bankruptcy and is not insolvent
         and neither the Seller nor the Servicer have any knowledge of any
         circumstances or condition with respect to the Mortgage, the Mortgaged
         Property, the Mortgagor or the Mortgagor's credit standing that could
         reasonably be expected to cause investors to regard the Mortgage Loan
         as an unacceptable investment, cause the Mortgage Loan to become
         delinquent or materially adversely affect the value or the
         marketability of the Mortgage Loan.

                  (tt) The Mortgagor has not notified the Seller or the
         Servicer, and neither the Seller nor the Servicer has knowledge of any
         relief requested by the Mortgagor under the Soldiers' and Sailors'
         Civil Relief Act of 1940, as amended, or other similar state statute.

                  (uu) No Mortgage Loan was made in connection with (i) the
         construction or rehabilitation of a Mortgaged Property or (ii)
         facilitating the trade-in or exchange of a Mortgaged Property.

                  (vv) There is no pending action or proceeding directly
         involving any Mortgaged Property of which the Seller or the Servicer is
         aware in which compliance with any environmental law, rule or
         regulation is an issue and nothing further remains to be done to
         satisfy in full all requirements of each such law, rule or regulation
         constituting a prerequisite to use and enjoyment of said property.

                  (ww) No action, inaction, or event has occurred and no state
         of affairs exists or has existed that has resulted or will result in
         the exclusion from, denial of, or defense to coverage under any
         applicable special hazard insurance policy, Primary Mortgage Insurance
         Policy or bankruptcy bond, irrespective of the cause of such failure of
         coverage. In connection with the placement of any such insurance, no
         commission, fee, or other compensation has been or will be received by
         the Seller or the Servicer or any designee of the Seller or the
         Servicer or any corporation in which the Seller, the Servicer or any
         officer, director, or employee of the Seller or the Servicer had a
         financial interest at the time of placement of such insurance.

                  (xx) With respect to any ground lease to which a Mortgaged
         Property may be subject: (A) the Mortgagor is the owner of a valid and
         subsisting leasehold interest under such ground lease; (B) such ground
         lease is in full force and effect, unmodified and not supplemented by
         any writing or otherwise; (C) all rent, additional rent and other
         charges reserved therein have been fully paid to the extent payable as
         of the related Closing Date; (D) the Mortgagor enjoys the quiet and
         peaceful possession of the leasehold estate; (E) the Mortgagor is not
         in default under any of the terms of such ground lease, and there are
         no circumstances which, with the passage of time or the giving of
         notice, or both, would result in a default under such ground lease; (F)
         the lessor under such ground lease is not in default under any of the
         terms or provisions of such ground lease on the part of the lessor to
         be observed or performed; (G) the lessor under such ground lease has
         satisfied any repair or construction obligations due as of the related
         Closing Date


                                       28
<PAGE>

         pursuant to the terms of such ground lease; (H) the execution, delivery
         and performance of the Mortgage do not require the consent (other than
         those consents which have been obtained and are in full force and
         effect) under, and will not contravene any provision of or cause a
         default under, such ground lease; and (I) the term of such lease does
         not terminate earlier than the maturity date of the Mortgage Note.

                  (yy) With respect to escrow deposits and payments that the
         Servicer is entitled to collect, all such payments are in the
         possession of, or under the control of the Servicer, and there exist no
         deficiencies in connection therewith for which customary arrangements
         for repayment thereof have not been made. All escrow payments have been
         collected in full compliance with state and federal law and the
         provisions of the related Mortgage Note and Mortgage. As to any
         Mortgage Loan that is the subject of an escrow, escrow of funds is not
         prohibited by applicable law and has been established in an amount
         sufficient to pay for every escrowed item that remains unpaid and has
         been assessed but is not yet due and payable. No escrow deposits or
         other charges or payments due under the Mortgage Note have been
         capitalized under any Mortgage or the related Mortgage Note.

                  (zz) The Mortgage Note, the Mortgage, the Assignment of
         Mortgage and any other documents required to be delivered under the
         Custodial Agreement for each Mortgage Loan have been delivered to the
         Custodian. The Seller is in possession of a complete, true and accurate
         Mortgage File in compliance with Exhibit 2 attached hereto, except for
         such documents the originals of which have been delivered to the
         Custodian

                  (aaa) There is no Mortgage Loan that was originated on or
         after October 1, 2002 and on or prior to March 7, 2003, which is
         secured by property located in the State of Georgia. No Mortgage Loan
         that was originated on or after March 7, 2003, is a "high cost home
         loan" as defined under the Georgia Fair Lending Act, as amended.

                  (bbb) The Assignment of Mortgage with respect to each Mortgage
         Loan is in recordable form and is acceptable for recording under the
         laws of the jurisdiction in which the Mortgaged Property is located.

                  (ccc) To the best of the Seller's knowledge, there is no
         pending action or proceeding directly involving the Mortgaged Property
         in which material compliance with any environmental law, rule or
         regulation is an issue; and, to the best of the Seller's knowledge,
         nothing further remains to be done to satisfy in full all requirements
         of each such law, rule or regulation constituting a prerequisite to use
         and enjoyment of said property.

                  (ddd) The Seller, in its capacity as servicer for each
         Mortgage Loan, has fully furnished, in accordance with the Fair Credit
         Reporting Act and its implementing regulations, accurate and complete
         information (e.g., favorable and unfavorable) on its borrower credit
         files to Equifax, Experian and Trans Union Credit Information Company
         (three of the credit repositories), on a monthly basis.

                  (eee) Each Mortgage Loan that is subject to a Prepayment
         Penalty as provided in the related Mortgage Note is identified on the
         related Mortgage Loan Schedule. With


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<PAGE>

         respect to Mortgage Loans originated prior to October 1, 2002, no such
         Prepayment Penalty may be imposed for a term in excess of five (5)
         years following origination. With respect to Mortgage Loans originated
         on or after October 1, 2002, no such Prepayment Penalty may be imposed
         for a term in excess of three (3) years following origination.

                  (fff) No Mortgage Loan is (a) a "high cost" loan under the
         Home Ownership and Equity Protection Act of 1994 or (b) a "high cost
         home," "threshold," "covered," "high risk home," "predatory" or similar
         loan under any other applicable state, federal or local law (or a
         similarly classified loan using different terminology under a law
         imposing heightened regulatory scrutiny or additional legal liability
         for residential mortgage loans having high interest rates, points
         and/or fees); provided that any Mortgage Loan secured by a Mortgaged
         Property in Illinois characterized as a "threshold" loan shall not be a
         "high cost" loan unless it is characterized as "predatory" under
         applicable local law.

                  (ggg) No proceeds from any Mortgage Loan were used to purchase
         single-premium credit insurance policies.

                  (hhh) No Mortgage Loan is secured by the pledge of stock
         allocated to a dwelling unit in a residential cooperative housing
         corporation and a collateral assignment of the related lease.

                  (iii) With respect to a Mortgage Loan that is a Cooperative
         Loan, the Cooperative Shares that are pledged as security for the
         Mortgage Loan are held by a person as a tenant-stockholder (as defined
         in Section 216 of the Code) in a cooperative housing corporation (as
         defined in Section 216 of the Code).

                  (jjj) Each FHA Mortgage Loan was underwritten in accordance
         with FHA standards and is fully-insured by the FHA, which insurance is
         in full force and effect, and the Mortgage Loan is not subject to any
         defect which would diminish or impair the FHA insurance, and all prior
         transfers, if any, of the Mortgage Loan have been, and the transactions
         contemplated herein are, in compliance with the FHA regulations, and no
         circumstances exist with respect to the FHA Mortgage Loan which would
         permit the FHA to deny coverage under the FHA insurance.

                  (kkk) Each VA Mortgage Loan was underwritten in accordance
         with VA standards and is guaranteed by the VA, which guaranty is in
         full force and effect, and the Mortgage Loan is not subject to any
         defect which would diminish or impair the VA guaranty (other than a
         potential valuation of the related Mortgaged Property), and all prior
         transfers, if any, of the Mortgage Loan have been, and the transactions
         contemplated herein are, in compliance with VA regulations, and no
         circumstances exist with respect to the VA Mortgage Loan which would
         permit the VA to deny coverage under the FHA guaranty.

                  (lll) No Mortgage Loan is a VA Vendee Loan, Title I Loan or
         Section 325 Loan.


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<PAGE>

         Subsection 7.02 Seller and Servicer Representations.

The Seller and the Servicer hereby represent and warrant to the Purchaser that,
as to itself as of the related Closing Date:

                  (a) It is a national banking association, duly organized,
         validly existing, and in good standing under the laws of the United
         States and has all licenses necessary to carry on its business as now
         being conducted and is licensed, qualified and in good standing in the
         states where the Mortgaged Property is located if the laws of such
         state require licensing or qualification in order to conduct business
         of the type conducted by it. It is an approved seller/servicer in good
         standing of conventional residential mortgage loans for Fannie Mae or
         Freddie Mac and is a HUD-approved mortgagee under Section 203 of the
         National Housing Act. It has corporate power and authority to execute
         and deliver this Agreement and to perform in accordance herewith; the
         execution, delivery and performance of this Agreement (including all
         instruments of transfer to be delivered pursuant to this Agreement) by
         it and the consummation of the transactions contemplated hereby have
         been duly and validly authorized. This Agreement, assuming due
         authorization, execution and delivery by the Purchaser, evidences the
         legal, valid, binding and enforceable obligation of it, subject to
         applicable law except as enforceability may be limited by (i)
         bankruptcy, insolvency, liquidation, receivership, moratorium,
         reorganization or other similar laws affecting the enforcement of the
         rights of creditors and (ii) general principles of equity, whether
         enforcement is sought in a proceeding in equity or at law. All
         requisite corporate action has been taken by it to make this Agreement
         valid and binding upon it in accordance with the terms of this
         Agreement.

                  (b) No consent, approval, authorization or order of, or
         registration or filing with, or notice to any court or governmental
         agency or body including HUD, the FHA or the VA is required for the
         execution, delivery and performance by the Seller of or compliance by
         the Seller with this Agreement or the Mortgage Loans or the sale of the
         Mortgage Loans or the consummation of the transactions contemplated by
         this Agreement, or if required, such approval has been obtained prior
         to the Closing Date.

                  (c) The consummation of the transactions contemplated by this
         Agreement are in its ordinary course of business and will not result in
         the breach of any term or provision of its articles of association or
         by-laws 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 it or its property is
         subject, or result in the violation of any law, rule, regulation,
         order, judgment or decree to which it or its property is subject.

                  (d) Its transfer, assignment and conveyance of the Mortgage
         Notes and the Mortgages pursuant to this Agreement are not subject to
         the bulk transfer or any similar statutory provisions in effect in any
         applicable jurisdiction.

                  (e) There is no action, suit, proceeding or investigation
         pending or, to its best knowledge, threatened against it which, either
         individually or in the aggregate, would result in any material adverse
         change in its business, operations, financial condition,


                                       31
<PAGE>

         properties or assets, or in any material impairment of its right or
         ability to carry on its business substantially as now conducted or
         which would draw into question the validity of this Agreement or the
         Mortgage Loans or of any action taken or to be taken in connection with
         its obligations contemplated herein, or which would materially impair
         its ability to perform under the terms of this Agreement.

                  (f) It does not believe, nor does it have any reason or cause
         to believe, that it cannot perform each and every covenant contained in
         this Agreement.

                  (g) It acknowledges and agrees that the Servicing Fee shall be
         treated by the Servicer, for accounting and tax purposes, as
         compensation for the servicing and administration of the Mortgage Loans
         pursuant to this Agreement.

                  (h) It has determined that the disposition of the Mortgage
         Loans pursuant to this Agreement will be afforded sale treatment for
         accounting and tax purposes.

                  (i) It is solvent and the sale of the Mortgage Loans will not
         cause it to become insolvent. The sale of the Mortgage Loans is not
         undertaken with the intent to hinder, delay or defraud any of its
         creditors.

                  (j) It has not dealt with any broker, investment banker, agent
         or other person that may be entitled to any commission or compensation
         in connection with the sale of the Mortgage Loans.

                  (k) The Seller's decision to originate any mortgage loan or to
         deny any mortgage loan application is an independent decision based
         upon the Underwriting Guidelines in effect at the time of origination
         (with exceptions thereto exercised in a reasonable manner as permitted
         under the Underwriting Guidelines), and is in no way made as a result
         of Purchaser's decision to purchase, or not to purchase, or the price
         Purchaser may offer to pay for, any such mortgage loan, if originated.

                  (l) The Seller has complied with all applicable anti-money
         laundering laws and regulations, including without limitation the USA
         Patriot Act of 2001 (collectively, the "Anti-Money Laundering Laws");
         the Seller has established an anti-money laundering compliance program
         as required by the Anti-Money Laundering Laws, has conducted the
         requisite due diligence in connection with the origination of each
         Mortgage Loan for purposes of the Anti-Money Laundering Laws, including
         with respect to the legitimacy of the applicable Mortgagor and the
         origin of the assets used by the said Mortgagor to purchase the
         property in question, and maintains, and will maintain, sufficient
         information to identify the applicable Mortgagor for purposes of the
         Anti-Money Laundering Laws.

                  (m) Seller has the facilities, procedures, and experienced
         personnel necessary for the sound servicing of mortgage loans of the
         same type as the Mortgage Loans. The Seller is duly qualified,
         licensed, registered and otherwise authorized under all applicable
         federal, state and local laws, and regulations, if applicable, meets
         the minimum capital requirements set forth by HUD, the OTS, the OCC or
         the FDIC, if applicable, and is in


                                       32
<PAGE>

         good standing to enforce, originate, sell mortgage loans to, and
         service mortgage loans in the jurisdiction wherein the Mortgaged
         Properties are located.

                  (n) The characteristics of the related Mortgage Loan Package
         are as set forth on the description of the pool characteristics for the
         applicable Mortgage Loan Package delivered in connection with the
         related commitment letter by and between the Seller and the Purchaser
         relating to such Mortgage Loan Package.

         Subsection 7.03 Remedies for Breach of Representations and Warranties.

         It is understood and agreed that the representations and warranties set
forth in Subsections 7.01 and 7.02 shall survive the sale of the Mortgage Loans
to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or lack of examination of any Mortgage
File. Upon discovery by the Seller, the Servicer or the Purchaser of a breach of
any of the foregoing representations and warranties which materially and
adversely affects the value of the Mortgage Loans or the interest of the
Purchaser therein (or which materially and adversely affects the interest of the
Purchaser in or the value of the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to the others.

