<PAGE>

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




                       MORGAN STANLEY ABS CAPITAL I INC.,

                                  as Depositor,

                      COUNTRYWIDE HOME LOANS SERVICING LP,

                                  as Servicer,

                           CDC MORTGAGE CAPITAL INC.,

                             as Unaffiliated Seller,

                                       and

                      DEUTSCHE BANK NATIONAL TRUST COMPANY,

                                   as Trustee,

                         POOLING AND SERVICING AGREEMENT

                          Dated as of February 1, 2004

                       CDC MORTGAGE CAPITAL TRUST 2004-HE1

                       MORTGAGE PASS-THROUGH CERTIFICATES,
                                 SERIES 2004-HE1






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


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                                Page
                                                                                                                                ----
<S>                                                                                                                              <C>
ARTICLE I DEFINITIONS..............................................................................................................1

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES...........................................................45

   Section 2.01      Conveyance of Mortgage Loans.................................................................................45
   Section 2.02      Acceptance by the Trustee of the Mortgage Loans..............................................................51
   Section 2.03      Representations, Warranties and Covenants of the Unaffiliated Seller and the Servicer........................52
   Section 2.04      The Depositor and the Mortgage Loans.........................................................................55
   Section 2.05      Delivery of Opinion of Counsel in Connection with Substitutions and Non-Qualified Mortgages..................55
   Section 2.06      Execution and Delivery of Certificates.......................................................................56
   Section 2.07      REMIC Matters................................................................................................56
   Section 2.08      Representations and Warranties of the Depositor..............................................................56

ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS........................................................................57

   Section 3.01      Servicer to Service Mortgage Loans...........................................................................57
   Section 3.02      Subservicing Agreements Between the Servicer and Subservicers................................................59
   Section 3.03      Successor Subservicers.......................................................................................60
   Section 3.04      Liability of the Servicer....................................................................................60
   Section 3.05      No Contractual Relationship Between Subservicers and the Trustee.............................................61
   Section 3.06      Assumption or Termination of Subservicing Agreements by Trustee..............................................61
   Section 3.07      Collection of Certain Mortgage Loan Payments; Establishment of Certain Accounts..............................61
   Section 3.08      Subservicing Accounts........................................................................................64
   Section 3.09      Collection of Taxes, Assessments and Similar Items; Escrow Accounts..........................................65
   Section 3.10      Collection Account...........................................................................................66
   Section 3.11      Withdrawals from the Collection Account......................................................................67
   Section 3.12      Investment of Funds in the Accounts..........................................................................68
   Section 3.13      Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage...............................70
   Section 3.14      Enforcement of Due-On-Sale Clauses Assumption Agreements.....................................................71
   Section 3.15      Realization Upon Defaulted Mortgage Loans....................................................................72
   Section 3.16      Release of Mortgage Files....................................................................................73
   Section 3.17      Title, Conservation and Disposition of REO Property..........................................................75
   Section 3.18      Notification of Adjustments..................................................................................76
   Section 3.19      Access to Certain Documentation and Information Regarding the Mortgage Loans.................................76
   Section 3.20      Documents, Records and Funds in Possession of the Servicer to be Held for the Trustee........................77
   Section 3.21      Servicing Compensation.......................................................................................77
   Section 3.22      Annual Statement as to Compliance............................................................................78
</TABLE>

                                        i
<PAGE>

<TABLE>
<CAPTION>
<S>                  <C>                                                                                                         <C>
   Section 3.23      Annual Independent Public Accountants' Servicing Statement; Financial Statements.............................78
   Section 3.24      Trustee to Act as Servicer...................................................................................79
   Section 3.25      Compensating Interest........................................................................................79
   Section 3.26      Credit Reporting; Gramm-Leach-Bliley Act.....................................................................79
   Section 3.27      Advance Facilities...........................................................................................80

ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE SERVICER.............................................................................81

   Section 4.01      Advances.....................................................................................................81
   Section 4.02      Priorities of Distribution...................................................................................82
   Section 4.03      Monthly Statements to Certificateholders.....................................................................92
   Section 4.04      Certain Matters Relating to the Determination of LIBOR.......................................................95
   Section 4.05      The Certificate Insurance Policy.............................................................................95
   Section 4.06      Effect of Payments by the Certificate Insurer; Subrogation...................................................97
   Section 4.07      Allocation of Applied Realized Loss Amounts..................................................................98

ARTICLE V THE CERTIFICATES........................................................................................................98

   Section 5.01      The Certificates.............................................................................................98
   Section 5.02      Certificate Register; Registration of Transfer and Exchange of Certificates..................................99
   Section 5.03      Mutilated, Destroyed, Lost or Stolen Certificates...........................................................103
   Section 5.04      Persons Deemed Owners.......................................................................................104
   Section 5.05      Access to List of Certificateholders' Names and Addresses...................................................104
   Section 5.06      Maintenance of Office or Agency.............................................................................104
   Section 5.07      Rights of the Certificate Insurer to Exercise Rights of Class A-1  Certificateholders.......................104
   Section 5.08      Trustee To Act Solely with Consent of the Certificate Insurer...............................................105
   Section 5.09      Mortgage Loans, Trust Fund and Accounts Held for Benefit of the Certificate Insurer.........................105
   Section 5.10      Certificate Insurer Default.................................................................................106

ARTICLE VI THE DEPOSITOR AND THE SERVICER........................................................................................106

   Section 6.01      Respective Liabilities of the Depositor and the Servicer....................................................106
   Section 6.02      Merger or Consolidation of the Depositor or the Servicer....................................................106
   Section 6.03      Limitation on Liability of the Depositor, the Servicer and Others...........................................107
   Section 6.04      Limitation on Resignation of the Servicer...................................................................108
   Section 6.05      Additional Indemnification by the Servicer; Third Party Claims..............................................108

ARTICLE VII DEFAULT..............................................................................................................109

   Section 7.01      Events of Default...........................................................................................109
   Section 7.02      Trustee to Act; Appointment of Successor....................................................................111
   Section 7.03      Notification to Certificateholders..........................................................................112

ARTICLE VIII CONCERNING THE TRUSTEE..............................................................................................113

   Section 8.01      Duties of the Trustee.......................................................................................113
   Section 8.02      Certain Matters Affecting the Trustee.......................................................................114
   Section 8.03      Trustee Not Liable for Certificates or Mortgage Loans.......................................................115
   Section 8.04      Trustee May Own Certificates................................................................................115
</TABLE>

                                       ii
<PAGE>

<TABLE>
<CAPTION>

<S>                  <C>                                                                                                         <C>
   Section 8.05      Trustee's Fees and Expenses.................................................................................115
   Section 8.06      Eligibility Requirements for the Trustee....................................................................116
   Section 8.07      Resignation and Removal of the Trustee......................................................................116
   Section 8.08      Successor Trustee...........................................................................................117
   Section 8.09      Merger or Consolidation of the Trustee......................................................................117
   Section 8.10      Appointment of Co-Trustee or Separate Trustee...............................................................117
   Section 8.11      Tax Matters.................................................................................................119
   Section 8.12      Periodic Filings............................................................................................121
   Section 8.13      Tax Classification of the Excess Reserve Fund Account.......................................................123
   Section 8.14      Cap Agreements..............................................................................................123

ARTICLE IX TERMINATION...........................................................................................................123

   Section 9.01      Termination upon Liquidation or Purchase of the Mortgage Loans..............................................123
   Section 9.02      Final Distribution on the Certificates......................................................................124
   Section 9.03      Additional Termination Requirements.........................................................................125

ARTICLE X MISCELLANEOUS PROVISIONS...............................................................................................126

   Section 10.01     Amendment...................................................................................................126
   Section 10.02     Recordation of Agreement; Counterparts......................................................................128
   Section 10.03     Governing Law...............................................................................................128
   Section 10.04     Intention of Parties........................................................................................128
   Section 10.05     Notices.....................................................................................................129
   Section 10.06     Severability of Provisions..................................................................................130
   Section 10.07     Assignment..................................................................................................130
   Section 10.08     Limitation on Rights of Certificateholders..................................................................130
   Section 10.09     Inspection and Audit Rights.................................................................................131
   Section 10.10     Certificates Nonassessable and Fully Paid...................................................................131
   Section 10.11     The Certificate Insurer Default.............................................................................131
   Section 10.12     Third Party Beneficiary.....................................................................................132
   Section 10.13     Waiver of Jury Trial........................................................................................132
</TABLE>

SCHEDULES
---------

Schedule I        Mortgage Loan Schedule
Schedule IA       Schedule of Countrywide Serviced Loans
Schedule II       Representations and Warranties of the Servicer
Schedule IIA      Further Representations and Warranties of the Servicer
Schedule III      Representations and Warranties as to the Unaffiliated Seller


EXHIBITS
--------

Exhibit           A Form of Class A-1, Class A-2, Class A-3, Class A-4, Class
                  M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3
                  Certificate
Exhibit B         [Reserved]
Exhibit C         Form of Class P Certificate
Exhibit D         Form of Class R Certificate

                                      iii
<PAGE>

Exhibit E         Form of Class X Certificate
Exhibit F         Form of Initial Certification of Trustee
Exhibit G         Form of Final Certification of Trustee
Exhibit H         Form of Transfer Affidavit
Exhibit I         Form of Transferor Certificate
Exhibit J         Form of Rule 144A Letter
Exhibit K         Form of Request for Release
Exhibit L         Form of Subsequent Transfer Agreement
Exhibit M         Depositor Certification
Exhibit N         Trustee/Servicer Certification to be provided to Depositor







                                       iv
<PAGE>

         THIS POOLING AND SERVICING AGREEMENT, dated as of February 1, 2004,
among MORGAN STANLEY ABS CAPITAL I INC., a Delaware corporation, as depositor
(the "Depositor"), COUNTRYWIDE HOME LOANS SERVICING LP, a Texas limited
partnership, as servicer (the "Servicer"), CDC MORTGAGE CAPITAL INC., a New York
corporation, as unaffiliated seller (the "Unaffiliated Seller") and DEUTSCHE
BANK NATIONAL TRUST COMPANY, a national banking association, as trustee (the
"Trustee"),

                              W I T N E S S E T H:
                              - - - - - - - - - -

         In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:

                             PRELIMINARY STATEMENT

         The Trustee shall elect that three segregated asset pools within the
Trust Fund be treated for federal income tax purposes as comprising three REMICs
(each a "REMIC" or, in the alternative, the Lower Tier REMIC, the Middle Tier
REMIC and the Upper Tier REMIC, respectively). Each Class of Certificates, other
than the Class P and Class R Certificates and other than the right of each Class
of LIBOR Certificates to receive Basis Risk Carry Forward Amounts and the right
of the Class X Certificates to receive payments from the Cap Agreements,
represents ownership of one or more regular interests in the Upper Tier REMIC
for purposes of the REMIC Provisions. The Class R Certificate represents
ownership of the sole class of residual interest in each of the Lower Tier
REMIC, Middle Tier REMIC and the Upper Tier REMIC for purposes of the REMIC
Provisions. Class UT-R, Class MT-R and Class LT-R comprise the Class R
Certificate. The Startup Day for each REMIC described herein is the Closing
Date. The latest possible maturity date for each regular interest is the date
referenced for such regular interest in this preliminary statement.

         The Upper Tier REMIC shall hold as assets the several classes of
uncertificated Middle Tier Regular Interests. Each such Middle Tier Regular
Interest is hereby designated as a regular interest in the Middle Tier REMIC.
Class MT-A-1, Class MT-A-2, Class MT-A-3, Class MT-A-4, Class MT-M-1, Class
MT-M-2, Class MT-M-3, Class MT-B-1, Class MT-B-2 and Class MT-B-3 are hereby
designated the MT Accretion Directed Classes. The Class P Certificate represents
beneficial ownership of the Prepayment Charges, which portion of the Trust Fund
shall be treated as a grantor trust.