         Within sixty (60) days after the earlier of either discovery by or
notice to either the Seller or the Servicer of any breach of a representation or
warranty which materially and adversely affects the value of a Mortgage Loan or
the Mortgage Loans or the interest of the Purchaser therein, the Seller or the
Servicer, as the case may be, shall use its best efforts promptly to cure such
breach in all material respects and, if such breach cannot be cured, the Seller
shall repurchase such Mortgage Loan or Mortgage Loans at the Repurchase Price.
Notwithstanding the above sentence, within 60 days after the earlier of either
discovery by, or notice to, the Seller of any breach of the representations or
warranties set forth in clauses (oo), (zz), (aaa), (ddd), (eee), (ggg), (hhh) or
(iii) of Subsection 7.01, the Seller shall repurchase such Mortgage Loan at the
Repurchase Price unless, in the case of clause (oo), such breach was cured.
However, the Seller may, at its option, with the Purchaser's prior approval,
such approval not to be withheld unreasonably, and assuming that the Seller has
a Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided
above, remove such Mortgage Loan and substitute in its place a Substitute
Mortgage Loan or Substitute Mortgage Loans; provided, however, that any such
substitution shall be effected within ninety (90) days after the related Closing
Date. If the Seller has no Substitute Mortgage Loan, it shall repurchase the
deficient Mortgage Loan. Any repurchase of a Mortgage Loan pursuant to the
foregoing provisions of this Subsection 7.03 shall occur on a date designated by
the Purchaser and shall be accomplished by the Seller remitting by wire transfer
to the Purchaser the amount of the related Repurchase Price.

         At the time of repurchase of any deficient Mortgage Loan (or removal of
any Deleted Mortgage Loan), the Purchaser and the Seller shall arrange for the
assignment of the repurchased Mortgage Loan (or Deleted Mortgage Loan) to the
Seller or its designee and the delivery to the Seller of any documents held by
the Purchaser relating to the repurchased Mortgage Loan in the manner required
by this Agreement with respect to the purchase and sale of such Mortgage Loan on
the related Closing Date. In the event a deficient Mortgage Loan is repurchased,
the Seller


                                       33
<PAGE>

shall, simultaneously with its remittance to the Purchaser of such related
Repurchase Price, give written notice to the Purchaser that such repurchase has
taken place. Upon such repurchase, the related Mortgage Loan Schedule shall
simultaneously be amended to reflect the withdrawal of the repurchased Mortgage
Loan from this Agreement.

         As to any Deleted Mortgage Loan for which the Seller substitutes one or
more Substitute Mortgage Loans, the Seller shall effect such substitution by
delivering to the Purchaser for each Substitute Mortgage Loan the Mortgage Note,
the Mortgage, the Assignment of Mortgage and such other documents and agreements
as are required by Subsection 6.03. The Seller shall remit to the Servicer for
distribution the Monthly Payment due on each Substitute Mortgage Loan in the
month following the date of such substitution. Monthly Payments due with respect
to Substitute Mortgage Loans in the month of substitution will be retained by
the Seller. For the month of substitution, distributions to the Purchaser will
include the Monthly Payment due on such Deleted Mortgage Loan in the month of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received by it in respect of such Deleted Mortgage Loan. The Seller
shall give written notice to the Purchaser that such substitution has taken
place and shall amend the related Mortgage Loan Schedule to reflect the removal
of such Deleted Mortgage Loan from the terms of this Agreement and the
substitution of the Substitute Mortgage Loan. Upon such substitution, each
Substitute Mortgage Loan 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
Substitute Mortgage Loan, as of the date of substitution, the covenants,
representations and warranties set forth in Subsections 7.01 and 7.02.

         For any month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall, plus an amount equal to the aggregate of any
Monthly Advances made with respect to such Deleted Mortgage Loans, shall be
remitted to the Servicer by the Seller for distribution by the Servicer in the
month of substitution. Accordingly, on the date of such substitution, the Seller
will remit to the Servicer from its own funds for deposit into the Custodial
Account an amount equal to the amount of such shortfall plus one month's
interest thereon at the Mortgage Loan Remittance Rate.

         In addition to such cure, repurchase and substitution obligations, the
Seller or the Servicer shall indemnify the Purchaser and its present and former
directors, officers, employees and agents, and hold such parties harmless
against any out-of-pocket losses, penalties, fines, forfeitures, reasonable and
necessary legal fees and expenses and related costs, judgments, and other costs
and expenses resulting from any claim, demand, defense or assertion by any third
party that is based on or grounded upon, or resulting from, a breach of the
Seller or the Servicer, as applicable, representations and warranties contained
in this Agreement; provided, however, indemnification shall not be available for
any economic losses of the Purchaser due to reinvestment losses, loss of
investment income or any other special, indirect or consequential losses or
damages. For purposes of the previous sentence, "Purchaser" shall mean the
Person then acting as the Purchaser under this Agreement and any and all Persons
who previously were "Purchasers" under this Agreement in accordance with the
provisions of Section 29 hereof.


                                       34
<PAGE>

         No action may be brought against the Seller or the Servicer, as
applicable, relating to or arising out of the breach of any representations and
warranties made in Subsections 7.01 or 7.02 with respect to any Mortgage Loan
unless and until (i) discovery of such breach by the Purchaser or notice thereof
by the Seller or the Servicer to Purchaser, (ii) failure by the Seller or the
Servicer, as applicable, to cure such breach, repurchase such Mortgage Loan as
specified above, substitute a Substitute Mortgage Loan for such Mortgage Loan as
specified above and/or indemnify the Purchaser and (iii) demand upon the Seller
or the Servicer, as applicable, by the Purchaser for compliance with the terms
of this Agreement.

         It is understood and agreed that the obligations of the Seller or the
Servicer, as applicable, set forth in this Subsection 7.03 to cure, repurchase
or substitute for a defective Mortgage Loan and/or to indemnify the Purchaser
constitute the sole remedies of the Purchaser respecting a breach of the
representations and warranties set forth in Subsections 7.01 and 7.02.

         SECTION 8. Closing Conditions.

         The closing for the purchase and sale of each Mortgage Loan Package
shall take place on the respective Closing Date. The closing shall be either by
telephone, confirmed by letter or wire as the parties hereto shall agree, or
conducted in person, at such place as the parties hereto shall agree.

         The closing for each Mortgage Loan Package shall be subject to the
satisfaction of each of the following conditions:

         (a) the Seller shall have delivered to the Purchaser the related
Mortgage Loan Schedule and an electronic data file containing information on a
loan-level basis;

         (b) all of the representations and warranties of the Seller under this
Agreement shall be true and correct as of the related Closing Date (or, with
respect to Subsection 7.01, such other date specified therein) in all material
respects and no default shall have occurred hereunder which, with notice or the
passage of time or both, would constitute an Event of Default hereunder;

         (c) the Purchaser shall have received from the custodian an initial
certification with respect to its receipt of the Mortgage Loan Documents for the
related Mortgage Loans;

         (d) the Purchaser shall have received originals of the related Term
Sheet executed by the Seller and a funding memorandum setting forth the Purchase
Price(s), and the accrued interest thereon, for the Mortgage Loan Package; and

         (e) all other terms and conditions of this Agreement and the related
Term Sheet to be satisfied by the Seller shall have been complied with in all
material respects.

         Upon satisfaction of the foregoing conditions, the Purchaser shall pay
to the Seller on such Closing Date the Purchase Price for the related Mortgage
Loan Package, plus accrued interest pursuant to Section 4 of this Agreement.


                                       35
<PAGE>

         SECTION 9. Closing Documents.

         On the related Closing Date, the Seller shall deliver to the
Purchaser's attorneys in escrow fully executed originals of:

         (a) this Agreement (to be executed and delivered only for the initial
Closing Date);

         (b) the Term Sheet, executed in two (2) counterparts;

         (c) with respect to the initial Closing Date, the Custodial Agreement,
dated as of the initial Cut-off Date;

         (d) with respect to the initial Closing Date, a Custodial Account
Certification in the form attached as Exhibit 4 hereto;

         (e) with respect to the initial Closing Date, an Escrow Account
Certification in the form attached as Exhibit 5 hereto;

         (f) the related Mortgage Loan Schedule, segregated by Mortgage Loan
Package, with respect to the initial Closing Date, one copy to be attached
hereto, and with respect to all Closing Dates, one copy to be attached to the
Custodian's counterpart of the Custodial Agreement, and one copy to be attached
to the related Term Sheet as the Mortgage Loan Schedule thereto;

         (g) with respect to the initial Closing Date, an Officer's Certificate,
in the form of Exhibit 10 hereto with respect to the Seller, including all
attachments thereto; and

         (h) with respect to the initial Closing Date, an Opinion of Counsel of
the Seller (who may be an employee of the Seller), in the form of Exhibit 11
hereto.

         SECTION 10. Costs.

         The Seller and the Servicer shall pay any commissions due their
salesmen and the legal fees and expenses of their attorneys. The Purchaser shall
pay the cost of delivering the Mortgage Files to the Purchaser or its designee,
the cost of recording the Assignments of Mortgage, any custodial fees incurred
in connection with the release of any Mortgage Loan Documents as may be required
by the servicing activities hereunder and all other costs and expenses incurred
in connection with the sale of the Mortgage Loans by the Seller to the
Purchaser, including without limitation the Purchaser's attorneys' fees.

         SECTION 11. Administration and Servicing of Mortgage Loans.

         Subsection 11.01 Servicer to Act as Servicer; Subservicing.

         The Servicer, as an independent contractor, shall service and
administer the Mortgage Loans in accordance with this Agreement and Customary
Servicing Procedures and the terms of the Mortgage Notes and Mortgages, and
shall have full power and authority, acting alone or through subservicers or
agents, to do or cause to be done any and all things in connection with such
servicing and administration which the Servicer may deem necessary or desirable
and


                                       36
<PAGE>

consistent with the terms of this Agreement. The Servicer shall service the
Mortgage Loans in accordance with the guidelines of the applicable governing
agency, including, with respect to the Non-Conventional Mortgage Loans, FHA or
VA, as applicable, and shall comply with all of the rules and regulations as set
forth by each applicable agency. The Servicer may perform its servicing
responsibilities through agents or independent contractors, but shall not
thereby be released from any of its responsibilities hereunder. Notwithstanding
anything to the contrary, the Servicer may delegate any of its duties under this
Agreement to one or more of its affiliates without regard to any of the
requirements of this section; provided, however, that the Servicer shall not be
released from any of its responsibilities hereunder by virtue of such
delegation. The Mortgage Loans may be subserviced by one or more unaffiliated
subservicers on behalf of the Servicer provided (i) with respect to the
Conventional Mortgage Loans, each subservicer is a Fannie Mae approved
seller/servicer or a Freddie Mac approved seller/servicer in good standing, and
no event has occurred, including but not limited to a change in insurance
coverage, that would make it unable to comply with the eligibility for
seller/servicers imposed by Fannie Mae or Freddie Mac, or which would require
notification to Fannie Mae or Freddie Mac and, (ii) with respect to the
Non-Conventional Mortgage Loans, each subservicer is an eligible FHA and VA
servicer in good standing, and no event has occurred, including but not limited
to a change in insurance coverage, that would make it unable to comply with the
eligibility for imposed by FHA or VA, or which would require notification to FHA
or VA. The Servicer shall pay all fees and expenses of the subservicer from its
own funds (provided that any such expenditures that would constitute Servicing
Advances if made by the Servicer hereunder shall be reimbursable to the Servicer
as Servicing Advances), and the subservicer's fee shall not exceed the Servicing
Fee.

         At the cost and expense of the Servicer, without any right of
reimbursement from the Custodial Account, the Servicer 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 meeting
the requirements in the preceding paragraph; provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Servicer, at the
Servicer's option, from electing to service the related Mortgage Loans itself.
If the Servicer's responsibilities and duties under this Agreement are
terminated and if requested to do so by the Purchaser, the Servicer shall at its
own cost and expense terminate the rights and responsibilities of the
subservicer as soon as is reasonably possible. The Servicer shall pay all fees,
expenses or penalties necessary in order to terminate the rights and
responsibilities of the subservicer from the Servicer's own funds without
reimbursement from the Purchaser.

         The Servicer shall be entitled to enter into an agreement with the
subservicer for indemnification of the Servicer 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 Mortgage Loans involving the subservicer shall be deemed to be
between the subservicer and Servicer alone, and the Purchaser shall have no
obligations, duties or liabilities with respect to the subservicer including no
obligation, duty or liability of Purchaser to pay the subservicer's fees and
expenses. For purposes of distributions and advances by the Servicer pursuant to
this Agreement, the Servicer shall be deemed to have received a payment on a
Mortgage Loan when the subservicer has received such payment.


                                       37
<PAGE>

         Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor; provided, however, that (unless the Mortgagor is in default with
respect to the Mortgage Loan, or such default is, in the judgment of the
Servicer, imminent, and the Servicer has the consent of the Purchaser) the
Servicer shall not enter into any payment plan or agreement to modify payments
with a Mortgagor resulting in the impairment of coverage under the MIC or LCG,
as applicable, lasting more than six (6) months or permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate, the
Lifetime Rate Cap (if applicable), the Initial Rate Cap (if applicable), the
Periodic Rate Cap (if applicable) or the Gross Margin (if applicable), defer or
forgive the payment of any principal or interest, change the outstanding
principal amount (except for actual payments of principal), make any future
advances or extend the final maturity date, as the case may be, with respect to
such Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer in its own name or acting through subservicers or agents is hereby
authorized and empowered by the Purchaser when the Servicer believes it
appropriate and reasonable in its best judgment, to execute and deliver, on
behalf of itself and the Purchaser, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and the Mortgaged Properties and
to institute foreclosure proceedings or obtain a deed-in-lieu of foreclosure so
as to convert the ownership of such properties, and to hold or cause to be held
title to such properties, on behalf of the Purchaser pursuant to the provisions
of Subsection 11.13.

         The Servicer shall notify the Purchaser of its intention to institute
any foreclosure proceeding no fewer than ten (10) days prior to initiating such
proceeding. The Servicer shall notify the Purchaser of its intention to accept a
deed-in-lieu of foreclosure or a partial release of any of the Mortgaged
Property subject to the lien of the Mortgage no fewer than ten (10) days prior
to accepting such deed-in-lieu or partial release and shall only accept such
deed-in-lieu or grant such partial release if the Purchaser has not objected
before the end of the tenth day after delivery of such notice. In connection
with any foreclosure sale, the Servicer shall consult with the Purchaser with
regard to a bid price for the related Mortgaged Property and shall set such bid
price in accordance with the Purchaser's instructions. The Servicer shall make
all required Servicing Advances and shall service and administer the Mortgage
Loans in accordance with all applicable laws, rules and regulations and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Purchaser shall furnish to the Servicer any powers of attorney and other
documents reasonably necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties under this Agreement.

         Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed-in-lieu of foreclosure, if
the Servicer has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or waste, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector at the Purchaser's expense, provided that the Purchaser has provided
consent (not to be unreasonably withheld) to such inspection prior thereto. Upon
completion of the inspection, the Servicer shall promptly provide the Purchaser
with a written report of the environmental inspection. After reviewing the
inspection, the Purchaser shall determine how the Servicer shall proceed with
respect to the Mortgaged Property.


                                       38
<PAGE>

         Subsection 11.02 Liquidation of Mortgage Loans.

         In the event that any payment due under any Mortgage Loan is not paid
when the same becomes due and payable, or in the event the Mortgagor fails to
perform any other covenant or obligation under the Mortgage Loan and such
failure continues beyond any applicable grace period, the Servicer shall take
such action as it shall deem to be in the best interest of the Purchaser. In the
event that any payment due under any Mortgage Loan remains delinquent for a
period of ninety (90) days or more, the Servicer shall commence foreclosure
proceedings in accordance with Customary Servicing Procedures and the guidelines
set forth by Fannie Mae or Freddie Mac and FHA or VA, as applicable. In such
connection, the Servicer shall from its own funds make all necessary and proper
Servicing Advances. If the portion of any Liquidation Proceeds allocable as a
recovery of interest on any Mortgage Loan is less than the full amount of
accrued and unpaid interest on such Mortgage Loan as of the date such proceeds
are received, then the applicable Servicing Fees with respect to such Mortgage
Loan shall be paid first and any amounts remaining thereafter shall be
distributed to the Purchaser.

         Subsection 11.03 Collection of Mortgage Loan Payments.

         Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Servicer will proceed diligently, in
accordance with this Agreement, to collect all payments due under each of the
Mortgage Loans when the same shall become due and payable. Further, the Servicer
will in accordance with Customary Servicing Procedures ascertain and estimate
taxes, assessments, fire and hazard insurance premiums, premiums for Primary
Mortgage Insurance Policies, and all other charges that, as provided in any
Mortgage, will become due and payable to the end that the installments payable
by the Mortgagors will be sufficient to pay such charges as and when they become
due and payable.

         Subsection 11.04 Establishment of Custodial Account; Deposits in
         Custodial Account.

         The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts
(collectively, the "Custodial Account"), titled "Bank of America, N.A., in trust
for Morgan Stanley Mortgage Capital Inc. as Purchaser of Mortgage Loans and
various Mortgagors." Such Custodial Account shall be established with a
commercial bank, a savings bank or a savings and loan association (which may be
a depository affiliate of the Servicer) which meets the guidelines set forth by
Fannie Mae or Freddie Mac as an eligible depository institution for custodial
accounts. The Custodial Account shall initially be established and maintained at
Bank of America, N.A., or any successor thereto, and shall not be transferred to
any other depository institution without the Purchaser's approval, which shall
not unreasonably be withheld. In any case, the Custodial Account shall be
insured by the FDIC in a manner which shall provide maximum available insurance
thereunder and which may be drawn on by the Servicer. The creation of any
Custodial Account shall be evidenced by a certification in the form of Exhibit 4
hereto.

         The Servicer shall deposit in the Custodial Account on a daily basis,
and retain therein the following payments and collections received or made by it
subsequent to the related Cut-off


                                       39
<PAGE>

Date (other than in respect of principal and interest on the Mortgage Loans due
on or before the related Cut-off Date):

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

                  (b) all payments on account of interest on the Mortgage Loans
         adjusted to the related Mortgage Loan Remittance Rate;

                  (c) all Liquidation Proceeds;

                  (d) all proceeds received by the Servicer under any title
         insurance policy, hazard insurance policy, Primary Mortgage Insurance
         Policy or other insurance policy other than proceeds to be held in the
         Escrow Account and applied to the restoration or repair of the
         Mortgaged Property or released to the Mortgagor in accordance with
         Customary Servicing Procedures;

                  (e) all awards or settlements in respect of condemnation
         proceedings or eminent domain affecting any Mortgaged Property which
         are not released to the Mortgagor in accordance with Customary
         Servicing Procedures;

                  (f) any amount required to be deposited in the Custodial
         Account pursuant to Subsections 11.15, 11.17 and 11.19;

                  (g) any amount required to be deposited by the Servicer in
         connection with any REO Property pursuant to Subsection 11.13;

                  (h) any amounts payable in connection with the repurchase of
         any Mortgage Loan pursuant to the provisions of Subsection 7.03 and all
         amounts required to be deposited by the Servicer in connection with
         shortfalls in principal amount of Substitute Mortgage Loans pursuant to
         Subsection 7.03;

                  (i) with respect to each Principal Prepayment in full, an
         amount (to be paid by the Servicer out of its own funds) which, when
         added to all amounts allocable to interest received in connection with
         the Principal Prepayment in full, equals one month's interest on the
         amount of principal so prepaid for the month of prepayment at the
         applicable Mortgage Loan Remittance Rate; provided, however, that the
         Servicer's aggregate obligations under this paragraph for any month
         shall be limited to the total amount of Servicing Fees actually
         received with respect to the Mortgage Loans by the Servicer during such
         month; and

                  (j) amounts required to be deposited by the Servicer in
         connection with the deductible clause of any hazard insurance policy.

         The foregoing requirements for deposit in the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
assumption fees and other ancillary fees need not be deposited by the Servicer
in the Custodial Account.


                                       40
<PAGE>

         The Servicer may invest the funds in the Custodial Account in Eligible
Investments designated in the name of the Servicer for the benefit of the
Purchaser, which shall mature not later than the Business Day next preceding the
Remittance Date next following the date of such investment (except that (A) any
investment in the institution with which the Custodial Account is maintained may
mature on such Remittance Date and (B) any other investment may mature on such
Remittance Date if the Servicer shall advance funds on such Remittance Date,
pending receipt thereof to the extent necessary to make distributions to the
Purchaser) and shall not be sold or disposed of prior to maturity.
Notwithstanding anything to the contrary herein and above, all income and gain
realized from any such investment shall be for the benefit of the Servicer and
shall be subject to withdrawal by the Servicer. The amount of any losses
incurred in respect of any such investments shall be deposited in the Custodial
Account by the Servicer out of its own funds immediately as realized.

         Subsection 11.05 Withdrawals From the Custodial Account.

         The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:

                  (a) to make payments to the Purchaser in the amounts and in
         the manner provided for in Subsection 11.15;

                  (b) to reimburse itself for P&I Advances, the Servicer's right
         to reimburse itself pursuant to this subclause (b) with respect to any
         Mortgage Loan being limited to related Liquidation Proceeds,
         Condemnation Proceeds, Insurance Proceeds and such other amounts as may
         be collected by the Servicer from the Mortgagor or otherwise relating
         to the Mortgage Loan, it being understood that, in the case of any such
         reimbursement, the Servicer's right thereto shall be prior to the
         rights of the Purchaser with respect to such Mortgage Loan, except
         that, where the Seller is required to repurchase a Mortgage Loan,
         pursuant to Subsection 7.03, the Servicer's right to such reimbursement
         shall be subsequent to the payment to the Purchaser of the Repurchase
         Price pursuant to Subsection 7.03, and all other amounts required to be
         paid to the Purchaser with respect to such Mortgage Loan;

                  (c) to reimburse itself for any unpaid Servicing Fees and for
         unreimbursed Servicing Advances, the Servicer's right to reimburse
         itself pursuant to this subclause (c) with respect to any Mortgage Loan
         being limited to related Liquidation Proceeds, Condemnation Proceeds,
         Insurance Proceeds and such other amounts as may be collected by the
         Servicer from the Mortgagor or otherwise relating to the Mortgage Loan,
         it being understood that, in the case of any such reimbursement, the
         Servicer's right thereto shall be prior to the rights of the Purchaser
         unless the Seller is required to repurchase a Mortgage Loan pursuant to
         Subsection 7.03, in which case the Servicer's right to such
         reimbursement shall be subsequent to the payment to the Purchaser of
         the related Repurchase Price pursuant to Subsection 7.03 and all other
         amounts required to be paid to the Purchaser with respect to such
         Mortgage Loan;

                  (d) to reimburse itself for unreimbursed Servicing Advances
         and for unreimbursed P&I Advances, to the extent that such amounts are
         nonrecoverable (as


                                       41
<PAGE>

         certified by the Servicer to the Purchaser in an Officer's Certificate)
         by the Servicer pursuant to subclause (b) or (c) above, provided that
         the Mortgage Loan for which such advances were made is not required to
         be repurchased by a Seller pursuant to Subsection 7.03;

                  (e) to reimburse itself for expenses incurred by and
         reimbursable to it pursuant to Subsection 12.01;

                  (f) to withdraw amounts to make P&I Advances in accordance
         with Subsection 11.17;

                  (g) to pay to itself any interest earned or any investment
         earnings on funds deposited in the Custodial Account, net of any losses
         on such investments;

                  (h) to withdraw any amounts inadvertently deposited in the
         Custodial Account; and

                  (i) to clear and terminate the Custodial Account upon the
         termination of this Agreement.

         Upon request, the Servicer will provide the Purchaser with copies of
reasonably acceptable invoices or other documentation relating to Servicing
Advances that have been reimbursed from the Custodial Account.

         Subsection 11.06 Establishment of Escrow Account; Deposits in Escrow
         Account.

         The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts (collectively, the "Escrow Account"),
titled "Bank of America, N.A., in trust for Morgan Stanley Mortgage Capital Inc.
as Purchaser of Mortgage Loans and various Mortgagors." The Escrow Account shall
be established with a commercial bank, a savings bank or a savings and loan
association (which may be a depository affiliate of Servicer), which meets the
guidelines set forth by Fannie Mae or Freddie Mac as an eligible institution for
escrow accounts. The Escrow Account shall initially be established and
maintained at Bank of America, N.A., or any successor thereto, and shall not be
transferred to any other depository institution without the Purchaser's
approval, which shall not unreasonably be withheld. In any case, the Escrow
Account shall be insured by the FDIC in a manner which shall provide maximum
available insurance thereunder and which may be drawn on by the Servicer. The
creation of any Escrow Account shall be evidenced by a certification in the form
of Exhibit 5 hereto.

         The Servicer shall deposit in the Escrow Account on a daily basis, and
retain therein: (a) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement and (b) all amounts representing proceeds of
any hazard insurance policy which are to be applied to the restoration or repair
of any Mortgaged Property. The Servicer shall make withdrawals therefrom only in
accordance with Subsection 11.07 hereof. As part of its servicing duties, the


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<PAGE>

Servicer shall pay to the Mortgagors interest on funds in the Escrow Account, to
the extent required by law.

         Subsection 11.07 Withdrawals From Escrow Account.

         Withdrawals from the Escrow Account shall be made by the Servicer only
(a) to effect timely payments of ground rents, taxes, assessments, premiums for
Primary Mortgage Insurance Policies, fire and hazard insurance premiums or other
items constituting Escrow Payments for the related Mortgage, (b) to reimburse
the Servicer for any Servicing Advance made by Servicer pursuant to Subsection
11.08 hereof with respect to a related Mortgage Loan, (c) to refund to any
Mortgagor any funds found to be in excess of the amounts required under the
terms of the related Mortgage Loan, (d) for transfer to the Custodial Account
upon default of a Mortgagor or in accordance with the terms of the related
Mortgage Loan and if permitted by applicable law, (e) for application to restore
or repair of the Mortgaged Property, (f) to pay to the Mortgagor, to the extent
required by law, any interest paid on the funds deposited in the Escrow Account,
(g) to pay to itself any interest earned on funds deposited in the Escrow
Account (and not required to be paid to the Mortgagor), (h) to the extent
permitted under the terms of the related Mortgage Note and applicable law, to
pay late fees with respect to any Monthly Payment which is received after the
applicable grace period, (i) to withdraw suspense payments that are deposited
into the Escrow Account, (j) to withdraw any amounts inadvertently deposited in
the Escrow Account or (k) to clear and terminate the Escrow Account upon the
termination of this Agreement.

         Subsection 11.08 Payment of Taxes, Insurance and Other Charges;
         Collections Thereunder.

         With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments and
other charges which are or may become a lien upon the Mortgaged Property and the
status of premiums for Primary Mortgage Insurance Policies and fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage. To the extent that a Mortgage does not
provide for Escrow Payments, the Servicer shall determine that any such payments
are made by the Mortgagor. The Servicer assumes full responsibility for the
timely payment of all such bills and shall effect timely payments of all such
bills irrespective of each Mortgagor's faithful performance in the payment of
same or the making of the Escrow Payments and shall make Servicing Advances to
effect such payments, subject to its ability to recover such Servicing Advances
pursuant to Subsections 11.05(c), 11.05(d) and 11.07(b). No costs incurred by
the Servicer or subservicers in effecting the payment of taxes and assessments
on the Mortgaged Properties shall, for the purpose of calculating remittances to
the Purchaser, be added to the amount owing under the related Mortgage Loans,
notwithstanding that the terms of such Mortgage Loans so permit.


                                       43
<PAGE>

         Subsection 11.09 Transfer of Accounts.

         The Servicer may transfer the Custodial Account or the Escrow Account
to a different depository institution. Such transfer shall be made only upon
obtaining the prior written consent of the Purchaser, such consent not to be
unreasonably withheld.

         Subsection 11.10 Maintenance of Hazard Insurance.

         The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance with extended coverage customary in the area where the
Mortgaged Property is located by an insurer acceptable to Fannie Mae or Freddie
Mac and FHA or VA, as applicable, in an amount which is at least equal to the
lesser of (a) the full insurable value of the Mortgaged Property or (b) the
greater of (i) the outstanding principal balance owing on the Mortgage Loan and
(ii) an amount such that the proceeds of such insurance shall be sufficient to
avoid the application to the Mortgagor or loss payee of any coinsurance clause
under the policy. If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as a special flood
hazard area (and such flood insurance has been made available) the Servicer will
cause to be maintained a flood insurance policy meeting the requirements of the
National Flood Insurance Program, in an amount representing coverage not less
than the lesser of (A) the minimum amount required under the terms of the
coverage to compensate for any damage or loss to the Mortgaged Property on a
replacement-cost basis (or the outstanding principal balance of the Mortgage
Loan if replacement-cost basis is not available) or (B) the maximum amount of
insurance available under the National Flood Insurance Program. The Servicer
shall also maintain on REO Property fire and hazard insurance with extended
coverage in an amount which is at least equal to the maximum insurable value of
the improvements which are a part of such property, liability insurance and, to
the extent required and available under the National Flood Insurance Program,
flood insurance in an amount required above. Any amounts collected by the
Servicer under any such policies (other than amounts to be deposited in the
Escrow Account and applied to the restoration or repair of the property subject
to the related Mortgage or property acquired in liquidation of the Mortgage
Loan, or to be released to the Mortgagor in accordance with Customary Servicing
Procedures) shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Subsection 11.05. It is understood and agreed that no earthquake or
other additional insurance need be required by the Servicer of any Mortgagor or
maintained on REO Property other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. All policies required hereunder shall be endorsed with
standard mortgagee clauses with loss payable to Servicer, and shall provide for
at least thirty (30) days prior written notice of any cancellation, reduction in
amount or material change in coverage to the Servicer. The Servicer shall not
interfere with the Mortgagor's freedom of choice in selecting either its
insurance carrier or agent; provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies are acceptable to Fannie Mae or Freddie Mac and FHA or VA, as
applicable, and are licensed to do business in the state wherein the property
subject to the policy is located.

         The hazard insurance policies for each Mortgage Loan secured by a unit
in a condominium development or planned unit development shall be maintained
with respect to such


                                       44
<PAGE>

Mortgage Loan and the related development in a manner which is consistent with
Fannie Mae or Freddie Mac requirements and FHA or VA requirements, as
applicable.

         Subsection 11.11 Maintenance of Primary Mortgage Insurance Policy;
         Claims.