         The Middle Tier REMIC shall hold as assets the several classes of
uncertificated Lower Tier Regular Interests. Each such Lower Tier Regular
Interest is hereby designated as a regular interest in the Lower Tier REMIC.

         The Lower Tier REMIC shall hold as assets all of the assets included in
the Trust Fund other than Prepayment Charges, the Excess Reserve Fund Account,
the Pre-Funding Accounts, the Capitalized Interest Account and the Cap
Agreements. The Lower Tier REMIC shall issue the following classes of interests,
and each Lower Tier Interest, other than the Class LT-R Interest, is hereby
designated as a regular interest in the Lower Tier REMIC.


                                       1
<PAGE>

LOWER TIER CLASS  TIER INTEREST  INITIAL TIER PRINCIPAL LATEST POSSIBLE MATURITY
   DESIGNATION        RATE               AMOUNT                 DATE
----------------  -------------  ---------------------- ------------------------
Class LT-C            (1)             $718,833,368         June 25, 2034
Class LT-N            (2)                  (3)             June 25, 2034
Class LT-PO           (4)             $168,140,783         June 25, 2034
Class LT-R            (5)                  (5)             June 25, 2034

(1)  The interest rate with respect to any Distribution Date for this interest
     is (i) during the Pre-Funding Period, an interest rate equal to a per annum
     variable rate equal to the weighted average of the Adjusted Net Mortgage
     Rates then in effect on the beginning of the related Due Period on the
     Initial Mortgage Loans, and (ii) thereafter, a per annum variable rate
     equal to the weighted average of the Adjusted Net Mortgage Rates then in
     effect on the beginning of the related Due Period on the Mortgage Loans.

(2)  The interest rate with respect to any Distribution Date for the Class LT-N
     is (i) during the Pre-Funding Period, all interest on the Subsequent
     Mortgage Loans for such Distribution Date divided by $168,140,783, and (ii)
     thereafter, 0.00%.

(3)  The Class LT-N will have a notional principal balance equal to
     $168,140,783.

(4)  The interest rate with respect to any Distribution Date for the Class LT-PO
     is (i) during the Pre-Funding Period, 0.00% and (ii) thereafter, a per
     annum variable rate equal to the weighted average of the Adjusted Net
     Mortgage Rates then in effect on the beginning of the related Due Period on
     the Mortgage Loans.

(5)  The Class LT-R is the sole class of residual interest in the Lower Tier
     REMIC. The Class LT-R does not have a principal amount or an interest rate.

         During the Pre-Funding Period, all principal payments (scheduled and
prepaid) and Realized Losses with respect to the Initial Mortgage Loans shall be
allocated to the Class LT-C, until such Class is paid in full or eliminated by
such losses. All principal payments (scheduled and prepaid) and Realized Losses
generated with respect to the Subsequent Mortgage Loans and any amounts
transferred from the Pre-Funding Accounts to the Lower Tier REMIC shall be
allocated to the Class LT-PO.

         On each Distribution Date thereafter, all principal payments (scheduled
and prepaid) and Realized Losses generated with respect to the Mortgage Loans
shall be allocated, pro rata, to the Class LT-C and Class LT-PO, until such
Classes are paid in full or eliminated by such losses.

         The Middle Tier REMIC shall issue the following classes of interests,
and each Middle Tier Interest, other than the Class MT-R Interest, is hereby
designated as a regular interest in the Middle Tier REMIC.


                                       2
<PAGE>

<TABLE>
<CAPTION>
   MIDDLE TIER CLASS              TIER              INITIAL TIER PRINCIPAL            CORRESPONDING         LATEST POSSIBLE MATURITY
      DESIGNATION             INTEREST RATE                 AMOUNT                        CLASS                       DATE
      -----------             -------------                 ------                        -----                       ----
<S>                                <C>            <C>                                   <C>                       <C>
Class MT-A-1                       (1)            1/2 of the Corresponding              Class A-1                 June 25, 2034
                                                  Class initial principal
                                                  balance
Class MT-A-2                       (1)            1/2 of the Corresponding              Class A-2                 June 25, 2034
                                                  Class initial principal
                                                  balance
Class MT-A-3                       (1)            1/2 of the Corresponding              Class A-3                 June 25, 2034
                                                  Class initial principal
                                                  balance
Class MT-A-4                       (1)            1/2 of the Corresponding              Class A-4                 June 25, 2034
                                                  Class initial principal
                                                  balance
Class MT-M-1                       (1)            1/2 of the Corresponding              Class M-1                 June 25, 2034
                                                  Class initial principal
                                                  balance
Class MT-M-2                       (1)            1/2 of the Corresponding              Class M-2                 June 25, 2034
                                                  Class initial principal
                                                  balance
Class MT-M-3                       (1)            1/2 of the Corresponding              Class M-3                 June 25, 2034
                                                  Class initial principal
                                                  balance
Class MT-B-1                       (1)            1/2 of the Corresponding              Class B-1                 June 25, 2034
                                                  Class initial principal
                                                  balance
Class MT-B-2                       (1)            1/2 of the Corresponding              Class B-2                 June 25, 2034
                                                  Class initial principal
                                                  balance
Class MT-B-3                       (1)            1/2 of the Corresponding              Class B-3                 June 25, 2034
                                                  Class initial principal
                                                  balance
Class MT-Accrual                   (1)            1/2 of the sum of the Pool                                      June 25, 2034
                                                  Stated Principal Balance,
                                                  the Subordinated Amount
                                                  and the Pre-Funding
                                                  Amount, minus $100.
</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>
   MIDDLE TIER CLASS              TIER              INITIAL TIER PRINCIPAL            CORRESPONDING         LATEST POSSIBLE MATURITY
      DESIGNATION             INTEREST RATE                 AMOUNT                        CLASS                       DATE
      -----------             -------------                 ------                        -----                       ----
<S>                                <C>                        <C>                       <C>                       <C>
Class MT-N                         (2)                        (3)                                                 June 25, 2034
Class MT-R                         (4)                        (4)                                                 June 25, 2034
</TABLE>

(1)  The interest rate with respect to any Distribution Date for these interests
     is (i) during the Pre-Funding Period, the weighted average Pass-Through
     Rate of the Class LT-C and Class LT-PO, and (ii) thereafter, a per annum
     variable rate equal to the weighted average of the Adjusted Net Mortgage
     Rates then in effect on the beginning of the related Due Period on the
     Mortgage Loans.

(2)  The Class MT-N is entitled to all distributions of interest on the Class
     LT-N.

(3)  The Class MT-N will have a notional principal balance equal to the notional
     principal balance of the Class LT-N.

(4)  The Class MT-R is the sole class of residual interest in the Middle Tier
     REMIC. The Class MT-R does not have a principal amount or an interest rate.

         On each Distribution Date, 50% of the increase in the Subordinated
Amount will be payable as a reduction of the principal balances of the MT
Accretion Directed Classes and will be accrued and added to the principal
balance of the MT-Accrual Class. To this end, each MT Accretion Directed Class
will be reduced by an amount equal to 50% of any increase in the Subordinated
Amount that is attributable to a reduction in the principal balance of its
Corresponding Class. On each Distribution Date, the increase in the principal
balance of the MT-Accrual Class may not exceed interest accruals for such
Distribution Date for the MT-Accrual Class. If, with respect to any Distribution
Date, 50% of the increase in the Subordinated Amount exceeds accrued interest on
the MT-Accrual Class, the excess (accumulated with all such excess for all prior
Distribution Dates) will be added to any increase in the Subordinated Amount for
purposes of calculating accrued interest on the MT-Accrual Class payable as
principal on the MT Accretion Directed Classes on the next Distribution Date.

         All principal payments (scheduled and prepaid) on the Mortgage Loans
shall be allocated 50% to the MT-Accrual Class and 50% to the MT Accretion
Directed Classes, until paid in full. To this end, principal payments shall be
allocated among such MT Accretion Directed Classes in an amount equal to 50% of
the principal amounts allocated to their respective Corresponding Classes.
Notwithstanding the foregoing, principal payments allocated to the Class X
Certificates that result in the reduction in the Subordinated Amount shall be
allocated to the MT-Accrual Class until paid in full. Realized losses shall be
applied so that after all distributions have been made on each Distribution Date
(i) the principal balance of each MT Accretion Directed Class is equal to 50% of
the principal balance of its Corresponding Class, and (ii) the MT-Accrual Class
is equal to 50% of the sum of (1) the Pool Stated Principal Balance, (2) the
Subordinated Amount and (3) the Pre-Funding Amount, minus $100.

                                       4
<PAGE>

         The Upper Tier REMIC shall issue the following classes of interests,
and each Upper Tier Interest, other than the Class UT-R Interest, is hereby
designated as a regular interest in the Upper Tier REMIC.

<TABLE>
<CAPTION>

    UPPER TIER CLASS         UPPER TIER        INITIAL UPPER TIER                                LATEST POSSIBLE
      DESIGNATION           INTEREST RATE       PRINCIPAL AMOUNT       CORRESPONDING CLASS        MATURITY DATE
      -----------           -------------       ----------------       -------------------        -------------
<S>                              <C>              <C>                      <C>                    <C>
   Class A-1                     (1)              $400,266,000             Class A-1(16)          June 25, 2034
   Class A-2                     (2)              $200,226,000             Class A-2(16)          June 25, 2034
   Class A-3                     (3)               $91,000,000             Class A-3(16)          June 25, 2034
   Class A-4                     (4)               $35,827,000             Class A-4(16)          June 25, 2034
   Class M-1                     (5)               $53,218,000             Class M-1(16)          June 25, 2034
   Class M-2                     (6)               $44,349,000             Class M-2(16)          June 25, 2034
   Class M-3                     (7)               $15,966,000             Class M-3(16)          June 25, 2034
   Class B-1                     (8)               $11,974,000             Class B-1(16)          June 25, 2034
   Class B-2                     (9)               $11,087,000             Class B-2(16)          June 25, 2034
   Class B-3                    (10)               $11,087,000             Class B-3(16)          June 25, 2034
   Class X-1(15)                (11)                  (11)                                        June 25, 2034
   Class X-2(15)                (12)                  (13)                    Class X             June 25, 2034
   Class UT-R                   (14)                    $                     Class R             June 25, 2034
</TABLE>

(1)  The Class A-1 Certificates will bear interest during each Interest Accrual
     Period at a per annum rate equal to the least of (a) one-month LIBOR plus
     (x) on or prior to the Optional Termination Date, 0.290% or (y) after the
     Optional Termination Date, 0.580%, (b) the Adjusted WAC Cap minus the
     Premium Rate and (c) the Loan Group I Cap.

(2)  The Class A-2 Certificates will bear interest during each Interest Accrual
     Period at a per annum rate equal to the least of (a) one-month LIBOR plus
     (x) on or prior to the Optional Termination Date, 0.310% or (y) after the
     Optional Termination Date, 0.620%, (b) the Adjusted WAC Cap and (c) the
     Loan Group II Cap.

(3)  The Class A-3 Certificates will bear interest during each Interest Accrual
     Period at a per annum rate equal to the least of (a) one-month LIBOR plus
     (x) on or prior to the Optional Termination Date, 0.210% or (y) after the
     Optional Termination Date, 0.420%, (b) the Adjusted WAC Cap and (c) the
     Loan Group III Cap.

(4)  The Class A-4 Certificates will bear interest during each Interest Accrual
     Period at a per annum rate equal to the least of (a) one-month LIBOR plus
     (x) on or prior to the Optional Termination Date, 0.460% or (y) after the
     Optional Termination Date, 0.920%, (b) the Adjusted WAC Cap and (c) the
     Loan Group III Cap.