         With respect to each Mortgage Loan with a LTV in excess of 80%, the
Servicer shall, without any cost to the Purchaser, maintain or cause the
Mortgagor to maintain in full force and effect a Primary Mortgage Insurance
Policy insuring that portion of the Mortgage Loan in excess of a percentage in
conformance with Fannie Mae and FHA or VA requirements, as applicable. The
Servicer shall pay or shall cause the Mortgagor to pay the premium thereon on a
timely basis, at least until the LTV of such Mortgage Loan is reduced to 80%. In
the event that such Primary Mortgage Insurance Policy shall be terminated, the
Servicer shall obtain from another insurer a comparable replacement policy, with
a total coverage equal to the remaining coverage of such terminated Primary
Mortgage Insurance Policy. If the insurer shall cease to be a qualified insurer,
the Servicer shall obtain from another qualified insurer a replacement Primary
Mortgage Insurance Policy. The Servicer shall not take any action which would
result in noncoverage under any applicable Primary Mortgage Insurance Policy of
any loss which, but for the actions of the Servicer would have been covered
thereunder. In connection with any assumption or substitution agreement entered
into or to be entered into pursuant to Subsection 11.18, the Servicer shall
promptly notify the insurer under the related Primary Mortgage Insurance Policy,
if any, of such assumption or substitution of liability in accordance with the
terms of such Primary Mortgage Insurance Policy and shall take all actions which
may be required by such insurer as a condition to the continuation of coverage
under such Primary Mortgage Insurance Policy. If such Primary Mortgage Insurance
Policy is terminated as a result of such assumption or substitution of
liability, the Servicer shall obtain a replacement Primary Mortgage Insurance
Policy as provided above.

         In connection with its activities as servicer, the Servicer agrees to
prepare and present or to assist the Purchaser in preparing and presenting, on
behalf of itself and the Purchaser, claims to the insurer under any Primary
Mortgage Insurance Policy in a timely fashion in accordance with the terms of
such Primary Mortgage Insurance Policy and, in this regard, to take such action
as shall be necessary to permit recovery under any Primary Mortgage Insurance
Policy respecting a defaulted Mortgage Loan. Pursuant to Subsection 11.06, any
amounts collected by the Servicer under any Primary Mortgage Insurance Policy
shall be deposited in the Escrow Account, subject to withdrawal pursuant to
Subsection 11.07.

         Subsection 11.12 Fidelity Bond; Errors and Omissions Insurance.

         The Servicer shall maintain, at its own expense, a blanket Fidelity
Bond and an errors and omissions insurance policy, with broad coverage on all
officers, employees or other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Mortgage
Loans. These policies must insure the Servicer against losses resulting from
fraud, theft, errors, omissions, negligence, dishonest or fraudulent acts
committed by the Servicer's personnel, any employees of outside firms that
provide data processing services for the Servicer, and temporary contract
employees or student interns. The Fidelity Bond shall also protect and insure
the Servicer against losses in connection with the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby.


                                       45
<PAGE>

No provision of this Subsection 11.12 requiring such Fidelity Bond and errors
and omissions insurance shall diminish or relieve the Servicer from its duties
and obligations as set forth in this Agreement. The minimum coverage under any
such Fidelity Bond and insurance policy shall be at least equal to the
corresponding amounts required by FHA or VA, Fannie Mae in the Fannie Mae
Servicing Guide or by Freddie Mac in the Freddie Mac Guide, as amended or
restated from time to time, as applicable, or in an amount as may be permitted
to the Servicer by express waiver of FHA or VA and Fannie Mae or Freddie Mac, as
applicable. Upon request of the Purchaser, the Servicer shall cause to be
delivered to the Purchaser a certified true copy of such Fidelity Bond or a
certificate evidencing the same with a statement that the Servicer shall
endeavor to provide written notice to the Purchaser thirty (30) days prior to
modification or any material change.

         Subsection 11.13 Title, Management and Disposition of REO Property.

         (a) In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser or its nominee.

         (b) The Purchaser, by giving notice to the Servicer, may elect to
manage and dispose of all REO Property acquired pursuant to this Agreement by
itself. If the Purchaser so elects, the Purchaser shall assume control of REO
Property at the time of its acquisition and the Servicer shall forward the
related Mortgage File to the Purchaser as soon as is practicable. Promptly upon
assumption of control of any REO Property, the Purchaser shall reimburse any
related Servicing Advances or other expenses incurred by the Servicer with
respect to that REO Property.

         (c) If the Purchaser has not informed the Servicer that it will manage
REO Property, the provisions of this Subsection 11.13(c) shall apply. The
Servicer shall cause to be deposited on a daily basis in the Custodial Account
all revenues received with respect to the conservation of the related REO
Property. The Servicer shall make distributions as required on each Remittance
Date to the Purchaser of the net cash flow from the REO Property (which shall
equal the revenues from such REO Property net of the expenses described above
and of any reserves reasonably required from time to time to be maintained to
satisfy anticipated liabilities for such expenses).

         The disposition of REO Property shall be carried out by the Servicer.
Upon the request of the Purchaser, and at the Purchaser's expense, the Servicer
shall cause an appraisal of the REO Property to be performed for the Purchaser.

         The Servicer shall either itself or through an agent selected by the
Servicer, manage, conserve, protect and operate the REO Property in the same
manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the REO Property is managed. Any disbursement in excess of
$5,000 shall be made only with the written approval of the Purchaser. The
Servicer shall bill the Purchaser for such costs upon the sale of the REO
Property and shall not withdraw funds to cover such costs from the Custodial
Account.


                                       46
<PAGE>

         If a REMIC election is or is to be made with respect to the arrangement
under which the Mortgage Loans and any REO Property are held, the Servicer shall
manage, conserve, protect and operate each REO Property in a manner which does
not cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by such
REMIC of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" within
the meaning of Section 860G(c)(2) of the Code.

         Subsection 11.14 Servicing Compensation.

         As compensation for its services hereunder, the Servicer shall be
entitled to retain the Servicing Fee from interest payments actually collected
on the Mortgage Loans. Additional servicing compensation in the form of
assumption fees, late payment charges, prepayment penalties and other ancillary
income shall be retained by the Servicer to the extent not required to be
deposited in the Custodial Account. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement therefor except as specifically
provided for herein. The Servicing Fee shall not be reduced by the amount of any
guaranty fee payable to FHA or VA.

         Subsection 11.15 Distributions.

         On each Remittance Date the Servicer shall remit by wire transfer of
immediately available funds to the account designated in writing by the
Purchaser of record on the preceding Record Date (a) all amounts credited to the
Custodial Account at the close of business on the related Determination Date,
net of charges against or withdrawals from the Custodial Account pursuant to
Subsection 11.05(b) through (h), plus (b) all amounts, if any, which the
Servicer is obligated to distribute pursuant to Subsection 11.17, minus (c) any
amounts attributable to Principal Prepayments received after the end of the
calendar month preceding the month in which the Remittance Date occurs, minus
(d) any amounts attributable to Monthly Payments collected but due on a Due Date
or Due Dates subsequent to the related Due Date.

         With respect to any remittance received by the Purchaser after the
Business Day on which such payment was due, the Servicer shall pay to the
Purchaser interest on any such late payment at an annual rate equal to the rate
of interest as is publicly announced from time to time at its principal office
by Bank of America, N.A., or its successor, as its prime lending rate, adjusted
as of the date of each change, plus two percent (2%), but in no event greater
than the maximum amount permitted by applicable law. Such interest shall be paid
by the Servicer to the Purchaser on the date such late payment is made and shall
cover the period commencing with the Business Day on which such payment was due
and ending with the Business Day immediately preceding the Business Day on which
such payment is made, both inclusive. The payment by the Servicer of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by the Servicer.

         Subsection 11.16 Statements to the Purchaser.

         Not later than five (5) days prior to each related Remittance Date, the
Servicer shall forward to the Purchaser a statement, substantially in the form
of Exhibit 8 and certified by a


                                       47
<PAGE>

Servicing Officer, setting forth on a loan-by-loan basis: (a) the amount of the
distribution made on such Remittance Date which is allocable to principal and
allocable to interest; (b) the amount of servicing compensation received by the
Servicer during the prior calendar month; and (c) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the preceding month. Such
statement shall also include information regarding delinquencies on Mortgage
Loans, indicating the number and aggregate principal amount of Mortgage Loans
which are either one (1), two (2) or three (3) or more months delinquent and the
book value of any REO Property. The Servicer shall submit to the Purchaser
monthly a liquidation report with respect to each Mortgaged Property sold in a
foreclosure sale as of the related Record Date and not previously reported. Such
liquidation report shall be incorporated into the remittance report delivered to
Purchaser in the form of Exhibit 8 hereto. The Servicer shall also provide such
information as set forth above to the Purchaser in electronic form in the
Servicer's standard format, a copy of which has been provided by the Servicer.

         In addition, within a reasonable period of time after the end of each
calendar year, the Servicer will furnish a report to each Person that was a
Purchaser at any time during such calendar year. Such report shall state the
aggregate of amounts distributed to the Purchaser for such calendar year. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code.

         The Servicer shall prepare and file any and all tax returns,
information statements or other filings required to be delivered to any
governmental taxing authority, the Mortgagor or to the Purchaser pursuant to any
applicable law with respect to the Mortgage Loans and the transactions
contemplated hereby. In addition, the Servicer shall provide the Purchaser with
such information concerning the Mortgage Loans as is necessary for such
Purchaser to prepare federal income tax returns as the Purchaser may reasonably
request from time to time.

         Subsection 11.17 Advances by the Servicer.

         On the Business Day immediately preceding each related Remittance Date,
the Servicer shall either (a) deposit in the Custodial Account from its own
funds an amount equal to the aggregate amount of all Monthly Payments (with
interest adjusted to the Mortgage Loan Remittance Rate) which were due on the
Mortgage Loans during the applicable Due Period and which were delinquent at the
close of business on the immediately preceding Determination Date (each such
advance, a "P&I Advance"), (b) cause to be made an appropriate entry in the
records of the Custodial Account that amounts held for future distribution have
been, as permitted by this Subsection 11.17, used by the Servicer in discharge
of any such P&I Advance or (c) make P&I Advances in the form of any combination
of (a) or (b) aggregating the total amount of advances to be made. Any amounts
held for future distribution and so used shall be replaced by the Servicer by
deposit in the Custodial Account on or before any future Remittance Date if
funds in the Custodial Account on such Remittance Date shall be less than
payments to the Purchaser required to be made on such Remittance Date. The
Servicer's obligation to make P&I Advances as to any Mortgage Loan will continue
through the last Monthly Payment due prior to the payment in full of a Mortgage
Loan, or through the last related Remittance Date prior to the Remittance Date
for the distribution of all other payments or recoveries (including proceeds
under any title, hazard or other insurance policy, or condemnation awards) with
respect to a


                                       48
<PAGE>

Mortgage Loan; provided, however, that such obligation shall cease if the
Servicer, in its good faith judgment, determines that such P&I Advances would
not be recoverable pursuant to Subsection 11.05(d). The determination by the
Servicer that a P&I Advance, if made, would be nonrecoverable, shall be
evidenced by an Officer's Certificate of the Servicer, delivered to the
Purchaser, which details the reasons for such determination.

         Subsection 11.18 Assumption Agreements.

         The Servicer will use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note; provided that, subject to
the Purchaser's prior approval, the Servicer shall permit such assumption if so
required in accordance with the terms of the Mortgage or the Mortgage Note. When
the Mortgaged Property has been conveyed by the Mortgagor, the Servicer will, to
the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto; provided, however, the Servicer will not exercise such
rights if prohibited by law from doing so or if the exercise of such rights
would impair or threaten to impair any recovery under the related Primary
Mortgage Insurance Policy, if any, or if the exercise of such rights would
impair or threaten to impair any recovery under the related MIC or LGC. In
connection with any such assumption, the outstanding principal amount, the
Monthly Payment, the Mortgage Interest Rate, the Lifetime Rate Cap (if
applicable), the Gross Margin (if applicable), the Initial Rate Cap (if
applicable) or the Periodic Rate Cap (if applicable) of the related Mortgage
Note shall not be changed, and the term of the Mortgage Loan will not be
increased or decreased. If an assumption is allowed pursuant to this Subsection
11.18, the Servicer, with the prior consent of the issuer of the Primary
Mortgage Insurance Policy, if any, is authorized to enter into a substitution of
liability agreement with the purchaser of the Mortgaged Property pursuant to
which the original Mortgagor is released from liability and the purchaser of the
Mortgaged Property is substituted as Mortgagor and becomes liable under the
Mortgage Note.

         Subsection 11.19 Satisfaction of Mortgages and Release of Mortgage
         Files.

         Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will obtain the portion of the
Mortgage File that is in the possession of the Purchaser or its designee,
prepare and process any required satisfaction or release of the Mortgage and
notify the Purchaser in accordance with the provisions of this Agreement. The
Purchaser agrees to deliver to the Servicer (or cause to be delivered to the
Servicer) the original Mortgage Note for any Mortgage Loan not later than five
(5) Business Days following its receipt of a notice from the Servicer that such
a payment in full has been received or that a notification has been received
that such a payment in full shall be made. Such Mortgage Note shall be held by
the Servicer, in trust, for the purpose of canceling such Mortgage Note and
delivering the canceled Mortgage Note to the Mortgagor in a timely manner as and
to the extent provided under any applicable federal or state law.

         In the event the Servicer grants a satisfaction or release of a
Mortgage without having obtained payment in full of the indebtedness secured by
the Mortgage or should the Servicer otherwise prejudice any right the Purchaser
may have under the mortgage instruments, the


                                       49
<PAGE>

Servicer shall remit to the Purchaser the Stated Principal Balance of the
related Mortgage Loan by deposit thereof in the Custodial Account. The Fidelity
Bond shall insure the Servicer against any loss it may sustain with respect to
any Mortgage Loan not satisfied in accordance with the procedures set forth
herein.

         Subsection 11.20 Annual Statement as to Compliance.

         Within seventy-five (75) days after the Servicer's fiscal year end,
beginning with the fiscal year end 2003, the Servicer will deliver to the
Purchaser an Officer's Certificate stating that (a) a review of the activities
of the Servicer during the preceding calendar year and if performance under this
Agreement has been made under such officer's supervision, and (b) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof and the action
being taken by the Servicer to cure such default.

         Subsection 11.21 Annual Independent Public Accountants' Servicing
         Report.

         Within seventy-five (75) days after the Servicer's fiscal year end,
beginning with the fiscal year end 2003, the Servicer 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 a statement to the
Purchaser to the effect that such firm has, with respect to the Servicer's
overall servicing operations, examined such operations in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers,
stating such firm's conclusions relating thereto.

         Subsection 11.22 Servicer Shall Provide Access and Information as
         Reasonably Required.

         The Servicer shall provide to the Purchaser, and for any Purchaser
insured by FDIC or NAIC, the supervisory agents and examiners of FDIC and OTS or
NAIC, access to any documentation regarding the Mortgage Loans which may be
required by applicable regulations. Such access shall be afforded without
charge, but only upon reasonable request, during normal business hours and at
the offices of the Servicer.

         In addition, the Servicer shall furnish upon request by the Purchaser,
during the term of this Agreement, such periodic, special or other reports or
information, whether or not provided for herein, as shall be necessary,
reasonable and appropriate with respect to the purposes of this Agreement and
applicable regulations. All such reports or information shall be provided by and
in accordance with all reasonable instructions and directions the Purchaser may
require. The Servicer agrees to execute and deliver all such instruments and
take all such action as the Purchaser, from time to time, may reasonably request
in order to effectuate the purposes and to carry out the terms of this
Agreement.

         Subsection 11.23 Inspections.

         The Servicer shall inspect the Mortgaged Property as often deemed
necessary by the Servicer to assure itself that the value of the Mortgaged
Property is being preserved. In addition,


                                       50
<PAGE>

if any Mortgage Loan is more than sixty (60) days delinquent, the Servicer
immediately shall inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with Customary Servicing Procedures or as may be
required by the primary mortgage guaranty insurer. The Servicer shall keep
written report of each such inspection and shall provide a copy of such
inspection to the Purchaser upon the request of the Purchaser.

         Subsection 11.24 Restoration of Mortgaged Property.

         The Servicer need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Customary Servicing Procedures. At a minimum, the Servicer
shall comply with the following conditions in connection with any such release
of Insurance Proceeds or Condemnation Proceeds:

                  (a) the Servicer shall receive satisfactory independent
         verification of completion of repairs and issuance of any required
         approvals with respect thereto;

                  (b) the Servicer shall take all steps necessary to preserve
         the priority of the lien of the Mortgage, including, but not limited to
         requiring waivers with respect to mechanics' and materialmen's liens;

                  (c) the Servicer shall verify that the Mortgage Loan is not in
         default; and

                  (d) pending repairs or restoration, the Servicer shall place
         the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.

         If the Purchaser is named as an additional loss payee, the Servicer is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.

         SECTION 12. The Servicer.

         Subsection 12.01 Indemnification; Third Party Claims.

         (a) The Servicer agrees to indemnify and hold harmless the Purchaser,
any successor servicer and their respective present and former directors,
officers, employees and agents harmless from any and all claims, losses,
penalties, fines, forfeitures, legal fees and expenses, related costs,
judgments, and any other costs, fees and expenses that such parties may sustain
in any way related to the failure of the Servicer to service the Mortgage Loans
in compliance with the terms of this Agreement.

         (b) The Servicer shall immediately notify the Purchaser if a claim is
made by a third party with respect to this Agreement or the Mortgage Loans, and
the Servicer shall assume (with the written consent of the Purchaser) the
defense of any such claim and pay all expenses in connection therewith,
including counsel fees. If the Servicer has assumed the defense of the
Purchaser, the Servicer shall provide the Purchaser with a written report of all
expenses and advances incurred by the Servicer pursuant to this Subsection 12.01
and the Purchaser shall promptly reimburse the Servicer for all amounts advanced
by it pursuant to the preceding


                                       51
<PAGE>

sentence except when the claim in any way relates to the failure of the Servicer
to service the Mortgage Loans in accordance with the terms of this Agreement.

         For purposes of this Subsection 12.01, "Purchaser" shall mean the
Person then acting as the Purchaser under this Agreement and any and all Persons
who previously were "Purchasers" under Section 29 of this Agreement.

         Subsection 12.02 Merger or Consolidation of the Servicer.

         The Servicer will keep in full effect its existence, rights and
franchises as a national banking association, and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.

         Any Person into which the Servicer may be merged or consolidated, or
any entity resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to substantially all of the
business of the Servicer (whether or not related to loan servicing), shall be
the successor of the Servicer 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.

         Subsection 12.03 Limitation on Liability of the Servicer and Others.

         The duties and obligations of the Servicer shall be determined solely
by the express provisions of this Agreement, the Servicer shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Agreement and no implied covenants or obligations shall be
read into this Agreement against the Servicer. Neither the Servicer nor any of
the directors, officers, employees or agents of the Servicer shall be under any
liability to the Purchaser for any action taken or for refraining from the
taking of any action in accordance with Customary Servicing Procedures and
otherwise in good faith pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer against
any liability resulting from any breach of any representation or warranty made
herein, or from any liability specifically imposed on the Servicer herein; and,
provided further, that this provision shall not protect the Servicer against any
liability that would otherwise be imposed by reason of the willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of the obligations or duties hereunder. The Servicer and any
director, officer, employee or agent of the Servicer may rely on any document of
any kind which it in good faith reasonably believes to be genuine and to have
been adopted or signed by the proper authorities respecting any matters arising
hereunder. Subject to the terms of Subsection 12.01, the Servicer shall have no
obligation to appear with respect to, prosecute or defend any legal action which
is not incidental to the Servicer's duty to service the Mortgage Loans in
accordance with this Agreement.

         Subsection 12.04 Seller and Servicer Not to Resign.

         Neither the Seller nor the Servicer shall assign this Agreement or
resign from the obligations and duties hereby imposed on it except by mutual
consent of the Servicer or the


                                       52
<PAGE>

Seller, as the case may be, and the Purchaser or upon the determination that the
Servicer's duties hereunder are no longer permissible under applicable law and
such incapacity cannot be cured by the Servicer. Any such determination
permitting the unilateral resignation of the Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser, which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation or assignment shall become effective until a successor has assumed
the Servicer's responsibilities and obligations hereunder in accordance with
Subsection 14.02.

         SECTION 13. Default.

         Subsection 13.01 Events of Default.

         In case one or more of the following Events of Default by the Servicer
shall occur and be continuing:

                  (a) any failure by the Servicer to remit to the Purchaser any
         payment required to be made under the terms of this Agreement which
         continues unremedied for a period of two (2) Business Days after the
         date upon which written notice of such failure, requiring the same to
         be remedied, shall have been given to the Servicer by the Purchaser;

                  (b) failure by the Servicer to duly observe or perform, in any
         material respect, any other covenants, obligations or agreements of the
         Servicer as set forth in this Agreement which failure continues
         unremedied for a period of thirty (30) days after the date on which
         written notice of such failure, requiring the same to be remedied,
         shall have been given to the Servicer by the Purchaser;

                  (c) 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, marshalling of assets and liabilities or similar proceedings, or
         for the winding-up or liquidation of its affairs, shall have been
         entered against the Servicer and such decree or order shall have
         remained in force, undischarged or unstayed for a period of sixty (60)
         days;

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

                  (e) the Servicer shall admit in writing its inability to pay
         its debts 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;

                  (f) the Servicer shall cease to be qualified to do business
         under the laws of any state in which a Mortgaged Property is located,
         but only to the extent such qualification is necessary to ensure the
         enforceability of each Mortgage Loan and to perform the Servicer's
         obligations under this Agreement; or


                                       53
<PAGE>

                  (g) the Servicer shall fail to meet the servicer eligibility
         qualifications of Fannie Mae or the Servicer shall fail to meet the
         servicer eligibility qualifications of Freddie Mac;

then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Servicer, may, in
addition to whatever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, commence termination of
all the rights and obligations of the Servicer under this Agreement and in and
to the Mortgage Loans and the proceeds thereof. Upon receipt by the Servicer of
such written notice from the Purchaser stating that they intend to terminate the
Servicer as a result of such Event of Default, all authority and power of the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the successor appointed pursuant to
Subsection 14.02. Upon written request from the Purchaser, the Servicer shall
prepare, execute and deliver to a successor any and all documents and other
instruments, place in such successor's possession all Mortgage Files and do or
cause to be done all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, including, but not limited to, the
transfer and endorsement or assignment of the Mortgage Loans and related
documents to the successor at the Servicer's sole expense. The Servicer agrees
to cooperate with the Purchaser and such successor in effecting the termination
of the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to such successor for administration by it of all
amounts which shall at the time be credited by the Servicer to the Custodial
Account or Escrow Account or thereafter received with respect to the Mortgage
Loans.

         Subsection 13.02 Waiver of Default.

         The Purchaser may waive any default by the Servicer in the performance
of its obligations hereunder and its consequences. Upon any waiver of a past
default, such default shall cease to exist, and any Event of 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 thereto except to the extent expressly so waived.

         SECTION 14. Termination.

         Subsection 14.01 Termination.

         The respective obligations and responsibilities of the Servicer, as
servicer, shall terminate upon (a) the distribution to the Purchaser of the
final payment or liquidation with respect to the last Mortgage Loan (or advances
of same by the Servicer), (b) the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure with respect to the last Mortgage
Loan and the remittance of all funds due hereunder or (c) by mutual consent of
the Servicer and the Purchaser in writing. Upon written request from the
Purchaser in connection with any such termination, the Servicer shall prepare,
execute and deliver, any and all documents and other instruments, place in the
Purchaser's possession all Mortgage Files, 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 Mortgage Loans and related documents, or otherwise, at the Purchaser's sole
expense. The Servicer agrees to


                                       54
<PAGE>

cooperate with the Purchaser and such successor in effecting the termination of
the Servicer's responsibilities and rights hereunder as servicer, including,F
without limitation, the transfer to such successor for administration by it of
all cash amounts which shall at the time be credited by the Servicer to the
Custodial Account or Escrow Account or thereafter received with respect to the
Mortgage Loans.

         Subsection 14.02 Successors to the Servicer.

         Prior to the termination of the Servicer's responsibilities and duties
under this Agreement pursuant to Subsections 12.04, 13.01 or 14.01, the
Purchaser shall, (a) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement or (b)
appoint a successor which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
upon such termination. In connection with such appointment and assumption, the
Purchaser may make such arrangements for the compensation of such successor out
of payments on Mortgage Loans as it and such successor shall agree. In the event
that the Servicer's duties, responsibilities and liabilities under this
Agreement shall be terminated pursuant to the aforementioned Subsections, the
Servicer shall discharge such duties and responsibilities during the period from
the date it acquires knowledge of such termination until the effective date
thereof with the same degree of diligence and prudence which it is obligated to
exercise under this Agreement, and shall take no action whatsoever that might
impair or prejudice the rights or financial condition of its successor. The
resignation or removal of the Servicer pursuant to the aforementioned
Subsections shall not become effective until a successor shall be appointed
pursuant to this Subsection and shall in no event relieve the Seller of the
representations and warranties made pursuant to Subsections 7.01 and 7.02 and
the remedies available to the Purchaser under Subsection 7.03, it being
understood and agreed that the provisions of such Subsections 7.01 and 7.02
shall be applicable to the Seller notwithstanding any such resignation or
termination of the Servicer, or the termination of this Agreement.

         Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and to the Purchaser an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Servicer or this Agreement pursuant to
Subsections 12.04, 13.01 or 14.01 shall not affect any claims that the Purchaser
may have against the Servicer arising prior to any such termination or
resignation.

         The Servicer shall promptly deliver to the successor the funds in the
Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Servicer shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer.

         Upon a successor's acceptance of appointment as such, the Servicer
shall notify by mail the Purchaser of such appointment.


                                       55
<PAGE>

         SECTION 15. Notices.

         All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address as follows:

         (a)      if to the Purchaser:

                  Morgan Stanley Mortgage Capital Inc.
                  1633 Broadway
                  New York, New York  10019
                  Attention:  Whole Loan Operations Manager

         (b)      if to the Seller:

                  Bank of America, N.A.
                  201 North Tryon Street
                  Charlotte, North Carolina 28255
                  Attention:  Secondary Marketing Manager

         (c)      if to the Servicer:

                  Bank of America, N.A.
                  475 Crosspoint Parkway
                  Getzville, New York  14068-9000
                  Attention:  Servicing Manager

or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or 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).

         SECTION 16. Severability Clause.

         Any part, provision, representation or warranty of this Agreement which
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop


                                       56
<PAGE>

a structure the economic effect of which is nearly as possible the same as the
economic effect of this Agreement without regard to such invalidity.

         SECTION 17. No Partnership.

         Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Purchaser.

         SECTION 18. Counterparts.

         This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.

         SECTION 19. Governing Law.

EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW, THE AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS OF NEW YORK OR ANY OTHER JURISDICTION.

         SECTION 20. Intention of the Parties.

         It is the intention of the parties that the Purchaser is purchasing,
and the Seller is selling, the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to treat
the transaction for federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the
right to review the Mortgage Loans and the related Mortgage Files to determine
the characteristics of the Mortgage Loans which shall affect the federal income
tax consequences of owning the Mortgage Loans and the Seller shall cooperate
with all reasonable requests made by the Purchaser in the course of such review.

         It is not the intention of the parties that such conveyances be deemed
a pledge thereof. However, in the event that, notwithstanding the intent of the
parties, such assets are held to be the property of the Seller or if for any
other reason this Agreement is held or deemed to create a security interest in
either such assets, then (a) this Agreement shall be deemed to be a security
agreement within the meaning of the Uniform Commercial Code of the State of New
York and (b) the conveyances provided for in this Agreement shall be deemed to
be an assignment and a grant by the Seller to the Purchaser of a security
interest in all of the assets transferred, whether now owned or hereafter
acquired.


                                       57
<PAGE>

         SECTION 21. Waivers.

         No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.

         SECTION 22. Exhibits.

         The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.

         SECTION 23. General Interpretive Principles.

         For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:

                  (a) the terms defined in this Agreement have the meanings
         assigned to them in this Agreement and include the plural as well as
         the singular, and the use of any gender herein shall be deemed to
         include the other gender;

                  (b) accounting terms not otherwise defined herein have the
         meanings assigned to them in accordance with generally accepted
         accounting principles;

                  (c) references herein to "Articles," "Sections,"
         "Subsections," "Paragraphs" and other subdivisions without reference to
         a document are to designated Articles, Sections, Subsections,
         Paragraphs and other subdivisions of this Agreement;

                  (d) reference to a Subsection without further reference to a
         Section is a reference to such Subsection as contained in the same
         Section in which the reference appears, and this rule shall also apply
         to Paragraphs and other subdivisions;

                  (e) the words "herein," "hereof," "hereunder" and other words
         of similar import refer to this Agreement as a whole and not to any
         particular provision; and

                  (f) the term "include" or "including" shall mean without
         limitation by reason of enumeration.

         SECTION 24. Reproduction of Documents.

         This Agreement and all documents relating thereto, including, without
limitation (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
agree that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party hereto
in the regular course of business, and that


                                       58
<PAGE>

any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.

         SECTION 25. Amendment.

         This Agreement may be amended from time to time by the Purchaser, the
Seller and the Servicer by written agreement signed by the parties hereto.

         SECTION 26. Confidentiality.

         Each of the Purchaser, the Seller and the Servicer shall employ proper
procedures and standards designed to maintain the confidential nature of the
terms of this Agreement, except to the extent (a) the disclosure of which is
reasonably believed by such party to be required in connection with regulatory
requirements or other legal requirements relating to its affairs; (b) disclosed
to any one or more of such party's employees, officers, directors, agents,
attorneys or accountants who would have access to the contents of this Agreement
and such data and information in the normal course of the performance of such
person's duties for such party, to the extent such party has procedures in
effect to inform such person of the confidential nature thereof; (c) that is
disclosed in a prospectus, prospectus supplement or private placement memorandum
relating to a Securitization of the Mortgage Loans by the Purchaser (or an
affiliate assignee thereof) or to any person in connection with the resale or
proposed resale of all or a portion of the Mortgage Loans by such party in
accordance with the terms of this Agreement; and (d) that is reasonably believed
by such party to be necessary for the enforcement of such party's rights under
this Agreement.