                                       5
<PAGE>

(5)  The Class M-1 Certificates will bear interest during each Interest Accrual
     Period at a per annum rate equal to the lesser of (a) one-month LIBOR plus
     (x) on or prior to the Optional Termination Date, 0.570% or (y) after the
     Optional Termination Date, 0.855% and (b) the Adjusted WAC Cap.

(6)  The Class M-2 Certificates will bear interest during each Interest Accrual
     Period at a per annum rate equal to the lesser of (a) one-month LIBOR plus
     (x) on or prior to the Optional Termination Date, 1.200% or (y) after the
     Optional Termination Date, 1.80% and (b) the Adjusted WAC Cap.

(7)  The Class M-3 Certificates will bear interest during each Interest Accrual
     Period at a per annum rate equal to the lesser of (a) one-month LIBOR plus
     (x) on or prior to the Optional Termination Date, 1.350% or (y) after the
     Optional Termination Date, 2.025% and (b) the Adjusted WAC Cap.

(8)  The Class B-1 Certificates will bear interest during each Interest Accrual
     Period at a per annum rate equal to the lesser of (a) one-month LIBOR plus
     (x) on or prior to the Optional Termination Date, 1.700% or (y) after the
     Optional Termination Date, 2.550% and (b) the Adjusted WAC Cap.

(9)  The Class B-2 Certificates will bear interest during each Interest Accrual
     Period at a per annum rate equal to the lesser of (a) one-month LIBOR plus
     (x) on or prior to the Optional Termination Date, 1.800% or (y) after the
     Optional Termination Date, 2.700% and (b) the Adjusted WAC Cap.

(10) The Class B-3 Certificates will bear interest during each Interest Accrual
     Period at a variable rate equal to the lesser of (a) one-month LIBOR plus
     (x) on or prior to the Optional Termination Date, 3.750% or (y) after the
     Optional Termination Date, 5.625% and (b) the Adjusted WAC Cap.

(11) The Class X has an initial principal balance of $11,974,051.04 but it will
     not accrue interest on such balance but will accrue interest on a notional
     principal balance. As of any Distribution Date, the Class X-1 shall have a
     notional principal balance equal to the Pool Stated Principal Balance as of
     the first day of the related Interest Accrual Period. With respect to any
     Interest Accrual Period, the Class X-1 shall bear interest at a rate equal
     to the excess, if any, of the Middle Tier WAC Cap over the product of (i) 2
     and (ii) the weighted average Pass-Through Rate of the Middle Tier Regular
     Interests, where each MT Accretion Directed Class is subject to a cap and a
     floor equal to the Pass-Through Rate on its Corresponding Class, and the
     MT-Accrual Class is subject to a cap of zero. With respect to any
     Distribution Date, interest that so accrues on the notional principal
     balance of the Class X-1 shall be deferred in an amount equal to any
     increase in the Subordinated Amount on such Distribution Date. Such
     deferred interest shall not itself bear interest.

(12) The Class X-2 is entitled to all distributions of interest on the Class
     MT-N.

(13) The Class X-2 will have a notional principal balance equal to the notional
     principal balance of the Class MT-N.

                                       6
<PAGE>

(14) The Class UT-R is the sole class of residual interest in the Upper Tier
     REMIC. The Class UT-R does not have an interest rate.

(15) The Class X Certificates will represent two regular interests in the Upper
     Tier REMIC, the Class X-1 and Class X-2.

(16) Each of these Certificates will represent not only the ownership of the
     Corresponding Class of Upper Tier Regular Interest but also the right to
     receive payments from the Excess Reserve Fund Account in respect of any
     Basis Risk Carry Forward Amounts. For federal income tax purposes, the
     Trustee will treat a Certificateholder's right to receive payments from the
     Excess Reserve Fund Account as payments made pursuant to a notional
     principal contract written by the Class X Certificateholder.

         The minimum denomination for each Class of Certificates, other than the
Class P, Class R and the Class X Certificates, will be $25,000 and integral
multiples of $1 in excess thereof. The Class P, Class R and the Class X
Certificates will each represent a 100% Percentage Interest in such class.

         Set forth below are designations of Classes of Certificates to the
categories used herein:

Book-Entry Certificates...........  All Classes of Certificates other than the
                                    Physical Certificates.

Subordinated Certificates.........  Class M-1, Class M-2, Class M-3, Class B-1,
                                    Class B-2 and Class B-3 Certificates.

Delay Certificates................  None.

ERISA-Restricted Certificates.....  Class R Certificates, Class P Certificate
                                    and Class X Certificate; any certificate
                                    with a rating below the lowest applicable
                                    permitted rating under the Underwriters'
                                    Exemption.

LIBOR Certificates................  Class A-1, Class A-2, Class A-3, Class A-4
                                    and Subordinated Certificates.

Non-Delay Certificates............  Class A-1, Class A-2, Class A-3, Class A-4,
                                    Class X and Subordinated Certificates.

Offered Certificates..............  All Classes of Certificates other than the
                                    Private Certificates.

Physical Certificates.............  Class P, Class X and Class R Certificates.

Private Certificates..............  Class P, Class X and Class R Certificates.


                                       7
<PAGE>

Rating Agencies...................  Moody's, Fitch and Standard & Poor's.

Regular Certificates..............  All Classes of Certificates other than the
                                    Class P and Class R Certificates.

Residual Certificates.............  Class R Certificates.






                                       8
<PAGE>

                                   ARTICLE I

                                  DEFINITIONS

         Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:

         60+ Day Delinquent Loan: Each Mortgage Loan with respect to which any
portion of a Scheduled Payment is, as of the last day of the prior Due Period,
two months or more past due (without giving effect to any grace period), each
Mortgage Loan in foreclosure, all REO Property and each Mortgage Loan for which
the Mortgagor has filed for bankruptcy.

         Aames: Aames Capital Corporation, a California corporation.

         Aames Assignment Agreement: The Assignment and Recognition Agreement,
dated as of February 25, 2004, by and among the Unaffiliated Seller, the
Depositor and Accredited, and each other Assignment and Recognition Agreement by
and among the Unaffiliated Seller, the Depositor and Accredited in connection
with any Subsequent Transfer of Accredited Mortgage Loans.

         Aames Mortgage Loan: A Mortgage Loan which was acquired from Aames by
the Unaffiliated Seller pursuant to the Aames Purchase Agreement, and which has
been acquired by the Trust Fund.

         Aames Purchase Agreement: The Mortgage Loan Purchase and Warranties
Agreement, dated as of June 23, 2003, as amended to date, by and between the
Unaffiliated Seller and Aames.

         Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices set forth in Section 3.01.

         Account: Any of the Capitalized Interest Account, the Collection
Account, the Distribution Account, any Escrow Account, the Excess Reserve Fund
Account, the Insurance Payment Account or the Pre-Funding Accounts. Each Account
shall be an Eligible Account.

         Accredited: Accredited Home Lenders, Inc., a California corporation.

         Accredited Assignment Agreement: The Assignment and Recognition
Agreement, dated as of February 25, 2004, by and among the Unaffiliated Seller,
the Depositor and Accredited, and each other Assignment and Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and Accredited in
connection with any Subsequent Transfer of Accredited Mortgage Loans.

         Accredited Mortgage Loan: A Mortgage Loan which was acquired from
Accredited by the Unaffiliated Seller pursuant to the Accredited Purchase
Agreement, and which has been acquired by the Trust Fund.

                                       1
<PAGE>

         Accredited Purchase Agreement: The Mortgage Loan Purchase and
Warranties Agreement, dated as of October 1, 2003, as amended to date, by and
between the Unaffiliated Seller and Accredited.

         Accrued Certificate Interest: With respect to any Distribution Date for
each Class of Certificates (other than the Class P, Class R and Class X
Certificates), the amount of interest accrued during the related Interest
Accrual Period at the applicable Pass-Through Rate on the related Class
Certificate Balance immediately prior to such Distribution Date, as reduced by
such Class's share of Net Prepayment Interest Shortfalls and Relief Act
Shortfalls for the related Due Period allocated to such Class pursuant to
Section 4.02.

         Addition Notice: A written notice from the Unaffiliated Seller to the
Trustee, the Rating Agencies and the Certificate Insurer that the Unaffiliated
Seller desires to make a Subsequent Transfer.

         Adjustable Rate Mortgage Loan: A Mortgage Loan bearing interest at an
adjustable rate.

         Adjusted Mortgage Rate: As to each Mortgage Loan and at any time, the
per annum rate equal to the Mortgage Rate less the Servicing Fee Rate.

         Adjusted Net Mortgage Rate: As to each Mortgage Loan and at any time,
the per annum rate equal to the Mortgage Rate less the Expense Fee Rate.

         Adjusted WAC Cap: The weighted average of the Pass-Through Rates of the
Middle Tier Regular Interests (other than the Class MT-N).

         Adjustment Date: As to any Adjustable Rate Mortgage Loan, the first Due
Date on which the related Mortgage Rate adjusts as set forth in the related
Mortgage Note and each Due Date thereafter on which the Mortgage Rate adjusts as
set forth in the related Mortgage Note.

         Advances: Collectively, the P&I Advances and Servicing Advances.

         Advance Facility: As defined in Section 3.27.

         Advance Facility Trustee: As defined in Section 3.27.

         Advance Reimbursement Amount: As defined in Section 3.27.

         Advancing Person: As defined in Section 3.27.

         Aegis: Aegis Mortgage Corporation, a Delaware corporation.

         Aegis Assignment Agreement: The Assignment and Recognition Agreement,
dated as of February 25, 2004, by and among the Unaffiliated Seller, the
Depositor and Aegis, and each other Assignment and Recognition Agreement by and
among the Unaffiliated Seller, the Depositor and Aegis in connection with any
Subsequent Transfer of Aegis Mortgage Loans.

                                       2
<PAGE>

         Aegis Mortgage Loan: A Mortgage Loan which was acquired from Aegis by
the Unaffiliated Seller pursuant to the Aegis Purchase Agreement, and which has
been acquired by the Trust Fund.

         Aegis Purchase Agreement: The Mortgage Loan Purchase and Warranties
Agreement, dated as of December 1, 2002, as amended to date, by and between the
Unaffiliated Seller and Aegis.

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

         Agreement: This Pooling and Servicing Agreement and all amendments or
supplements hereto.

         Ameriquest: Ameriquest Mortgage Company, a Delaware corporation.

         Ameriquest Assignment Agreement: The Assignment and Recognition
Agreement, dated as of February 25, 2004, by and among the Unaffiliated Seller,
the Depositor and Ameriquest, and each other Assignment and Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and Ameriquest in
connection with any Subsequent Transfer of Ameriquest Mortgage Loans.

         Ameriquest Mortgage Loan: A Mortgage Loan which was acquired from
Ameriquest by the Unaffiliated Seller pursuant to the Ameriquest Purchase
Agreement, and which has been acquired by the Trust Fund.

         Ameriquest Purchase Agreement: The Mortgage Loan Purchase and
Warranties Agreement, dated as of June 30, 2003, as amended to date, by and
between the Unaffiliated Seller and Ameriquest.

         Amount Held for Future Distribution: As to the Certificates on any
Distribution Date, the aggregate amount held in the Collection Account at the
close of business on the related Determination Date on account of (i) Principal
Prepayments, Insurance Proceeds, Condemnation Proceeds and Liquidation Proceeds
on the Mortgage Loans received after the end of the related Prepayment Period
and (ii) all Scheduled Payments on the Mortgage Loans due after the end of the
related Due Period.

         Applied Realized Loss Amount: With respect to any Distribution Date,
the amount, if any, by which the aggregate Class Certificate Balance of the
LIBOR Certificates after distributions of principal on such Distribution Date
exceeds the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date.

         Appraised Value: The value set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the Mortgaged
Property.

                                       3
<PAGE>

         Assignment and Recognition Agreement: The Aames Assignment Agreement,
Accredited Assignment Agreement, the Aegis Assignment Agreement, the Ameriquest
Assignment Agreement, the BNC Assignment Agreement, the Chapel Mortgage
Assignment Agreement, the CIT Assignment Agreement, the Encore Assignment
Agreement, the FGMC Assignment Agreement, the First Banc Assignment Agreement,
the Impac Assignment Agreement, the Lenders Direct Assignment Agreement, the
Master Financial Assignment Agreement, the Novelle Assignment Agreement, the
Oakmont Assignment Agreement, the People's Choice Assignment Agreement or the
SIB Mortgage Assignment Agreement, as applicable.

         Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form (other than the assignee's
name and recording information not yet returned from the recording office),
reflecting the sale of the Mortgage to the Trustee.

         Available Funds: With respect to any Distribution Date and the Mortgage
Loans, to the extent received by the Trustee (x) the sum of (i) the aggregate
amount of Scheduled Payments on the Mortgage Loans due on the related Due Date
(net of the related Expense Fees) and received by the Servicer on or prior to
the related Determination Date, together with any P&I Advance in respect
thereof, (ii) certain unscheduled payments in respect of the Mortgage Loans
received by the Servicer and remitted to the Trustee, including all partial or
full prepayments, Insurance Proceeds, Condemnation Proceeds, Liquidation
Proceeds, Substitute Adjustment Amounts and proceeds from repurchase of those
Mortgage Loans occurring during the related Due Period at the Repurchase Price
(excluding Prepayment Charges), (iii) Compensating Interest payments from the
Servicer to the Trustee in respect of Prepayment Interest Shortfalls for that
Distribution Date, (iv) for any Distribution Date on or prior to May 24, 2004,
any funds required to be paid from the Capitalized Interest Account to make up
for any interest shortfalls on the Initial Mortgage Loans and (v) immediately
following the end of the Pre-Funding Period, all amounts, if any, on deposit in
the Pre-Funding Accounts reduced by (y) amounts in reimbursement for Advances
previously made with respect to the Mortgage Loans and other amounts, in each
case, as to which the Servicer, the Depositor or the Trustee are entitled to be
paid or reimbursed pursuant to the Agreement.

         Average Net Proceeds: As defined in Exhibit M hereto.

         Balloon Loan: Any Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its stated maturity
date.

         Basic Principal Distribution Amount: With respect to any Distribution
Date, the excess of (i) the aggregate Principal Remittance Amount for such
Distribution Date over (ii) the Excess Subordinated Amount, if any, for such
Distribution Date.

         Basis Risk Carry Forward Amount: With respect to each Class of LIBOR
Certificates, as of any Distribution Date, the sum of (A) if on such
Distribution Date the Pass-Through Rate for any Class of LIBOR Certificates is
based upon the Adjusted WAC Cap, the Loan Group I Cap, the Loan Group II Cap or
the Loan Group III Cap, as applicable, the excess of (i) the amount of interest
such Class of Certificates would otherwise be entitled to receive on

                                       4
<PAGE>

such Distribution Date had such rate been calculated as the sum of LIBOR and the
applicable Pass-Through Margin on such Class of Certificates for such
Distribution Date, over (ii) the amount of interest payable on such Class of
Certificates calculated at the Adjusted WAC Cap, the Loan Group I Cap, the Loan
Group II Cap or the Loan Group III Cap, as applicable, for such Distribution
Date and (B) the Basis Risk Carry Forward Amount for such Class of Certificates
for all previous Distribution Dates not previously paid, together with interest
thereon at a rate equal to the sum of LIBOR and the applicable Pass-Through
Margin for such Class of Certificates for such Distribution Date.

         Basis Risk Payment: For any Distribution Date, a payment in an amount
equal to any Basis Risk Carry Forward Amount; provided, however, that with
respect to any Distribution Date, the payment cannot exceed the amounts
otherwise available for distribution on the Class X Certificates plus any
Interest Rate Cap Payment with respect to such Distribution Date.

         Best's: Best's Key Rating Guide, as the same shall be amended from time
to time.

         BNC: BNC Mortgage, Inc., a Delaware corporation.

         BNC Assignment Agreement: The Assignment and Recognition Agreement,
dated as of February 25, 2004, by and among the Unaffiliated Seller, the
Depositor and BNC, and each other Assignment and Recognition Agreement by and
among the Unaffiliated Seller, the Depositor and BNC in connection with any
Subsequent Transfer of BNC Mortgage Loans.

         BNC Mortgage Loan: A Mortgage Loan which was acquired from BNC by the
Unaffiliated Seller pursuant to the BNC Purchase Agreement, and which has been
acquired by the Trust Fund.

         BNC Purchase Agreement: The Amended and Restated Mortgage Loan Purchase
and Warranties Agreement, dated as of February 26, 2002, as amended to date, by
and between the Unaffiliated Seller and BNC.

         Book-Entry Certificates: As specified in the Preliminary Statement.
Business Day: Any day other than (i) Saturday or Sunday, or (ii) a day on which
banking and savings and loan institutions, in (a) the State of New York, Utah,
New Jersey and Florida, (b) the applicable states in which the Servicer's
servicing operations are located, or (c) the State in which the Trustee's
operations are located, are authorized or obligated by law or executive order to
be closed.

         Cap Agreement: The Group II/Group III Class A Cap Agreement, the Class
M Cap Agreement and/or the Class B Cap Agreement, as applicable.

         Cap Provider: CDC Financial Products Inc., a Delaware corporation, and
any successor thereto.

         Capitalized Interest Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(e) in the name of the Trustee
for the benefit

                                       5
<PAGE>

of the Offered Certificateholders and designated "Deutsche Bank National Trust
Company, in trust for registered holders of CDC Mortgage Capital Trust 2004-HE1,
Mortgage Pass-Through Certificates, Series 2004-HE1".

         Capitalized Interest Requirement: With respect to the Distribution
Dates occurring in March 2004, April 2004 and May 2004, the excess, if any, of
(x) the Accrued Certificate Interests for all classes of the Offered
Certificates for such Distribution Date over (y) all scheduled installments of
interest (net of the related Expense Fees) due on the Mortgage Loans in the
related Due Period. In no event will the Capitalized Interest Requirement be
less than zero.

         Certificate: Any one of the Certificates executed by the Trustee in
substantially the forms attached hereto as exhibits.

         Certificate Balance: With respect to any Class of Certificates, other
than the Class X and Class R Certificates, at any date, the maximum dollar
amount of principal to which the Holder thereof is then entitled hereunder, such
amount being equal to the Denomination thereof minus all distributions of
principal previously made with respect thereto and in the case of any
Subordinated Certificates, reduced by any Applied Realized Loss Amounts
applicable to such Class of Subordinated Certificates. The Class X and Class R
Certificates have no Certificate Balance.

         Certificate Insurance Policy: The Financial Guaranty Insurance Policy
No. 51494-N, and all endorsements thereto dated the Closing Date, issued by the
Certificate Insurer for the benefit of the Class A-1 Certificateholders.

         Certificate Insurer: Financial Security Assurance Inc., a monoline
stock insurance company organized and created under the laws of the State of New
York, and any successors thereto.

         Certificate Insurer Default: The existence and continuance of any of
the following:

         (a) the Certificate Insurer shall have failed to make a required
     payment when due under the Certificate Insurance Policy;

         (b) the Certificate Insurer shall have (i) filed a petition or
     commenced any case or proceeding under any provision or chapter of the
     United States Bankruptcy Code, the New York State Insurance Law or any
     other similar federal or state law relating to insolvency, bankruptcy,
     rehabilitation, liquidation, or reorganization, (ii) made a general
     assignment for the benefit of its creditors or (iii) had an order for
     relief entered against it under the United States Bankruptcy Code, the New
     York State Insurance Law or any other similar federal or state law relating
     to insolvency, bankruptcy, rehabilitation, liquidation, or reorganization
     that is final and nonappealable; or

         (c) a court of competent jurisdiction, the New York Department of
     Insurance or any other competent regulatory authority shall have entered a
     final and nonappealable order, judgment or decree (i) appointing a
     custodian, trustee, agent, or receiver for the

                                       6
<PAGE>

     Certificate Insurer or for all or any material portion of its property or
     (ii) authorizing the taking of possession by a custodian, trustee, agent,
     or receiver of the Certificate Insurer or of all or any material portion of
     its property.

         Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Book-Entry Certificate.

         Certificate Register: The register maintained pursuant to Section 5.02.

         Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or any Affiliate of the Depositor shall be deemed not to
be Outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect such consent has been obtained; provided, however, that if
any such Person (including the Depositor) owns 100% of the Percentage Interests
evidenced by a Class of Certificates, such Certificates shall be deemed to be
Outstanding for the purposes of any provision hereof that requires the consent
of the Holders of Certificates of a particular Class as a condition to the
taking of any action hereunder. The Trustee is entitled to rely conclusively on
a certification of the Depositor or any Affiliate of the Depositor in
determining which Certificates are registered in the name of an Affiliate of the
Depositor.

         Certification: As defined in Section 8.12(b).

         Chapel Mortgage: Chapel Mortgage Corporation, a New Jersey corporation.

         Chapel Mortgage Assignment Agreement: The Assignment and Recognition
Agreement, dated as of February 25, 2004, by and among the Unaffiliated Seller,
the Depositor and Chapel Mortgage, and each other Assignment and Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and Chapel
Mortgage in connection with any Subsequent Transfer of Chapel Mortgage Loans.

         Chapel Mortgage Loan: A Mortgage Loan which was acquired from Chapel
Mortgage by the Unaffiliated Seller pursuant to the Chapel Mortgage Purchase
Agreement, and which has been acquired by the Trust Fund.

         Chapel Mortgage Purchase Agreement: The Mortgage Loan Purchase and
Warranties Agreement, dated as of June 4, 2002, as amended to date, by and
between the Unaffiliated Seller and Chapel Mortgage.

         CIT: Collectively, The CIT Group/Consumer Finance, Inc., a Delaware
corporation, The CIT Group/Consumer Finance, Inc. (NY), a New York corporation,
and The CIT Group/Consumer Finance, Inc. (TN), a Delaware corporation.

         CIT Assignment Agreement: The Assignment and Recognition Agreement,
dated as of February 25, 2004, by and among the Unaffiliated Seller, the
Depositor and CIT, and each other Assignment and Recognition Agreement by and
among the Unaffiliated Seller, the Depositor and CIT in connection with any
Subsequent Transfer of CIT Mortgage Loans.

                                       7
<PAGE>

         CIT Mortgage Loan: A Mortgage Loan which was acquired from CIT by the
Unaffiliated Seller pursuant to the CIT Purchase Agreement, and which has been
acquired by the Trust Fund.

         CIT Purchase Agreement: The Mortgage Loan Purchase and Warranties
Agreement, dated as of March 24, 2003, by and between the Unaffiliated Seller
and CIT.

         Class: All Certificates bearing the same class designation as set forth
in the Preliminary Statement.

         Class A Certificates: The Class A-1 Certificates, the Class A-2
Certificates and the Group III Class A Sequential Certificates.

         Class A Principal Distribution Amount: With respect to any Distribution
Date, an amount equal to the excess of (x) the aggregate Class Certificate
Balances of the Class A Certificates immediately prior to such Distribution Date
over (y) the lesser of (A) the product of 64.00% of the Current Maximum Amount
and (B) the excess, if any, of the Current Maximum Amount over $4,434,871.

         Class A-1 Certificates: All Certificates bearing the class designation
of "Class A-1 Certificates."