         Notwithstanding any other express or implied agreement to the contrary,
each of the Purchaser and the Seller agree and acknowledge that each of them and
each of their employees, representatives, and other agents may disclose to any
and all persons, without limitation of any kind, the tax treatment and tax
structure of the transaction and all materials of any kind (including opinions
or other tax analyses) that are provided to any of them relating to such tax
treatment and tax structure, except to the extent that confidentiality is
reasonably necessary to comply with U.S. federal or state securities laws. For
purposes of this paragraph, the terms "tax treatment" and "tax structure" have
the meanings specified in Treasury Regulation section 1.6011-4(c).

         SECTION 27. Entire Agreement.

         This Agreement constitutes the entire agreement and understanding
relating to the subject matter hereof between the parties hereto and any prior
oral or written agreements between them shall be deemed to have merged herewith.

         SECTION 28. Further Agreements; Securitization.

         The Seller and the Purchaser agree that with respect to some or all of
the Mortgage Loans, after the related Closing Date, on one or more dates (each,
a "Reconstitution Date") at the Purchaser's sole option, the Purchaser may
effect a sale (each, a "Reconstitution") of some or all of the Mortgage Loans
then subject to this Agreement, without recourse, to:


                                       59
<PAGE>

         (a) Fannie Mae under its Cash Purchase Program or MBS Program (Special
Servicing Option) (each, a "Fannie Mae Transfer"); or

         (b) Freddie Mac (the "Freddie Mac Transfer"); or

         (c) one or more third party purchasers in one or more Whole Loan
Transfers;

         (d) or one or more trusts or other entities to be formed as part of one
or more Securitizations.

         The Seller, the Servicer and the Purchaser each agree to execute and
deliver to the other such reasonable and appropriate additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.

         The Seller and the Servicer each agree to enter into additional
documents, instruments or agreements as may be necessary to effect one or more
Whole Loan Transfers, Agency Transfers or Securitizations of the Mortgage Loans,
including without limitation documents which contain representations to the
Purchaser and the applicable depositor, trustee and initial purchaser of the
Securities in the Securitization (1) that the Seller has serviced the Mortgage
Loans in accordance with the terms of the Agreement, and otherwise complied with
all covenants and obligations thereunder, and (2) that the Seller has taken no
action nor omitted to take any required action the omission of which would have
the effect of impairing any mortgage insurance or guarantee on the Mortgage
Loans. The parties also agree that the provisions of this Agreement may be
altered in a manner reasonably acceptable to the Servicer if necessary to effect
a Securitization (including, but not limited to, any changes required (i) to
satisfy rating agency requirements or (ii) to qualify for treatment as one or
more real estate mortgage investment conduits) or an Agency Transfer. The Seller
agrees to restate to the Purchaser, the applicable depositor and trustee the
representations and warranties contained in Subsection 7.01 of this Agreement as
of the applicable Closing Date and in Subsection 7.02 of this Agreement as of
the closing date of the applicable Securitization if required by the Purchaser.
In addition, the Seller shall indemnify the Purchaser, each affiliate of the
Purchaser participating in the Reconstitution and each Person who controls the
Purchaser or such affiliate, and hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, legal fees and expenses arising
out of any material misstatements or omissions contained in any information
provided to the Purchaser and included in any disclosure statements distributed
by the Purchaser; provided, however, that the Purchaser shall indemnify the
Seller, its successors and assigns and each Person who controls the Seller, and
hold each of them harmless from and against any losses, damages, penalties,
fines, forfeitures, legal fees and expenses arising out of any material
misstatements or omissions contained in all other information the Purchaser may
disclose in connection with the Reconstitution. For purposes of the preceding
sentence, "Purchaser" shall mean the Person then acting as Purchaser under this
Agreement and any and all Persons who previously were "Purchasers" under Section
29 of this Agreement. With respect to each Agency Transfer by the Purchaser, the
Seller and the Servicer agree to cooperate with the Purchaser as may be
necessary to effect such Agency Transfer, including, without limitation,
entering into additional agreements whereby the Servicer shall service the
Mortgage Loans in accordance with either the Fannie Mae Guides or the Freddie
Mac Guide, as applicable.


                                       60
<PAGE>

         With respect to any Mortgage Loans sold in a Securitization Transfer
where the Servicer is the servicer, the Servicer agrees that on or before March
15th of each year beginning March 15, 2004, the Servicer shall deliver to the
depositor, the master servicer (if any) and the trustee for the securitization
trust in the Securitization Transfer, and their officers, directors and
affiliates, a certification in the form attached as Exhibit 13 hereto, executed
by an officer of the Servicer for use in connection with any Form 10-K to be
filed with the Securities and Exchange Commission with respect to the
securitization trust. The Servicer shall indemnify and hold harmless the
depositor, the master servicer (if any) and the trustee, and their respective
officers, directors and Affiliates, from and against any losses, damages,
penalties, fines, forfeitures, legal fees and expenses and related costs,
judgments and other costs and expenses arising out of or based upon any breach
of the Servicer's obligations under this paragraph or any material misstatement
or omission, negligence, bad faith or willful misconduct of the Servicer in
connection therewith. If the indemnification provided for in the preceding
sentence is unavailable or insufficient to hold harmless any indemnified party,
then the Servicer agrees that it shall contribute to the amount paid or payable
by such indemnified party as a result of the losses, claims, damages or
liabilities of such indemnified party in such proportion as is appropriate to
reflect the relative fault of such indemnified party, on the one hand, and the
Servicer, on the other, in connection with a breach of the Servicer's
obligations under this paragraph or any material misstatement or omission,
negligence, bad faith or willful misconduct of the Servicer in connection
therewith.

         The parties also agree that the provisions of this Agreement may be
altered in a manner reasonably acceptable to the Servicer if necessary to effect
a Securitization (including, but not limited to, any changes required (i) to
satisfy Rating Agency requirements or (ii) to qualify for treatment as one or
more real estate mortgage investment conduits).

         All reasonable out of pocket costs actually incurred by the Seller and
the Servicer, including reasonable attorney's fees and accountant's fees, in
connection with performing its obligations under this Section 28 with respect to
a Reconstitution shall be paid or reimbursed by the Purchaser upon demand
therefor.

         SECTION 29. Successors and Assigns.

         This Agreement shall bind and inure to the benefit of and be
enforceable by the initial Purchaser, the Seller and the Servicer, and the
respective successors and assigns of the Purchaser, the Seller and the Servicer.
The initial Purchaser and any subsequent purchasers may assign this Agreement to
any Person to whom any Mortgage Loan is transferred pursuant to a sale or
financing upon prior written notice to the Servicer in accordance with the
following paragraph; provided, however, that the Servicer shall not be required
to service the Mortgage Loans for more than three (3) Persons for assignees of
Morgan Stanley Mortgage Capital Inc. or its respective affiliates at any time
and shall not recognize any assignment of this Agreement to the extent that
following such assignment more than such number of Persons would be purchasers
hereunder. As used herein, the trust formed in connection with a Securitization
shall be deemed to constitute a single "Person." Upon any such assignment and
written notice thereof to the Servicer, the Person to whom such assignment is
made shall succeed to all rights and obligations of the Purchaser under this
Agreement to the extent of the related Mortgage Loan or Mortgage Loans and this
Agreement, to the extent of the related Mortgage Loan or Mortgage


                                       61
<PAGE>

Loans, shall be deemed to be a separate and distinct agreement between the
Servicer and such purchaser, and a separate and distinct agreement between the
Servicer and each other purchaser to the extent of the other related Mortgage
Loan or Mortgage Loans.

         At least five (5) Business Days prior to the end of the month preceding
the date upon which the first remittance is to be made to an assignee of the
Purchaser, the Purchaser shall provide to the Servicer written notice of any
assignment setting forth: (a) the Servicer's applicable Mortgage Loan
identifying number for each of the Mortgage Loans affected by such assignment;
(b) the aggregate scheduled transfer balance of such Mortgage Loans; and (c) the
full name, address and wiring instructions of the assignee and the name and
telephone number of an individual representative for such assignee, to whom the
Servicer should: (i) send remittances; (ii) send any notices required by or
provided for in this Agreement; and (iii) deliver any legal documents relating
to the Mortgage Loans (including, but not limited to, contents of any Mortgage
File obtained after the effective date of any assignment).

         If the Purchaser has not provided the notice of assignment required by
this Section 29, the Servicer shall not be required to treat any other Person as
a "Purchaser" hereunder and may continue to treat the Purchaser which purports
to assign the Agreement as the "Purchaser" for all purposes of this Agreement.

         SECTION 30. Non-Solicitation.

         From and after the Closing Date, the Seller, the Servicer and any of
their respective affiliates hereby agrees that it will not take any action or
permit or cause any action to be taken by any of its agents or affiliates, or by
any independent contractors on its behalf, to personally, by telephone or mail,
solicit a Mortgagor under any Mortgage Loan for the purpose of refinancing a
Mortgage Loan, in whole or in part, without the prior written consent of the
Purchaser. It is understood and agreed that all rights and benefits relating to
the solicitation of any Mortgagors and the attendant rights, title and interest
in and to the list of such Mortgagors and data relating to their Mortgages
(including insurance renewal dates) shall be transferred to the Purchaser
pursuant hereto on the Closing Date and none of the Seller, the Servicer or any
of their respective affiliates shall take any action to undermine these rights
and benefits.

         Notwithstanding the foregoing, it is understood and agreed that the
Seller, the Servicer or any of their respective affiliates:

                  (a) may advertise its availability for handling refinancings
         of mortgages in its portfolio, including the promotion of terms it has
         available for such refinancings, through the sending of letters or
         promotional material, so long as it does not specifically target
         Mortgagors and so long as such promotional material either is sent to
         the mortgagors for all of the mortgages in the A-quality servicing
         portfolio of the Seller, the Servicer and any of their affiliates
         (those it owns as well as those serviced for others) or sent to all of
         the mortgagors who have specific types of mortgages (such as FHA, VA,
         conventional fixed-rate or conventional adjustable-rate, or sent to
         those mortgagors whose mortgages fall within specific interest rate
         ranges;


                                       62
<PAGE>

                  (b) may provide pay-off information and otherwise cooperate
         with individual mortgagors who contact it about prepaying their
         mortgages by advising them of refinancing terms and streamlined
         origination arrangements that are available; and

                  (c) may offer to refinance a Mortgage Loan made within thirty
         (30) days following receipt by it of a pay-off request from the related
         Mortgagor.

         Promotions undertaken by the Seller or the Servicer or by any affiliate
of the Seller or the Servicer which are directed to the general public at large
(including, without limitation, mass mailing based on commercially acquired
mailing lists, newspaper, radio and television advertisements), shall not
constitute solicitation under this Section 30.

         SECTION 31. Protection of Consumer Information.

         The Purchaser agrees that the Purchaser (i) shall comply with any
applicable laws and regulations regarding the privacy and security of Consumer
Information, (ii) shall not use Consumer Information in any manner inconsistent
with any applicable laws and regulations regarding the privacy and security of
Consumer Information, (iii) shall not disclose Consumer Information to third
parties except at the specific written direction of the Seller or the Servicer,
(iv) shall maintain adequate physical, technical and administrative safeguards
to protect Consumer Information from unauthorized access and (v) shall
immediately notify the Seller of any actual or suspected breach of the
confidentiality of Consumer Information.

         The Purchaser agrees that the Purchaser shall indemnify, defend and
hold the Seller and the Servicer harmless from and against any loss, claim or
liability the Seller or the Servicer may suffer by reason of the Purchaser's
failure to perform the obligations set forth in this Section 31.

                         [SIGNATURES ON FOLLOWING PAGE]


                                       63
<PAGE>

         IN WITNESS WHEREOF, the Purchaser, the Seller and the Servicer have
caused their names to be signed hereto by their respective officers thereunto
duly authorized on the date first above written.


                                   MORGAN STANLEY MORTGAGE CAPITAL INC.,

                                   as Purchaser





                                   By:      /s/ Kevin G. Chavers
                                            ------------------------------------
                                   Name:    Kevin G. Chavers
                                            ------------------------------------
                                   Title:   Vice President
                                            ------------------------------------





                                   BANK OF AMERICA, N.A.,

                                   as Seller and as Servicer





                                   By:      /s/ Jill E. Payne
                                            ------------------------------------
                                   Name:    Jill E. Payne
                                            ------------------------------------
                                   Title:   Vice President
                                            ------------------------------------


       [Signature Page to Flow Mortgage Loan Sale and Servicing Agreement,
                          dated as of October 1, 2003]



<PAGE>

                                    EXHIBIT 1

                             MORTGAGE LOAN DOCUMENTS



With respect to each Mortgage Loan, the Mortgage Loan Documents shall consist of
the following:

                  (a) the original Mortgage Note bearing all intervening
         endorsements, endorsed in blank and signed in the name of the Seller by
         an officer thereof or, if the original Mortgage Note has been lost or
         destroyed, a lost note affidavit substantially in the form of Exhibit 7
         hereto;

                  (a) the original Assignment of Mortgage with assignee's name
         left blank;

                  (b) the original of any guarantee executed in connection with
         the Mortgage Note;

                  (c) the original Mortgage with evidence of recording thereon,
         or if any such mortgage has not been returned from the applicable
         recording office or has been lost, or if such public recording office
         retains the original recorded mortgage, a photocopy of such mortgage
         certified by the Seller to be a true and complete copy of the original
         recorded mortgage;

                  (d) the originals of all assumption, modification,
         consolidation or extension agreements, if any, with evidence of
         recording thereon;

                  (e) the originals of all intervening assignments of mortgage
         with evidence of recording thereon, or if any such intervening
         assignment of mortgage has not been returned from the applicable
         recording office or has been lost or if such public recording office
         retains the original recorded assignments of mortgage, a photocopy of
         such intervening assignment of mortgage, certified by the Seller to be
         a true and complete copy of the original recorded intervening
         assignment of mortgage;

                  (f) the original mortgagee title insurance policy including an
         Environmental Protection Agency Endorsement and, with respect to any
         Adjustable Rate Mortgage Loan, an adjustable-rate endorsement;

                  (g) the original of any security agreement, chattel mortgage
         or equivalent document executed in connection with the Mortgage;

                  (h) a copy of any applicable power of attorney;

                  (i) with respect to any Cooperative Loan, the applicable
         Cooperative Loan Documents; and


                                      1-1
<PAGE>

(j)      with respect to the Non-Conventional Mortgage Loans, the MIC or LGC, as
         applicable, or any other evidence of FHA insurance coverage or VA
         guaranty, as the case may be.


                                      1-2
<PAGE>


                                    EXHIBIT 2


                         CONTENTS OF EACH MORTGAGE FILE


         With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, unless otherwise disclosed to the Purchaser on the
data tape, which shall be available for inspection by the Purchaser and which
shall be retained by the Servicer or delivered to the Purchaser:

                  (a) Copies of the Mortgage Loan Documents.

                  (b) Residential loan application.

                  (c) Mortgage Loan closing statement.

                  (d) Verification of employment and income, if required.

                  (e) Verification of acceptable evidence of source and amount
         of down payment.

                  (f) Credit report on Mortgagor, in a form acceptable to either
         Fannie Mae or Freddie Mac.

                  (g) Residential appraisal report.

                  (h) Photograph of the Mortgaged Property.

                  (i) Survey of the Mortgaged Property, unless a survey is not
         required by the title insurer.

                  (j) Copy of each instrument necessary to complete
         identification of any exception set forth in the exception schedule in
         the title policy, i.e., map or plat, restrictions, easements, home
         owner association declarations, etc.