         Class A-1 Deficiency: With respect to any Distribution Date and the
Class A-1 Certificates, an amount equal to the sum of:

         (i) the Class A-1 Interest Deficit Amount; plus

         (ii) the Class A-1 Principal Parity Amount, if any, for such
     Distribution Date; and

         (iii) the Class Certificate Balance of the Class A-1 Certificates to
     the extent unpaid on the Final Scheduled Distribution Date or, if earlier,
     the date on which the final distribution is made to the Class A-1
     Certificateholders pursuant to Article IX, in each case after giving effect
     to all distributions made on such date from sources other than the
     Certificate Insurance Policy for the Class A-1 Certificates.

         Class A-1 Interest Deficit Amount: With respect to any Distribution
Date and the Class A-1 Certificates, the product of (i) the Interest Deficit
Amount and (ii) a fraction, the numerator of which is the outstanding Class
Certificate Balance of the Class A-1 Certificates on such Distribution Date, and
the denominator of which is the aggregate outstanding Class Certificate Balances
of all Class A Certificates on such Distribution Date, in each case, without
taking into account any reduction of principal on such Certificates on such
Distribution Date.

         Class A-1 Principal Parity Amount: With respect to any Distribution
Date, the product of (i) the Principal Parity Deficit and (ii) a fraction, the
numerator of which is the initial Class Certificate Balance of the Class A-1
Certificates, and the denominator of which is the initial aggregate Class
Certificate Balances of all Class A Certificates.

                                       8
<PAGE>

         Class A-2 Certificates: All Certificates bearing the class designation
of "Class A-2 Certificates."

         Class A-3 Certificates: All Certificates bearing the class designation
of "Class A-3 Certificates."

         Class A-4 Certificates: All Certificates bearing the class designation
of "Class A-4 Certificates."

         Class B Cap Agreement: The interest rate cap agreement, relating to the
Class B Certificates, dated February 25, 2004 with the Cap Provider, as "Party
A" thereunder, and the Unaffiliated Seller, as "Party B" thereunder, or any
replacement thereof.

         Class B Interest Rate Cap Payment: On the 24th day of each month
(subject to adjustment in accordance with ISDA's "Preceding Business Day
Convention"), the product of (A)(i) commencing March 24, 2004 until and
including November 24, 2005, the number of basis points by which one-month LIBOR
exceeds 4.400% (up to a maximum excess of 235 basis points), (ii) commencing
December 24, 2005 until and including May 24, 2006, the number of basis points
by which one-month LIBOR exceeds 5.700% (up to a maximum excess of 180 basis
points), (iii) commencing June 24, 2006 until and including November 24, 2006,
the number of basis points by which one-month LIBOR exceeds 6.350% (up to a
maximum excess of 140 basis points) or (iv) commencing December 24, 2006 until
and including April, 24 2007, the number of basis points by which one-month
LIBOR exceeds 7.150% (up to a maximum excess of 60 basis points), (B) the Class
B notional balance and (C) the Class B notional balance multiplier, each as set
forth on the notional balance and multiplier schedule attached to the Class B
Cap Agreement as applicable to that Distribution Date, based on an "actual/360"
accrual.

         Class B-1 Certificates: All Certificates bearing the class designation
of "Class B-1 Certificates."

         Class B-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount on such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount on such Distribution
Date), and (E) the Class Certificate Balance of the Class B-1 Certificates
immediately prior to such Distribution Date over (ii) the lesser of (A) 92.30%
of the Current Maximum Amount and (B) the excess, if any, of the Current Maximum
Amount over $4,434,871.

         Class B-2 Certificates: All Certificates bearing the class designation
of "Class B-2 Certificates".

                                       9
<PAGE>

         Class B-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount on such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount on such Distribution
Date), (E) the Class Certificate Balance of the Class B-1 Certificates (after
taking into account the distribution of the Class B-1 Principal Distribution
Amount on such Distribution Date), and (F) the Class Certificate Balance of the
Class B-2 Certificates immediately prior to such Distribution Date over (ii) the
lesser of (A) 94.80% of the Current Maximum Amount and (B) the excess, if any,
of the Current Maximum Amount over $4,434,871.

         Class B-3 Certificates: All Certificates bearing the class designation
of "Class B-3 Certificates".

         Class B-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount on such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount on such Distribution
Date), (E) the Class Certificate Balance of the Class B-1 Certificates (after
taking into account the distribution of the Class B-1 Principal Distribution
Amount on such Distribution Date), (F) the Class Certificate Balance of the
Class B-2 Certificates (after taking into account the distribution of the Class
B-2 Principal Distribution Amount on such Distribution Date) and (G) the Class
Certificate Balance of the Class B-3 Certificates immediately prior to such
Distribution Date over (ii) the lesser of (A) 97.30% of the Current Maximum
Amount and (B) the excess, if any, of the Current Maximum Amount over
$4,434,871.

         Class Certificate Balance: With respect to any Class and as to any date
of determination, the aggregate of the Certificate Balances of all Certificates
of such Class as of such date.

         Class M Cap Agreement: The interest rate cap agreement, relating to the
Class M Certificates, dated February 25, 2004 with the Cap Provider, as "Party
A" thereunder, and the Unaffiliated Seller, as "Party B" thereunder, or any
replacement thereof.

         Class M Interest Rate Cap Payment: On the 24th day of each
month(subject to adjustment in accordance with ISDA's "Preceding Business Day
Convention"), an amount equal

                                       10
<PAGE>

to the product of (A)(i) commencing March 24, 2004 until and including November
24, 2005, the number of basis points by which one-month LIBOR exceeds 5.900% (up
to a maximum excess of 235 basis points), (ii) commencing December 24, 2005
until and including May 24, 2006, the number of basis points by which one-month
LIBOR exceeds 7.200% (up to a maximum excess of 180 basis points), (iii)
commencing June 24, 2006 until and including November 24, 2006, the number of
basis points by which one-month LIBOR exceeds 7.850% (up to a maximum excess of
140 basis points) or (iv) commencing December 24, 2006 until and including
April, 24 2007, the number of basis points by which one-month LIBOR exceeds
8.650% (up to a maximum excess of 60 basis points), (B) the Class M notional
balance and (C) the Class M notional balance multiplier, each as set forth on
the notional balance schedule attached to the Class M Cap Agreement as
applicable to that Distribution Date, based on an "actual/360" accrual

         Class M-1 Certificates: All Certificates bearing the class designation
of "Class M-1 Certificates".

         Class M-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount on such Distribution
Date), and (B) the Class Certificate Balance of the Class M-1 Certificates
immediately prior to such Distribution Date over (ii) the lesser of (A) 76.00%
of the Current Maximum Amount and (B) the excess, if any, of the Current Maximum
Amount over $4,434,871.

         Class M-2 Certificates: All Certificates bearing the class designation
of "Class M-2 Certificates."

         Class M-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount on such Distribution Date), and (C) the Class Certificate Balance of the
Class M-2 Certificates immediately prior to such Distribution Date over (ii) the
lesser of (A) 86.00% of the Current Maximum Amount and (B) the excess, if any,
of the Current Maximum Amount over $4,434,871.

         Class M-3 Certificates: All Certificates bearing the class designation
of "Class M-3 Certificates".

         Class M-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount on such Distribution Date), and (D) the Class
Certificate Balance of the Class M-3

                                       11
<PAGE>

Certificates immediately prior to such Distribution Date over (ii) 89.60% of the
Current Maximum Amount and (B) the excess, if any, of the Current Maximum Amount
over $4,434,871.

         Class P Certificates: All Certificates bearing the class designation of
"Class P Certificates".

         Class R Certificates: All Certificates bearing the class designation of
"Class R Certificates".

         Class X Certificates: All Certificates bearing the designation of
"Class X Certificates".

         Class X Distributable Amount: On any Distribution Date, the sum of (i)
as a distribution in respect of interest, the amount of interest that has
accrued on the Class X Regular Interests and not applied as an Extra Principal
Distribution Amount on such Distribution Date, plus any such accrued interest
remaining undistributed from prior Distribution Dates, plus (ii) as a
distribution in respect of principal, any portion of the principal balance of
the Class X Regular Interest which is distributable as a Subordination Reduction
Amount, less (iii) any amounts paid as a Basis Risk Payment.

         Class X Regular Interest: The Upper Tier Regular Interest represented
by the Class X Certificates as specified and described in the Preliminary
Statement and the related footnote thereto.

         Closing Date: February 25, 2004.

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

         Collection Account: As defined in Section 3.10(a).

         Compensating Interest: For any Distribution Date, the lesser of (a) the
Prepayment Interest Shortfall, if any, for such Distribution Date, and (b) the
Servicing Fee payable to the Servicer for such Distribution Date.

         Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation.

         Corporate Trust Office: The designated office of the Trustee in the
State of California at which at any particular time its corporate trust business
with respect to this Agreement is administered, which office at the date of the
execution of this Agreement is located at 1761 East St. Andrew Place, Santa Ana,
California 92705, Attn: Trust Administration DC04M1, facsimile no. (714)
247-6478 and which is the address to which notices to and correspondence with
the Trustee should be directed.

                                       12
<PAGE>

         Corresponding Class: The class of interests in any REMIC created under
this Agreement that correspond to the Class of interests in another such REMIC
or to a Class of Certificates in the manner set out below:

           MIDDLE TIER                 UPPER TIER             CORRESPONDING
        CLASS DESIGNATION               INTEREST               CERTIFICATE
        -----------------              ----------             -------------
         Class MT-A-1                  Class A-1                Class A-1
         Class MT -A-2                 Class A-2                Class A-2
         Class MT -A-3                 Class A-3                Class A-3
         Class MT -A-4                 Class A-4                Class A-4
         Class MT -M-1                 Class M-1                Class M-1
         Class MT -M-2                 Class M-2                Class M-2
         Class MT -M-3                 Class M-3                Class M-3
         Class MT -B-1                 Class B-1                Class B-1
         Class MT -B-2                 Class B-2                Class B-2
         Class MT -B-3                 Class B-3                Class B-3


         Countrywide: Countrywide Home Loans Servicing LP, a Texas limited
partnership.

         Cumulative Loss Percentage: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses incurred from the Cut-off Date to the last day of the
preceding calendar month less any amounts received with respect to Realized
Losses on the related Mortgage Loans subsequent to the Final Recovery
Determination being made with respect to such Mortgage Loans and the denominator
of which is the Cut-off Date Principal Balance of the Mortgage Loans.

         Current Maximum Amount: With respect to any Distribution Date, the sum
of (i) the aggregate of the Stated Principal Balances of the Mortgage Loans in
the Trust at such time, and (ii) with respect to each Distribution Date on or
prior to May 25, 2004, the Pre-Funding Amount immediately prior to such
Distribution Date, net of investment earnings on deposit therein.

         Custodial File: With respect to each Mortgage Loan, the file retained
by the Trustee consisting of items (i) - (viii) of Section 2.01(b).

         Cut-off Date: With respect to the Initial Mortgage Loans, February 1,
2004, and with respect to each Subsequent Mortgage Loan, the related Subsequent
Cut-off Date.

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

         Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on the Cut-off Date.

                                       13
<PAGE>

         Data Tape Information: The information provided by the Unaffiliated
Seller as of February 1, 2004 to the Depositor setting forth the following
information with respect to each Mortgage Loan: (1) the Mortgagor's name; (2) as
to each Mortgage Loan, the Scheduled Principal Balance as of the Cut-off Date;
(3) the Mortgage Rate Cap; (4) the Index; (5) a code indicating whether the
Mortgaged Property is owner-occupied; (6) the type of Mortgaged Property; (7)
the first date on which the Scheduled Payment was due on the Mortgage Loan and,
if such date is not consistent with the Due Date currently in effect, such Due
Date; (8) the "paid through date" based on payments received from the related
Mortgagor; (9) the original principal amount of the Mortgage Loan; (10) with
respect to Adjustable Rate Mortgage Loans, the Maximum Mortgage Rate; (11) the
type of Mortgage Loan (i.e., fixed or adjustable); (12) a code indicating the
purpose of the loan (i.e., purchase, rate and term refinance, equity take-out
refinance); (13) a code indicating the documentation style (i.e., full, asset
verification, income verification and no documentation); (14) the credit risk
score (FICO score); (15) the loan credit grade classification (as described in
the Underwriting Guidelines); (16) with respect to each Adjustable Rate Mortgage
Loan, the Minimum Mortgage Rate; (17) the Mortgage Rate at origination; (18)
with respect to each Adjustable Rate Mortgage Loan, the first Adjustment Date
immediately following the Cut-off Date; (19) the value of the Mortgaged
Property; (20) a code indicating the type and term of Prepayment Charges
applicable to such Mortgage Loan, if any; and (21) with respect to each
Adjustable Rate Mortgage Loan, the Periodic Mortgage Rate Cap. With respect to
the Mortgage Loans in the aggregate, the Data Tape Information shall set forth
the following information, as of the Cut-off Date: (1) the number of Mortgage
Loans; (2) the current aggregate outstanding principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans; and (4) the
weighted average maturity of the Mortgage Loans.

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

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

         Definitive Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).

         Delay Certificates: As specified in the Preliminary Statement.

         Deleted Mortgage Loan: A Mortgage Loan that is repurchased by the
Unaffiliated Seller or the related Originator, as applicable, or replaced with a
Substitute Mortgage Loan in accordance with the terms hereof and the related
Mortgage Loan Purchase Agreement.

                                       14
<PAGE>

         Delinquency Trigger Event: With respect to a Distribution Date after
the Stepdown Date, the event that is in effect if the quotient (expressed as a
percentage) of (x) the three-month rolling daily average of the Stated Principal
Balance of 60+ Day Delinquent Loans as of the last day of the related Due
Period, over (y) the Pool Stated Principal Balance of the Mortgage Loans as of
the last day of the related Due Period exceeds 44.50% of the prior period's
Senior Enhancement Percentage.

         Delinquent: A mortgage loan is "Delinquent" if any Scheduled Payment
due on a due date is not made by the close of business on the next scheduled due
date for that mortgage loan (including all Mortgage Loans in foreclosure,
Mortgage Loans in respect of REO Properties and Mortgage Loans for which the
related Mortgagor has declared bankruptcy). A mortgage loan is "30 days
Delinquent" if the Scheduled Payment has not been received by the close of
business on the corresponding day of the month immediately succeeding the month
in which that Scheduled Payment was due or, if there was no corresponding date
(e.g., as when a 30-day month follows a 31-day month in which the payment was
due on the 31st day of that month), then on the last day of that immediately
preceding month; and similarly for "60 days Delinquent" and "90 days
Delinquent," etc.

         Delivery Date: With respect to the Initial Mortgage Loans, the Closing
Date; with respect to any Subsequent Mortgage Loans, the related Subsequent
Transfer Date therefor.

         Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Certificate Balance of this Certificate" or the
Percentage Interest appearing on the face thereof.

         Depositor: Morgan Stanley ABS Capital I Inc., a Delaware corporation,
or its successor in interest.

         Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is CEDE & Co., as the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code of
the State of New York.

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

         Determination Date: With respect to each Remittance Date, the Business
Day immediately preceding such Remittance Date.

         Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(d) in the name of the Trustee
for the benefit of the Certificateholders and designated "Deutsche Bank National
Trust Company, in trust for registered holders of CDC Mortgage Capital Trust
2004-HE1, Mortgage Pass-Through Certificates, Series 2004-HE1".

                                       15
<PAGE>

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

         Document Certification and Exception Report: The report attached to
Exhibit F hereto.

         Due Date: The day of the month on which the Scheduled Payment is due on
a Mortgage Loan, exclusive of any days of grace.

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

         Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
commercial paper, short-term debt obligations, demand deposits or other
short-term deposits of which are rated in one of the two highest rating
categories by each of the Rating Agencies at the time any amounts are held on
deposit therein, (ii) an account or accounts the deposits in which are fully
insured by the FDIC (to the limits established by such corporation), the
uninsured deposits in which account are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to each Rating Agency, the
Certificateholders will have a claim with respect to the funds in such account
or a perfected first priority security interest against such collateral (which
shall be limited to Permitted Investments) securing such funds that is superior
to claims of any other depositors or creditors of the depository institution
with which such account is maintained, (iii) a trust account or accounts
maintained with the trust department of a federal or state chartered depository
institution, national banking association or trust company acting in its
fiduciary capacity, (iv) an account otherwise acceptable to each Rating Agency
or (v) an account maintained with a "qualified depository" (as such term is
defined in the related Servicing Agreement). Eligible Accounts may bear
interest.

         Eligible Institution: A federal or state chartered depository
institution or trust company, which (x) with respect to any Eligible Account,
the amounts on deposit in which will be held for less than 30 days, the
commercial paper, short-term debt obligations, or other short-term deposits of
which are rated at least "F1" by Fitch, "P-1" by Moody's, and either "A-1+" or
"A-1", if the amounts on deposit represent less than 20% of the initial par
value of the securities, are not intended to be used as credit enhancement and
are to be held for less than 30 days, by Standard & Poor's (or a comparable
rating if another Rating Agency is specified by the Depositor by written notice
to the Servicer and the Trustee) or (y) with respect to any Eligible Account,
the amounts on deposit in which will be held for no more than 365 days, the
long-term unsecured debt obligations of which are rated at least "A" by Fitch,
"A" by Standard & Poor's and "A2" by Moody's (or a comparable rating if another
Rating Agency is specified by the Depositor by written notice to the Servicer
and the Trustee).

         Encore: Encore Credit Corporation, a California corporation.

                                       16
<PAGE>

         Encore Assignment Agreement: The Assignment and Recognition Agreement,
dated as of February 25, 2004, by and among the Unaffiliated Seller, the
Depositor and Encore, and each other Assignment and Recognition Agreement by and
among the Unaffiliated Seller, the Depositor and Encore in connection with any
Subsequent Transfer of Encore Mortgage Loans.

         Encore Mortgage Loan: A Mortgage Loan which was acquired from Encore by
the Unaffiliated Seller pursuant to the Encore Purchase Agreement, and which has
been acquired by the Trust Fund.

         Encore Purchase Agreement: The Mortgage Loan Purchase and Warranties
Agreement, dated as of December 1, 2002, as amended to date, by and between the
Unaffiliated Seller and Encore.

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

         ERISA-Restricted Certificate: As specified in the Preliminary
Statement.

         Escrow Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.09(b).

         Escrow Payments: As defined in Section 3.09(b).

         Event of Default: As defined in Section 7.01.

         Excess Reserve Fund Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Sections 3.07(b) and 3.07(c) in the name
of the Trustee for the benefit of the Regular Certificateholders and designated
"Deutsche Bank National Trust Company, in trust for registered holders of CDC
Mortgage Capital Trust 2004-HE1, Mortgage Pass-Through Certificates, Series
2004-HE1". Amounts on deposit in the Excess Reserve Fund Account shall not be
invested.

         Excess Subordinated Amount: With respect to any Distribution Date, the
excess, if any, of (a) the Subordinated Amount on such Distribution Date over
(b) the Specified Subordinated Amount for such Distribution Date.

         Exchange Act: As defined in Section 8.12(a).

         Expense Fees: As to each Mortgage Loan, the sum of the Servicing Fee
and the Trustee Fee.

         Expense Fee Rate: As to each Mortgage Loan, a per annum rate equal to
the sum of the Servicing Fee Rate and the Trustee Fee Rate.

         Extra Principal Distribution Amount: As of any Distribution Date, the
lesser of (x) the related Total Monthly Excess Spread for such Distribution Date
and (y) the Subordination Deficiency for such Distribution Date.

                                       17
<PAGE>

         Fannie Mae: 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.

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

         FGMC: First Guaranty Mortgage Corporation, a Virginia corporation.

         FGMC Assignment Agreement: The Assignment and Recognition Agreement,
dated as of February 25, 2004, by and among the Unaffiliated Seller, the
Depositor and FGMC, and each other Assignment and Recognition Agreement by and
among the Unaffiliated Seller, the Depositor and FGMC in connection with any
Subsequent Transfer of FGMC Mortgage Loans.

         FGMC Mortgage Loan: A Mortgage Loan which was acquired from FGMC by the
Unaffiliated Seller pursuant to the FGMC Purchase Agreement, and which has been
acquired by the Trust Fund.

         FGMC Purchase Agreement: The Mortgage Loan Purchase and Warranties
Agreement, dated as of August 1, 2003, as amended to date, by and between the
Unaffiliated Seller and FGMC.

         FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.

         Final Certification: A certification submitted by the Trustee in
substantially the form of Exhibit G hereto.

         Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by an Originator as contemplated by the Assignment and Recognition Agreements),
a determination made by the Servicer that all Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds and other payments or recoveries which the
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.

         Final Scheduled Distribution Date: The Final Scheduled Distribution
Date for each Class of Certificates is the Distribution Date in each of the
following months:

                                                              FINAL SCHEDULED
                                                             DISTRIBUTION DATE
                                                             -----------------
Class A-1 Certificates....................................     June 25, 2034
Class A-2 Certificates....................................     June 25, 2034
Class A-3 Certificates....................................     June 25, 2034

                                       18
<PAGE>

                                                              FINAL SCHEDULED
                                                             DISTRIBUTION DATE
                                                             -----------------
Class A-4 Certificates....................................     June 25, 2034
Class M-1 Certificates....................................     June 25, 2034
Class M-2 Certificates....................................     June 25, 2034
Class M-3 Certificates....................................     June 25, 2034
Class B-1 Certificates....................................     June 25, 2034
Class B-2 Certificates....................................     June 25, 2034
Class B-3 Certificates....................................     June 25, 2034
Class X Certificates......................................     June 25, 2034
Class P Certificates......................................     June 25, 2034
Class R Certificates......................................     June 25, 2034

         First Banc: First Banc Mortgage, Inc., a Missouri corporation.

         First Banc Assignment Agreement: The Assignment and Recognition
Agreement, dated as of February 25, 2004, by and among the Unaffiliated Seller,
the Depositor and First Banc, and each other Assignment and Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and First Banc in
connection with any Subsequent Transfer of First Banc Mortgage Loans.

         First Banc Mortgage Loan: A Mortgage Loan which was acquired from First
Banc by the Unaffiliated Seller pursuant to the First Banc Purchase Agreement,
and which has been acquired by the Trust Fund.

         First Banc Purchase Agreement: The Mortgage Loan Purchase and
Warranties Agreement, dated as of April 1, 2003, as amended to date, by and
between the Unaffiliated Seller and First Banc.

         Fitch: Fitch, Inc. If Fitch is designated as a Rating Agency in the
Preliminary Statement, for purposes of Section 10.05(b) the address for notices
to Fitch shall be Fitch, Inc., One State St. Plaza, New York, New York 10004,
Attention: Residential Mortgage Surveillance Group - CDC Mortgage Capital Trust
2004-HE1, or such other address as Fitch may hereafter furnish to the Depositor
and the Servicer.

         Fixed Rate Mortgage Loan: A Mortgage Loan bearing interest at a fixed
rate.

         Floor Amount: An amount equal to the product of (x) 0.50% and (y) the
Maximum Pool Principal Balance.

         Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note to be added to
the applicable Index to determine the Mortgage Rate.

         Group I Allocation Percentage: With respect to any Distribution Date,
the percentage equivalent of a fraction, (i) the numerator of which is the Group
I Principal

                                       19
<PAGE>

Remittance Amount for such Distribution Date and (ii) the denominator of which
is the Principal Remittance Amount for such Distribution Date.