                  (k) Copies of all required disclosure statements.

                  (l) If applicable, termite report, structural engineer's
         report, water potability and septic certification.

                  (m) Sales contract, if applicable.

                  (n) The Primary Mortgage Insurance policy or certificate of
         insurance or electronic notation of the existence of such policy, where
         required pursuant to the Agreement.

                  (o) Evidence of electronic notation of the hazard insurance
         policy, and, if required by law, evidence of the flood insurance
         policy.


                                      2-1
<PAGE>


                                    EXHIBIT 3


                                    RESERVED



                                      3-1
<PAGE>


                                    EXHIBIT 4


                     FORM OF CUSTODIAL ACCOUNT CERTIFICATION




                                                              _________ __, 2003

Bank of America, N.A. hereby certifies that it has established the account
described below as a Custodial Account pursuant to Subsection 11.04 of the Flow
Mortgage Loan Sale and Servicing Agreement, dated October 1, 2003, Residential
Mortgage Loans.

Title of Account: "Bank of America, N.A., in trust for Morgan Stanley Mortgage
Capital Inc., as Purchaser of Mortgage Loans and various Mortgagors."

Account Number:
                  --------------------------

Address of office or branch of
Bank of America, N.A. at which
the Custodial Account is maintained:    475 Crosspoint Parkway
                                        Getzville, New York  14068-9000



                                        BANK OF AMERICA, N.A.


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



                                      4-1


<PAGE>


                                    EXHIBIT 5


                          ESCROW ACCOUNT CERTIFICATION




                                                              _________ __, 2003

Bank of America, N.A. hereby certifies that it has established the account
described below as an Escrow Account pursuant to Subsection 11.06 of the Flow
Mortgage Loan Sale and Servicing Agreement, dated October 1, 2003, Residential
Mortgage Loans.

Title of Account: "Bank of America, N.A., in trust for Morgan Stanley Mortgage
Capital Inc., as Purchaser of Mortgage Loans and various Mortgagors."

Account Number:
                  --------------------------

Address of office or branch of
Bank of America, N.A. at which
the Escrow Account is maintained:       475 Crosspoint Parkway
                                        Getzville, New York  14068-9000


                                        BANK OF AMERICA, N.A.


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


                                      5-1
<PAGE>



                                    EXHIBIT 6


                             UNDERWRITING GUIDELINES


                          [ON FILE WITH THE PURCHASER]



                                      6-1
<PAGE>



                                    EXHIBIT 7


                           FORM OF LOST NOTE AFFIDAVIT



         ________________________________________, being first duly sworn upon
oath deposes and states:

         That he/she is authorized by Bank of America, N.A. ("B of A") to
execute this Lost Note Affidavit on behalf of B of A. Notwithstanding anything
contained herein, he/she shall have no personal liability pursuant to this Lost
Note Affidavit.

         That the note dated ______________, executed by _______________ in the
original principal sum of $____________, payable to the order of
__________________ and secured by a mortgage (or deed of trust or other
instrument creating a lien securing the Note (as defined below)) of even date on
premises commonly known as ________________________________
____________________________, a copy of which is attached hereto as Exhibit A
(the "Note") was lost and /or destroyed and the affiant herein has no knowledge
of the location or whereabouts of said Note and said Note has not been paid,
satisfied, transferred, assigned, pledged, or hypothecated in any way.

         NOW THEREFORE, for and in consideration of _______________and its
successors and/or assigns, accepting a certified copy of the Note identified on
Exhibit "A" in lieu of the original Note, B of A does hereby agree to defend,
indemnify and hold harmless __________ _______________ its respective
transferees, and their respective assigns (the "Indemnified") from and against
any and all loss or damage, together with all reasonable costs, charges and
expenses (whether or not a lawsuit is filed) (collectively, the "Loss") incurred
as a result of the inability to enforce the Note in accordance with its terms
due to the lack of an original Note or incurred by reason of any claim, demand,
suit, cause of action or proceeding by a third party arising out of the
Indemnified's inability to enforce the Note according to its terms or the
inability to receive any related insurance proceeds due to the lack of an
original Note by a third party. B of A shall pay any such Loss upon demand
provided that B of A is notified of any such Loss in writing, after __________
or transferee becomes aware of same, at the following address: Bank of America,
201 North Tryon Street, 5th Floor, Charlotte, North Carolina 28255; Attention:
Secondary Marketing Manager; with copy to _______________________; Attention:
________________. B of A does hereby further agree that should the original Note
ever be found by it, it will promptly notify _________________ or its respective
transferees, or their respective assigns, as applicable, and upon receipt by B
of A of the original Note, will endorse to _______________ or its designee or
transferee, as applicable, without recourse, such original Note and promptly
forward said Note to_______________ or its designee or transferee, as
applicable. Upon receipt to the original Note by __________________ this
indemnification agreement shall become null and void as to any loss accruing
subsequent to _____________ ___________'s receipt of such original Note,
however, B of A shall remain liable as to any loss accruing on or prior to
__________________'s receipt of such original Note.


                                      7-1
<PAGE>

         Executed this _______day of _________________, 200__.

                                          BANK OF AMERICA, N.A.



                                          By:
                                              ----------------------------------
                                          Witness:
                                                   -----------------------------

         Subscribed and sworn to before me this _______ day of_________________,
200__.


-----------------------------------
Notary Public


                                      7-2
<PAGE>

                                    EXHIBIT 8

                        FORM OF MONTHLY REMITTANCE REPORT



                               [SELLER TO PROVIDE]



                                      8-1
<PAGE>


                                    EXHIBIT 9

                               FORM OF TERM SHEET


                  CLOSING DATE:
                                -----------------

         This Term Sheet (together with the PPTA (as defined below), if any,
this "Term Sheet"), dated as of _______ (the "Closing Date"), together with the
related Purchase Price and Terms Agreement, if any, executed in connection with
this Term Sheet by and between Bank of America, N.A. (the "Seller") and Morgan
Stanley Mortgage Capital Inc. (the "Purchaser") (the "PPTA"), confirms the sale
by the Seller to the Purchaser, and the purchase by the Purchaser from the
Seller, of the first lien residential mortgage loans on a servicing retained
basis described on the Mortgage Loan Schedule attached as Schedule I hereto (the
"Mortgage Loans"), pursuant to the terms of the Flow Mortgage Loan Sale and
Servicing Agreement (the "Flow Sale and Servicing Agreement"), dated as of
October 1, 2003, by and between the Purchaser and the Seller. Capitalized terms
that are used herein but are not defined herein shall have the respective
meanings set forth in the Flow Sale and Servicing Agreement.

         For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Seller does hereby bargain, sell, convey,
assign and transfer to Purchaser without recourse, except as provided in the
Flow Sale and Servicing Agreement, and on a servicing retained basis, all right,
title and interest of the Seller in and to each of the Mortgage Loans, together
with all documents maintained as part of the related Mortgage Files, all
Mortgaged Properties which secure any Mortgage Loan but are acquired by
foreclosure, deed in lieu of foreclosure after the Cut-off Date or otherwise,
all payments of principal and interest received on the Mortgage Loans after the
Cut-off Date, all other unscheduled collections collected in respect of the
Mortgage Loans after the Cut-off Date, and all proceeds of the foregoing,
subject, however, to the rights of the Seller under the Flow Sale and Servicing
Agreement.

         To the extent of any inconsistency or conflict between or among the
provisions of the related PPTA and the provisions hereof and of the Flow Sale
and Servicing Agreement, the provisions of such PPTA shall govern and control.
To the extent the provisions of the related PPTA are not inconsistent or do not
conflict with the provisions hereof and of the Flow Sale and Servicing
Agreement, the provisions hereof and of the Flow Sale and Servicing Agreement
shall govern and control.

         The Seller has delivered to the Purchaser or its designee prior to the
date hereof the documents with respect to each Mortgage Loan required to be
delivered under the Flow Sale and Servicing Agreement.

         For purposes of the Mortgage Loans sold pursuant to this Term Sheet,
certain terms shall be as set forth below:


                                      9-1
<PAGE>

        Cut-off Date Principal Balance:    $
                                            ----------------------
        Closing Date:
                                            ----------------------
        Cut-off Date:
                                            ----------------------
        Purchase Price Percentage:                   %
                                            ---------
        Servicing Fee Rate:                          %
                                            ---------

                         [SIGNATURES ON FOLLOWING PAGE]


                                      9-2
<PAGE>


         In WITNESS WHEREOF, the parties hereto, by the hands of their duly
authorized officers, execute this Term Sheet as of the Closing Date referred to
above.


MORGAN STANLEY MORTGAGE CAPITAL INC.       BANK OF AMERICA, N.A.
                                           as Seller
as Purchaser

By:                                        By:
    ---------------------------------          ---------------------------------
Name:                                      Name:
      -------------------------------            -------------------------------
Its:                                       Its:
     --------------------------------           --------------------------------
By:
    ---------------------------------
Name:
      -------------------------------
Its:
     --------------------------------


                                      9-3
<PAGE>


                                   EXHIBIT 10

                     FORM OF SELLER'S OFFICER'S CERTIFICATE


                  I, [_____________], hereby certify that I am a duly elected
[_____________] of Bank of America, N.A., a national banking association (the
"Bank"), and further certify, on behalf of the Bank as follows:

                  1. Attached hereto as Attachment I are a true and correct copy
of the Articles of Association and by-laws of the Bank as are in full force and
effect on the date hereof. No event has occurred which has affected the good
standing of the Bank under the laws of the United States.

                  2. No proceedings looking toward liquidation, dissolution or
bankruptcy of the Bank or a merger pursuant to which the Bank would not be the
surviving entity are pending or contemplated.

                  3. Each person who, as an officer or attorney-in-fact of the
Bank, signed (a) the Flow Mortgage Loan Sale and Servicing Agreement (the "Sale
Agreement"), dated October 1, 2003, by and between the Bank, as seller and as
servicer, Morgan Stanley Mortgage Capital Inc., as purchaser, and (b) any other
document delivered prior hereto or on the date hereof in connection with the
sale and servicing of the Mortgage Loans in accordance with the Sale Agreement
was, at the respective times of such signing and delivery, and is, as of the
date hereof, duly elected or appointed, qualified and acting as such officer or
attorney-in-fact, and the signatures of such persons appearing on such documents
are their genuine signatures.

                  4. All of the representations and warranties of the Bank
contained in Subsections 7.01 and 7.02 of the Sale Agreement were true and
correct in all material respects as of the Closing Date.

                  5. The Bank has performed all of its duties and has satisfied
all the material conditions on its part to be performed or satisfied prior to
the Closing Date pursuant to the Sale Agreement.

                  All capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Sale Agreement.


                                      10-1
<PAGE>



                  IN WITNESS WHEREOF, I have hereunto signed my name on this
____ day of _______, 2003.

                                        BANK OF AMERICA, N.A.


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

I, _________________________, a ____________________ of Bank of America, N.A.,
hereby certify that __________________________ is a duly elected, qualified and
acting _______________________ of the Seller and the Servicer and that the
signature appearing above is such person's genuine signature.

IN WITNESS WHEREOF, I have hereunto signed my name on this ____ day of ____,
2003.

                                        BANK OF AMERICA, N.A.


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


                                      10-2
<PAGE>



                                   EXHIBIT 11

                    FORM OF OPINION OF COUNSEL TO THE SELLER

October __, 2003

Morgan Stanley Mortgage Capital Inc.
1633 Broadway
New York, New York 10019

Ladies and Gentlemen:

                  I am Assistant General Counsel to Bank of America Corporation
and have acted as special counsel to Bank of America, N.A. (the "Bank") in
connection with the transactions referred to herein. In that capacity, I am
familiar with the sale by the Bank of the Mortgage Loans pursuant to that
certain Flow Mortgage Loan Sale and Servicing Agreement by and between the Bank,
as Seller and as Servicer, and Morgan Stanley Mortgage Capital Inc., as
Purchaser, dated as of October 1, 2003 (the "Sale Agreement") and that certain
Custodial Agreement by and between the Bank and Deutsche Bank Trust Company
Americas, dated as of October 1, 2003 (the "Custodial Agreement" and, together
with the Sale Agreement, the "Agreements"). Capitalized terms not otherwise
defined herein have the meanings set forth in the Sale Agreement.

                  In connection with rendering this opinion letter, I have
examined the Agreements and such other records and other documents as I have
deemed necessary and relevant. As to matters of fact, I have examined and relied
upon representations of the parties contained in the Agreements and, where I
have deemed appropriate, representations and certifications of officers of the
Bank or public officials. I have assumed the authenticity of all documents
submitted to me as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all documents
submitted to me as copies. I have assumed that all parties, except for the Bank,
had the corporate power and authority to enter into and perform all obligations
under such documents, and, as to such parties, I also have assumed the due
authorization by all requisite corporate action, the due execution and delivery
and the validity, binding effect and enforceability of such documents. I have
not examined the Mortgages, the Mortgage Loan Documents or other documents in
the Mortgage Files (such documents, collectively, the "Mortgage Documents"), and
I express no opinion concerning the conformity of any of the Mortgage Documents
to the requirements of the Agreements.

                  The opinions set forth herein are limited to matters governed
by the laws of the State of North Carolina and the federal laws of the United
States of America, and no opinion is expressed herein as to the laws of any
other jurisdiction. For purposes of these opinions, I have disregarded the
choice of law provision in the Agreements and, instead, have assumed that the
Agreements are governed exclusively by the internal, substantive laws and
judicial interpretation of the State of North Carolina. I assume no obligation
to supplement this opinion if any applicable laws change after the date of this
opinion, or if I become aware of any facts that might change the opinions
expressed herein after the date of this opinion. I do not express any opinion,
either implicitly or otherwise, on any issue not expressly addressed below.


                                      11-1
<PAGE>

                  Based upon the foregoing, I am of the opinion that:

                  1. The Bank is duly organized and validly existing as a
national banking association in good standing under the federal laws of the
United States and has the requisite power and authority, corporate or other, to
own its own properties and conduct its own business, as presently conducted by
it, and to enter into and perform its obligations under the Agreements.

                  2. The Bank has authorized the execution, delivery and
performance of the Agreements by all necessary corporate action and the
Agreements have been duly executed and delivered by the Bank.

                  3. No consent, approval, authorization or order of any State
of North Carolina or federal court or governmental agency or body is required
for the execution, delivery and performance by the Bank of the Agreements or the
consummation by the Bank of the transactions contemplated by the terms of the
Agreements, except for those consents, approvals, authorizations or orders which
previously have been obtained.

                  4. The Agreements constitute the legal, valid and binding
obligations of the Bank, enforceable against the Bank in accordance with their
terms, subject to the following:

                  (a) This opinion is subject to the effect of applicable
                  bankruptcy, insolvency, receivership, reorganization,
                  fraudulent conveyance, moratorium and similar laws affecting
                  the enforcement of creditors' rights generally.

                  (b) The opinion is subject to the effect of general principles
                  of equity (regardless of whether considered in a proceeding in
                  equity or at law), which may, among other things, deny rights
                  of specific performance.

                  5. The consummation of the transactions contemplated by, and
the performance by the Bank of any other of the terms of, the Agreements, will
not result in a breach of any term or provision of the articles of association
or by-laws of the Bank or, to the best of my knowledge, conflict with, result in
a breach, violation or acceleration of, or constitute a default under, the terms
of any material indenture or other material agreement or instrument to which the
Bank is a party or by which it is bound or any order of any State of North
Carolina or federal court, regulatory body, administrative agency or
governmental body having jurisdiction over the Bank.

                  6. To the best of my knowledge, there are no actions,
proceedings or investigations pending or threatened before any court,
administrative agency or other tribunal (a) asserting the invalidity of the
Agreements or (b) seeking to prevent the consummation of any of the transactions
contemplated by the Agreements, which might materially and adversely affect the
performance by the Bank of its obligations under, or the validity or
enforceability of, the Agreements.

                  This opinion letter is rendered for the sole benefit of the
persons or entities to which it is addressed, and no other person or entity is
entitled to rely hereon without my prior written consent. Copies of this opinion
letter may not be furnished to any other person or entity,


                                      11-2
<PAGE>

nor may any portion of this opinion letter be quoted, circulated or referred to
in any other document without my prior written consent.

                                  Very truly yours,


                                  Mark T. Cain
                                  Assistant General Counsel


                                      11-3
<PAGE>

                                   EXHIBIT 12

            FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT


ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this "Agreement") made this
_____ day of __________________, 200_, among BANK OF AMERICA, N.A., a national
banking association (the "Servicer"), _________________________ a
________________________ (the "Assignee"), and MORGAN STANLEY MORTGAGE CAPITAL
INC., a New York corporation (the "Assignor").

                  WHEREAS, the Assignor and the Servicer have entered into a
certain Flow Mortgage Loan Sale and Servicing Agreement dated as of October 1,
2003 (the "Sale and Servicing Agreement"), pursuant to which the Servicer sold
certain mortgage loans listed on the mortgage loan schedule attached as an
exhibit to the related Term Sheet, dated as of [____ __], 200_ (the "Term Sheet"
and, together with the Sale and Servicing Agreement, the "Assigned Agreements");

                  WHEREAS, the Assignee has agreed on certain terms and
conditions to purchase from the Assignor certain mortgage loans (the "Mortgage
Loans"), which Mortgage Loans are subject to the provisions of the Assigned
Agreements and are listed on the mortgage loan schedule attached as Exhibit 1
hereto (the "Mortgage Loan Schedule");

                  NOW THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

         1. Assignment and Assumption.

                           (a) The Assignor hereby assigns to the Assignee all
                  of its right, title and interest in and to the Mortgage Loans
                  and the Assigned Agreements, to the extent relating to the
                  Mortgage Loans (other than the rights of the Assignor to
                  indemnification thereunder), and the Assignee hereby assumes
                  all of the Assignor's obligations under the Assigned
                  Agreements, to the extent relating to the Mortgage Loans from
                  and after the date hereof, and the Servicer hereby
                  acknowledges such assignment and assumption and hereby agrees
                  to the release of the Assignor from any obligations under the
                  Assigned Agreements from and after the date hereof, to the
                  extent relating to the Mortgage Loans.

                           (b) The Assignor represents and warrants to the
                  Assignee that the Assignor has not taken any action which
                  would serve to impair or encumber the Assignor's ownership
                  interest in the Mortgage Loans since the date of the related
                  Term Sheet.

                           (c) The Servicer and the Assignor shall have the
                  right to amend, modify or terminate the Sale and Servicing
                  Agreement without the joinder of the Assignee with respect to
                  mortgage loans not conveyed to the Assignee hereunder,


                                      12-1
<PAGE>

                  provided, however, that such amendment, modification or
                  termination shall not affect or be binding on the Assignee.

                  2. Accuracy of Servicing Agreement.

                  The Servicer and the Assignor represent and warrant to the
Assignee that (i) attached hereto as Exhibit 2 are true, accurate and complete
copies of the Assigned Agreements, (ii) the Assigned Agreements are in full
force and effect as of the date hereof, (iii) the Assigned Agreements have not
been amended or modified in any respect and (iv) no notice of termination has
been given to the Servicer under the Sale and Servicing Agreement.

                  3. Recognition of Purchaser.

                  From and after the date hereof, the Servicer shall note the
transfer of the Mortgage Loans to the Assignee in its books and records, shall
recognize the Assignee as the owner of the Mortgage Loans and shall service the
Mortgage Loans for the benefit of the Assignee pursuant to the Sale and
Servicing Agreement, the terms of which are incorporated herein by reference. It
is the intention of the Assignor, Servicer and Assignee that the Assigned
Agreements shall be binding upon and inure to the benefit of the Servicer and
the Assignee and their successors and assigns.

                  4. Representations and Warranties of the Assignee.

                           (a) Decision to Purchase. The Assignee represents and
                  warrants that it is a sophisticated investor able to evaluate
                  the risks and merits of the transactions contemplated hereby,
                  and that it has not relied in connection therewith upon any
                  statements or representations of the Assignor or the Servicer
                  other than those contained in the Assigned Agreements or this
                  Agreement.

                           (b) Authority. The Assignee hereto represents and
                  warrants that it is duly and legally authorized to enter into
                  this Agreement and to perform its obligations hereunder and
                  under the Sale and Servicing Agreement.

                           (c) Enforceability. The Assignee hereto represents
                  and warrants that this Agreement has been duly authorized,
                  executed and delivered by it and (assuming due authorization,
                  execution and delivery thereof by each of the other parties
                  hereto) constitutes its legal, valid and binding obligation,
                  enforceable in accordance with its terms, except as such
                  enforcement may be limited by bankruptcy, insolvency,
                  reorganization or other similar laws affecting the enforcement
                  of creditors' rights generally and by general equitable
                  principles (regardless of whether such enforcement is
                  considered in a proceeding in equity or at law).

                  5. Representations and Warranties of the Assignor. The
Assignor hereby represents and warrants to the Assignee as follows:

                           (a) The Assignor has been duly organized and is a
                  validly existing New York corporation with full corporate
                  power and authority to enter into


                                      12-2
<PAGE>

                  and perform its obligations under the Assigned Agreements and
                  this Assignment Agreement.

                           (b) This Agreement has been duly executed and
                  delivered by the Assignor, and, assuming due authorization,
                  execution and delivery by each of the other parties hereto,
                  constitutes a legal, valid, and binding agreement of the
                  Assignor, enforceable against it in accordance with its terms,
                  subject to bankruptcy, insolvency, reorganization, moratorium,
                  or other similar laws affecting creditors' rights generally
                  and to general principles of equity regardless of whether
                  enforcement is sought in a proceeding in equity or at law.

                           (c) The execution, delivery and performance by the
                  Assignor of this Agreement and the consummation of the
                  transactions contemplated thereby 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 such as has been obtained, given, effected or taken
                  prior to the date thereof.

                           (d) The execution and delivery of this Agreement have
                  been duly authorized by all necessary corporate action on the
                  part of the Assignor; neither the execution and delivery by
                  the Assignor of this Agreement, nor the consummation by the
                  Assignor of the transactions therein contemplated, nor
                  compliance by the Assignor with the provisions thereof, will
                  conflict with or result in a breach of, or constitute a
                  default under, any of the provisions of the governing
                  documents of the Assignor or any law, governmental rule or
                  regulation or any material judgment, decree or order binding
                  on the Assignor or any of its properties, or any of the
                  provisions of any material indenture, mortgage, deed of trust,
                  contract or other instrument to which the Assignor is a party
                  or by which it is bound.

                           (e) There are no actions, suits or proceedings
                  pending or, to the knowledge of the Assignor, threatened,
                  before or by any court, administrative agency, arbitrator or
                  governmental body (A) with respect to any of the transactions
                  contemplated by this Agreement or (B) with respect to any
                  other matter that in the judgment of the Assignor will be
                  determined adversely to the Assignor and will if determined
                  adversely to the Assignor materially adversely affect its
                  ability to perform its obligations under this Agreement.

                           (f) Except for the sale to the Assignee, the Assignor
                  has not assigned or pledged any Mortgage Note or the related
                  Mortgage or any interest or participation therein.

                           (g) The Assignor has not satisfied, canceled, or
                  subordinated in whole or in part, or rescinded the Mortgage,
                  and the Assignor has not released the Mortgaged Property from
                  the lien of the Mortgage, in whole or in part, nor has the
                  Assignor executed an instrument that would effect any such
                  release, cancellation, subordination, or rescission. The
                  Assignor has not released any Mortgagor, in


                                      12-3
<PAGE>

                  whole or in part, except in connection with an assumption
                  agreement or other agreement approved by the related Federal
                  Insurer, to the extent such approval was required.

                  It is understood and agreed that the representations and
warranties set forth in this Section 5 shall survive delivery of the respective
Mortgage Files to the Custodian and shall inure to the benefit of the Assignee
and its assigns notwithstanding any restrictive or qualified endorsement or
assignment. Upon the discovery by the Assignor or the Assignee and its assigns
of a breach of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the other parties to
this Agreement, and in no event later than two (2) Business Days from the date
of such discovery. It is understood and agreed that the obligations of the
Assignor set forth in Section 6 to repurchase a Mortgage Loan constitute the
sole remedies available to the Assignee and its assigns on their behalf
respecting a breach of the representations and warranties contained in this
Section 5. It is further understood and agreed that the Assignor shall be deemed
not to have made the representations and warranties in this Section 5 with
respect to, and to the extent of, representations and warranties made, as to the
matters covered in this Section 5, by the Servicer in the Sale and Servicing
Agreement (or any officer's certificate delivered pursuant thereto).

                  It is understood and agreed that the Assignor has made no
representations or warranties to the Assignee other than those contained in this
Section 5, and no other affiliate of the Assignor has made any representations
or warranties of any kind to the Assignee.

                  6. Repurchase of Mortgage Loans.

                  Upon discovery or notice of any breach by the Assignor of any
representation, warranty, or covenant under this Agreement that materially and
adversely affects the value of any Mortgage Loan or the interest of the Assignee
therein (it being understood that any such defect or breach shall be deemed to
have materially and adversely affected the value of the related Mortgage Loan or
the interest of the Assignee therein if the Assignee incurs a loss as a result
of such defect or breach), the Assignee promptly shall request that the Assignor
cure such breach and, if the Assignor does not cure such breach in all material
respects within 60 days from the date on which it is notified of the breach, the
Assignee may enforce the Assignor's obligation hereunder to purchase such
Mortgage Loan from the Assignee.

                  In the event the Servicer has breached a representation or
warranty under the Sale and Servicing Agreement that is substantially identical
to a representation or warranty breached by the Assignor hereunder, the Assignee
shall first proceed against the Servicer. If the Servicer does not within 60
days after notification of the breach, take steps to cure such breach (which may
include certifying to progress made and requesting an extension of the time to
cure such breach, as permitted under the Sale and Servicing Agreement) or
purchase for the Mortgage Loan, the Assignee shall be entitled to enforce the
obligations of the Assignor hereunder to cure such breach or to repurchase the
Mortgage Loan. In such event, the Assignor shall succeed to the rights of the
Assignee to enforce the obligations of the Servicer to cure such breach or
repurchase such Mortgage Loan under the terms of the Sale and Servicing
Agreement.


                                      12-4
<PAGE>

                  Except as specifically set forth herein, the Assignee shall
have no responsibility to enforce any provision of this Agreement, to oversee
compliance hereof, or to take notice of any breach or default thereof.

                  7. Representations and Warranties of the Servicer.

                  The Servicer hereby represents and warrants, for the benefit
of the Assignor and the Assignee, that the representations and warranties set
forth in Section 7.02 of the Sale and Servicing Agreement, are true and correct
on the date hereof as if such representations and warranties were made on the
date hereof, and that the representations and warranties set forth in Section
7.01 of the Sale and Servicing Agreement were true and correct as of the
underlying Closing Date.

                  The Servicer hereby acknowledges and agrees that the remedies
available to the Assignor and the Assignee in connection with any breach of the
representations and warranties made by the Servicer set forth in Section 7
hereof shall be as set forth in Subsection 7.03 of the Sale and Servicing
Agreement as if they were set forth herein (including without limitation the
repurchase and indemnity obligations set forth therein).

                  8. Continuing Effect.

                  Except as contemplated hereby, the Sale and Servicing
Agreement shall remain in full force and effect in accordance with its terms.

                  9. Governing Law.

                  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS HEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS).

                  10. Notices.

                  Any notices or other communications permitted or required
hereunder or under the Sale and Servicing Agreement shall be in writing and
shall be deemed conclusively to have been given if personally delivered at or
mailed by registered mail, postage prepaid, and return receipt requested or
transmitted by telex, telegraph or telecopier and confirmed by a similar mailed
writing, to: (i) in the case of the Servicer, [______________________,
_____________________] or such address as may hereafter be furnished by the
Servicer; (ii) in the case of the Assignee, _________________,
_________________, Attention: ________________________, or such other address as
may hereafter be furnished by the Assignee, and (iii) in the case of the
Assignor, __________________, Attention: _________________, or such other
address as may hereafter be furnished by the Assignor.


                                      12-5
<PAGE>

                  11. Counterparts.

                  This Agreement may be executed in counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same instrument.

                  12. Definitions.

                  Any capitalized term used but not defined in this Agreement
has the same meaning as in the Sale and Servicing Agreement.



                        [Signatures follow on next page.]



                                      12-6
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.

                                        ASSIGNEE:



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


                                        ASSIGNOR:



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

Acknowledged by:


SERVICER:


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


                                      12-7
<PAGE>

                                   EXHIBIT 13

                          FORM OF ANNUAL CERTIFICATION

                  I, [identify the certifying individual], certify to
_______________, and its officers, directors, agents and affiliates, and with
the knowledge and intent that they will rely upon this certification, that:

                  1. Based on my knowledge, the information in the Annual
Statement of Compliance, the Annual Independent Public Accountant's Servicing
Report and all servicing reports, officer's certificates and other information
relating to the servicing of the Mortgage Loans submitted by the Servicer to the
Master Servicer taken as a whole (and as amended or corrected in writing to the
Master Servicer), 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 last day of the month covered by such servicing reports;

                  2. The servicing information required to be provided to the
Master Servicer by the Servicer under the Servicing Agreement has been provided
to the Master Servicer;

                  3. I am responsible for reviewing the activities performed by
the Servicer under the Servicing Agreement and based upon the review required by
the Servicing Agreement, and except as disclosed in the Annual Statement of
Compliance or the Annual independent Public Accountant's Servicing Report, the
Servicer has, for the period covered by the Form 10-K fulfilled its obligation
under the Servicing Agreement; and

                  4. The Servicer has disclosed to the Servicer's Certified
Public Accountants all significant deficiencies relating to the Servicer's
compliance with the minimum servicing standards in accordance with a review
conducted in compliance with the Uniform Single Attestation Program for Mortgage
Bankers of similar standard as set forth in the Servicing Agreement.

                  Capitalized terms used but not defined herein have the
meanings ascribed to them in the Flow Mortgage Loan Sale and Servicing
Agreement, dated as of October 1, 2003 (the "Servicing Agreement"), between Bank
of America, N.A. and Morgan Stanley Mortgage Capital Inc.

                                            BANK OF AMERICA, N.A.


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


                                      13-1