         Group I Initial Pre-Funded Amount: $92,766,053.

         Group I Interest Remittance Amount: With respect to any Distribution
Date, the portion of the Interest Remittance Amount that was collected or
advanced on the Group I Mortgage Loans.

         Group I Mortgage Loans: The Mortgage Loans allocated to Group I which
primarily support the Class A-1 Certificates, as initially set forth on Schedule
I hereto.

         Group I Pre-Funding Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(f) in the name of the Trustee
for the benefit of the Certificateholders, and designated "Deutsche Bank
National Trust Company, in trust for registered holders of CDC Mortgage Capital
Trust 2004-HE4, Mortgage Pass-Through Certificates, Series 2004-HE4," the funds
of which, during the Pre-Funding Period, shall be applied solely to the purchase
of Group I Subsequent Mortgage Loans.

         Group I Principal Remittance Amount: With respect to any Distribution
Date, that portion of the Principal Remittance Amount for such Distribution Date
that was collected or advanced on the Group I Mortgage Loans.

         Group I Subsequent Mortgage Loans: The Mortgage Loans hereafter
transferred and assigned to the Trust Fund and allocated to Group I pursuant to
Section 2.01(c), each of which shall have been purchased by the Unaffiliated
Seller under a Mortgage Loan Purchase Agreement.

         Group II Allocation Percentage: With respect to any Distribution Date,
the percentage equivalent of a fraction, (i) the numerator of which is the Group
II Principal Remittance Amount for such Distribution Date and (ii) the
denominator of which is the Principal Remittance Amount for such Distribution
Date.

         Group II Initial Pre-Funded Amount: $46,127,841.

         Group II Interest Remittance Amount: With respect to any Distribution
Date, the portion of the Interest Remittance Amount that was collected or
advanced on the Group II Mortgage Loans.

         Group II Mortgage Loans: The Mortgage Loans allocated to Group II which
primarily support the Class A-2 Certificates, as initially set forth on Schedule
I hereto.

         Group II Pre-Funding Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(f) in the name of the Trustee
for the benefit of the Certificateholders, and designated "Deutsche Bank
National Trust Company, in trust for

                                       20
<PAGE>

registered holders of CDC Mortgage Capital Trust 2004-HE1, Mortgage Pass-Through
Certificates, Series 2004-HE1," the funds of which, during the Pre-Funding
Period, shall be applied solely to the purchase of Group II Subsequent Mortgage
Loans.

         Group II Principal Remittance Amount: With respect to any Distribution
Date, that portion of the Principal Remittance Amount for such Distribution Date
that was collected or advanced on the Group II Mortgage Loans.

         Group II Subsequent Mortgage Loans: The Mortgage Loans hereafter
transferred and assigned to the Trust Fund and allocated to Group II pursuant to
Section 2.01(c), each of which shall have been purchased by the Unaffiliated
Seller under a Mortgage Loan Purchase Agreement.

         Group II/GroupIII Class A Cap Agreement: The interest rate cap
agreement, relating to the Class A-2 Certificates and the Group III Class A
Sequential Certificates, dated February 25, 2004 with the Cap Provider, as
"Party A" thereunder, and the Unaffiliated Seller, as "Party B" thereunder, or
any replacement thereof.

         Group II/Group III Class A Interest Rate Cap Payment: On the 24th day
of each month (subject to adjustment in accordance with ISDA's "Preceding
Business Day Convention"), the product of (A) (i) commencing March 24, 2004
until and including November 24, 2005, the number of basis points by which
one-month LIBOR exceeds 6.650% (up to a maximum excess of 235 basis points);
(ii) commencing December 24, 2005 until and including May 24, 2006, the number
of basis points by which one-month LIBOR exceeds 8.000% (up to a maximum excess
of 180 basis points); (iii) commencing June 24, 2006 until and including
November 24, 2006, the number of basis points by which one-month LIBOR exceeds
8.700% (up to a maximum excess of 140 basis points; or (iv) commencing December
24, 2006 until and including February 24, 2007, the number of basis points by
which one-month LIBOR exceeds 9.500% (up to a maximum excess of 60 basis
points), (B) the Class A notional balance and (C) the Class A notional balance
multiplier, each as set forth on the notional balance and multiplier schedule
attached to the Class A Cap Agreement as applicable to that Distribution Date,
based on an "actual/360" accrual.

         Group III Allocation Percentage: With respect to any Distribution Date,
the percentage equivalent of a fraction, (i) the numerator of which is the Group
III Principal Remittance Amount for such Distribution Date and (ii) the
denominator of which is the Principal Remittance Amount for such Distribution
Date.

         Group III Class A Sequential Certificates: The Class A-3 and Class A-4
Certificates.

         Group III Interest Remittance Amount: With respect to any Distribution
Date, the portion of the Interest Remittance Amount that was collected or
advanced on the Group III Mortgage Loans.

         Group III Mortgage Loans: The Mortgage Loans allocated to Group III
which primarily support the Group III Class A Sequential Certificates, as
initially set forth on Schedule I hereto.

                                       21
<PAGE>

         Group III Initial Pre-Funded Amount: $29,246,889

         Group III Pre-Funding Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.07(f) in the name of the
Trustee for the benefit of the Certificateholders, and designated "Deutsche Bank
National Trust Company, in trust for registered holders of CDC Mortgage Capital
Trust 2004-HE1, Mortgage Pass-Through Certificates, Series 2004-HE1," the funds
of which, during the Pre-Funding Period, shall be applied solely to the purchase
of Group III Subsequent Mortgage Loans.

         Group III Principal Remittance Amount: With respect to any Distribution
Date, that portion of the Principal Remittance Amount for such Distribution Date
that was collected or advanced on the Group III Mortgage Loans.

         Group III Subsequent Mortgage Loans: The Mortgage Loans hereafter
transferred and assigned to the Trust Fund and allocated to Group III pursuant
to Section 2.01(c), each of which shall have been purchased by the Unaffiliated
Seller under a Mortgage Loan Purchase Agreement.

         High Cost Loan: A Mortgage Loan classified as (a) a "high cost" loan
under the Home Ownership and Equity Protection Act of 1994 or (b) a "high cost,"
"threshold," "covered", "predatory" or similar loan under any other applicable
state, federal or local law.

         I&I Payments: Payments due and owing under the Insurance and Indemnity
Agreement.

         Impac: Impac Funding Corporation, a California corporation.

         Impac Assignment Agreement: The Assignment and Recognition Agreement,
dated as of February 25, 2004, by and among the Unaffiliated Seller, the
Depositor and Impac, and each other Assignment and Recognition Agreement by and
among the Unaffiliated Seller, the Depositor and Impac in connection with any
Subsequent Transfer of Impac Mortgage Loans.

         Impac Mortgage Loan: A Mortgage Loan which was acquired from Impac by
the Unaffiliated Seller pursuant to the Impac Purchase Agreement, and which has
been acquired by the Trust Fund.

         Impac Purchase Agreement: The Amended and Restated Mortgage Loan
Purchase and Warranties Agreement, dated as of January 29, 2003, as amended to
date, by and between the Unaffiliated Seller and Impac.

         Index: As to each Adjustable Rate Mortgage Loan, the index from time to
time in effect for the adjustment of the Mortgage Rate set forth as such on the
related Mortgage Note.

         Initial Cut-off Date: February 1, 2004.

         Initial Mortgage Loans: The Mortgage Loans delivered by the Depositor
on the Startup Date.

                                       22
<PAGE>

         Initial Pre-Funded Amount: The sum of the Group I Initial Pre-Funded
Amount, the Group II Initial Pre-Funded Amount and the Group III Initial
Pre-Funded Amount.

         Insurance and Indemnity Agreement: The Insurance and Indemnity
Agreement dated as of February 1, 2004 among the Certificate Insurer, the
Servicer and the Unaffiliated Seller, as such agreement may be amended or
supplemented in accordance with the provisions thereof.

         Insurance Payment Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.05(c) in the name of the Trustee
for the benefit of the Class A-1 Certificateholders and the Certificate Insurer,
and designated "Deutsche Bank National Trust Company, in trust for Financial
Security Assurance Inc. and the registered holders of CDC Mortgage Capital Trust
2004-HE1, Mortgage Pass-Through Certificates, Series 2004-HE1."

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

         Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.

         Insured Payment: With respect to any Distribution Date, the amount of
the Class A-1 Deficiency for that Distribution Date.

         Interest Accrual Period: With respect to any Distribution Date, the
period beginning with the immediately preceding Distribution Date (or in the
case of the first Distribution Date, the period from and including the Closing
Date to but excluding such first Distribution Date) and ending on the day prior
to the current Distribution Date (on an actual/360 day count basis).

         Interest Deficit Amount: With respect to any Distribution Date, the
excess of (i) the aggregate Accrued Certificate Interest for all Classes of the
Class A Certificates on such Distribution Date, over (ii) an amount of Available
Funds allocated to pay such aggregate Accrued Certificate Interest pursuant to
Section 4.02(a)(i)(B).

         Interest Rate Cap Payment: The Group II/Group III Class A Interest Rate
Cap Payment, the Class M Interest Rate Cap Payment and/or the Class B Interest
Rate Cap Payment, as applicable.

         Interest Remittance Amount: With respect to any Distribution Date, the
sum of (a) the sum, without duplication, of the following amounts received by
the Trustee from the Servicer on the related Remittance Date:

         (i) all installments of interest due on the Mortgage Loans during the
     related Due Period and received or advanced by the Servicer on or prior to
     the related Remittance Date;

                                       23
<PAGE>

         (ii) Compensating Interest paid by the Servicer on such Remittance
     Date;

         (iii) the interest component of all Substitution Adjustment Amounts and
     Repurchase Prices received by the Servicer during the related Due Period;

         (iv) the interest component of all Condemnation Proceeds, Insurance
     Proceeds and Liquidation Proceeds received by the Servicer during the
     related Due Period (in each case, net (but not to be reduced below zero) of
     unreimbursed expenses incurred in connection with a liquidation or
     foreclosure and unreimbursed Advances, if any); and

         (v) the interest component of the proceeds of any termination of the
     Trust Fund;

reduced by the Servicing Fee for the related Due Period, together with amounts
in reimbursement for Advances previously made with respect to the Mortgage Loans
and other amounts as to which the Servicer is entitled to be reimbursed pursuant
to the Agreement; and

(b) the Capitalized Interest Requirement, if any, deposited into the
Distribution Account on such Distribution Date.

         Investment Account: As defined in Section 3.12(a).

         Investor: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS System as the investor pursuant to the MERS Procedures
Manual.

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

         Late Payment Rate: Has the meaning ascribed thereto in the Insurance
and Indemnity Agreement.

         Lenders Direct: Lenders Direct Capital Corporation, a California
corporation.

         Lenders Direct Assignment Agreement: The Assignment and Recognition
Agreement, dated as of February 25, 2004, by and among the Unaffiliated Seller,
the Depositor and Lenders Direct, and each other Assignment and Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and Lenders Direct
in connection with any Subsequent Transfer of Lenders Mortgage Loans.

         Lenders Direct Mortgage Loan: A Mortgage Loan which was acquired from
Lenders Direct by the Unaffiliated Seller pursuant to the Lenders Direct
Purchase Agreement, and which has been acquired by the Trust Fund.

                                       24
<PAGE>

         Lenders Direct Purchase Agreement: The Amended and Restated Mortgage
Loan Purchase and Warranties Agreement, dated as of October 1, 2003, as amended
to date, by and between the Unaffiliated Seller and Lenders Direct.

         LIBOR: With respect to any Interest Accrual Period for the LIBOR
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks.

         LIBOR Certificates: As specified in the Preliminary Statement.

         LIBOR Determination Date: With respect to any Interest Accrual Period
(other than the initial Interest Accrual Period) for the LIBOR Certificates, the
second London Business Day preceding the commencement of such Interest Accrual
Period.

         Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Servicer has certified (in accordance with this Agreement) that it has received
all amounts it expects to receive in connection with the liquidation of such
Mortgage Loan including the final disposition of an REO Property.

         Liquidation Event: With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from coverage under this Agreement by reason of its being purchased,
sold or replaced pursuant to or as contemplated by this Agreement. With respect
to any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property; or (ii) such REO Property is
removed from coverage under this Agreement by reason of its being purchased
pursuant to this Agreement.

         Liquidation Proceeds: Cash received in connection with the liquidation
of a Liquidated Mortgage Loan, whether through trustee's sale, foreclosure sale
or otherwise, including any subsequent recoveries related to the Mortgage Loan
after it has been liquidated.

         Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the original outstanding principal amount
of the Mortgage Loan as

                                       25
<PAGE>

of the Cut-off Date (unless otherwise indicated), to the lesser of (a) the
Appraised Value of the Mortgaged Property at origination, and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price of the Mortgaged Property.

         Loan Group I Cap: The per annum rate equal to the weighted average
gross rate of the Group I Mortgage Loans then in effect on the beginning of the
related Due Period, less the applicable Expense Fee Rate and further reduced by
the Premium Rate in respect of the Class A-1 Certificates.

         Loan Group II Cap: The per annum rate equal to the weighted average
gross rate of the Group II Mortgage Loans then in effect on the beginning of the
related Due Period, less the applicable Expense Fee.

         Loan Group III Cap: The per annum rate equal to the weighted average
gross rate of the Group III Mortgage Loans then in effect on the beginning of
the related Due Period, less the applicable Expense Fee.

         London Business Day: Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.

         Loss Trigger Event: With respect to any Distribution Date, the event
that is in effect if the aggregate amount of Realized Losses incurred since the
related Cut-off Date through the last day of the related Prepayment Period
divided by the Maximum Pool Principal Balance exceeds the applicable percentage
as follows with respect to such Distribution Date: (a) 3.50% for the
Distribution Dates occurring from March 2007 to February 2008; (b) 5.00% for
Distribution Dates occurring from March 2008 to February 2009; and (c) 5.75% for
Distribution Dates occurring in March 2009 and thereafter.

         Lower Tier Regular Interest: As described in the Preliminary Statement.

         Lower Tier REMIC: As described in the Preliminary Statement

         Master Financial: Master Financial, Inc., a California corporation.

         Master Financial Assignment Agreement: The Assignment and Recognition
Agreement, dated as of February 25, 2004, by and among the Unaffiliated Seller,
the Depositor and Master Financial, and each other Assignment and Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and Master
Financial in connection with any Subsequent Transfer of Master Financial
Mortgage Loans.

         Master Financial Mortgage Loan: A Mortgage Loan which was acquired from
Master Financial by the Unaffiliated Seller pursuant to the Master Financial
Purchase Agreement, and which has been acquired by the Trust Fund.

         Master Financial Purchase Agreement: The Mortgage Loan Purchase and
Warranties Agreement, dated as of June 1, 2003, as amended to date, by and
between the Unaffiliated Seller and Master Financial.

                                       26
<PAGE>

         Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and in the
related Mortgage Note and (ii) is the maximum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be increased during the
lifetime of such Adjustable Rate Mortgage Loan.

         Maximum Pool Principal Balance: The aggregate Stated Principal Balances
of all Initial Mortgage Loans as of the Initial Cut-off Date plus the Initial
Pre-Funded Amount.

         MERS: Mortgage Electronic Registration System, Inc.

         MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Originators have designated or will designate MERS as, and have taken or will
take such action as is necessary to cause MERS to be, the mortgagee of record,
as nominee for the Originators, in accordance with the MERS Procedure Manual and
(b) the Originators have designated or will designate the Trust as the Investor
on the MERS(R) System.

         MERS Procedures Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified from time to time.

         MERS(R) System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.

         Middle Tier Regular Interest: As described in the Preliminary
Statement.

         Middle Tier REMIC: As described in the Preliminary Statement.

         Middle Tier WAC Cap: The weighted average of the Pass-Through Rates of
the Middle Tier Regular Interests (other than the Class MT-N) minus, in the case
of the Class MT-A-1 Interest, two times the Premium Rate.

         Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and in the
related Mortgage Note and (ii) is the minimum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be decreased during the
lifetime of such Adjustable Rate Mortgage Loan.

         Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.03.

         Moody's: Moody's Investors Service, Inc. If Moody's is designated as a
Rating Agency in the Preliminary Statement, for purposes of Section 10.05(b) the
address for notices to Moody's shall be Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007, Attention: Residential Mortgage
Pass-Through Group, or such other address as Moody's may hereafter furnish to
the Depositor and the Servicer.

         Mortgage: The mortgage, deed of trust or other instrument identified on
the Mortgage Loan Schedule as securing a Mortgage Note.

                                       27
<PAGE>

         Mortgage File: The items pertaining to a particular Mortgage Loan
contained in either the Servicing File or Custodial File.

         Mortgage Loan Purchase Agreement: The Aames Purchase Agreement, the
Accredited Purchase Agreement, the Aegis Purchase Agreement, the Ameriquest
Purchase Agreement, the BNC Purchase Agreement, the CIT Mortgage Purchase
Agreement, the Chapel Mortgage Purchase Agreement, the Encore Purchase
Agreement, the FGMC Purchase Agreement, the First Banc Purchase Agreement, the
Impac Purchase Agreement, the Lenders Direct Purchase Agreement, the Master
Financial Purchase Agreement, the Novelle Purchase Agreement, the Oakmont
Purchase Agreement, the People's Choice Purchase Agreement or the SIB Mortgage
Purchase Agreement, as applicable.

         Mortgage Loans: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes,
without limitation, the Mortgage File, the Scheduled Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition proceeds, Prepayment Charges, and all other rights, benefits,
proceeds and obligations arising from or in connection with such Mortgage Loan,
excluding replaced or repurchased Mortgage Loans. As applicable, "Mortgage Loan"
shall be deemed to refer to REO Property.

         Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto as
Schedule I, such schedule setting forth the following information with respect
to each Mortgage Loan: (1) the Originator's Mortgage Loan number; (2) the city,
state and zip code of the Mortgaged Property; (3) a code indicating whether the
Mortgaged Property is a single family residence, two-family residence,
three-family residence, four-family residence, PUD or condominium; (4) the
current Mortgage Interest Rate; (5) the current net Mortgage Rate; (6) the
current Scheduled Payment; (7) the Gross Margin; (8) the original term to
maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of principal
due on or before the Cut-off Date whether or not collected; (11) the
Loan-to-Value Ratio; (12) the next Interest Rate Adjustment Date; (13) the
lifetime Mortgage Interest Rate Cap; (14) whether the Mortgage Loan is
convertible or not; (15) a code indicating the mortgage guaranty insurance
company; (16) the Servicing Fee; (17) the identity of the related Originator of
such Mortgage Loan; (18) the Mortgagor's name; (19) the "paid-through" date
(based on payments received from the related Mortgagor) as of the Cut-off Date;
(20) the Servicing Transfer Date; (21) a Code indicating whether the Mortgage
Loan is a Group I Mortgage Loan, Group II Mortgage Loan or Group III Mortgage
Loan; and (22) a Code indicating whether the Mortgage Loan has been 30 days
Delinquent since the applicable Servicing Transfer Date.

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

         Mortgage Rate: The annual rate of interest borne on a Mortgage Note,
which shall be adjusted from time to time with respect to Adjustable Rate
Mortgage Loans.

                                       28
<PAGE>

         Mortgage Rate Caps: With respect to an Adjustable Rate Mortgage Loan,
the Periodic Mortgage Rate Cap, the Maximum Mortgage Rate, and the Minimum
Mortgage Rate for such Mortgage Loan.

         Mortgaged Property: With respect to each Mortgage Loan, the real
property (or leasehold estate, if applicable) identified on the Mortgage Loan
Schedule as securing repayment of the debt evidenced by a Mortgage Note.

         Mortgagor: The obligor(s) on a Mortgage Note.

         Net Interest Margin Securities: As defined in Section 9.01.

         Net Monthly Excess Cash Flow: For any Distribution Date the amount
remaining for distribution pursuant to subsection 4.02(a)(iii) (before giving
effect to distributions pursuant to such subsection).

         Net Prepayment Interest Shortfall: For any Distribution Date, the
amount by which the sum of the Prepayment Interest Shortfalls exceeds the sum of
the Compensating Interest payments made on such Distribution Date.

         NIM Closing Date: On or about February 25, 2004.

         NIMs Trust: CDC Mortgage Capital Inc. NIM Trust 2004-HE1N, a Delaware
statutory trust.

         Non-Delay Certificates: As specified in the Preliminary Statement.

         Non-Permitted Transferee: A Person other than a Permitted Transferee.

         Nonrecoverable P&I Advance: Any P&I Advance previously made or proposed
to be made in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Servicer, will not or, in the case of a proposed P&I
Advance, would not be ultimately recoverable from related late payments,
Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds or otherwise on
such Mortgage Loan or REO Property as provided herein.

         Nonrecoverable Servicing Advance: Any Servicing Advances previously
made or proposed to be made in respect of a Mortgage Loan or REO Property,
which, in the good faith business judgment of the Servicer, will not or, in the
case of a proposed Servicing Advance, would not, be ultimately recoverable from
related late payments, Insurance Proceeds, Condemnation Proceeds, Liquidation
Proceeds or otherwise on such Mortgage Loan or REO Property. The determination
by the Servicer that it has made a Nonrecoverable Servicing Advance or that any
proposed Servicing Advances, if made, would constitute a Nonrecoverable
Servicing Advance, shall be evidenced by an Officers' Certificate delivered to
the Trustee.

         Notice of Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the Certificates
shall be made only upon presentation and surrender thereof.

                                       29
<PAGE>

         Novelle: Novelle Financial Services, Inc., a California corporation.

         Novelle Assignment Agreement: The Assignment and Recognition Agreement,
dated as of February 25, 2004, by and among the Unaffiliated Seller, the
Depositor and Novelle, and each other Assignment and Recognition Agreement by
and among the Unaffiliated Seller, the Depositor and Novelle in connection with
any Subsequent Transfer of Novelle Mortgage Loans.

         Novelle Mortgage Loan: A Mortgage Loan which was acquired from Novelle
by the Unaffiliated Seller pursuant to the Novelle Purchase Agreement, and which
has been acquired by the Trust Fund.

         Novelle Purchase Agreement: The Mortgage Loan Purchase and Warranties
Agreement, dated as of September 27, 2002, by and between the Unaffiliated
Seller and Novelle.

         Oakmont: Oakmont Mortgage Company, Inc., a California corporation.

         Oakmont Assignment Agreement: The Assignment and Recognition Agreement,
dated as of February 25, 2004, by and among the Unaffiliated Seller, the
Depositor and Oakmont and each other Assignment and Recognition Agreement by and
among the Unaffiliated Seller, the Depositor and Oakmont in connection with any
Subsequent Transfer of Oakmont Mortgage Loans.

         Oakmont Mortgage Loan: A Mortgage Loan which was acquired from Oakmont
by the Unaffiliated Seller pursuant to the Oakmont Purchase Agreement, and which
has been acquired by the Trust Fund.

         Oakmont Purchase Agreement: The Mortgage Loan Purchase and Warranties
Agreement, dated as of November 24, 2003, by and between the Unaffiliated Seller
and Oakmont.

         Offered Certificates: As specified in the Preliminary Statement.

         Officer's Certificate: A certificate signed by an officer of the
Servicer with responsibility for the servicing of the Mortgage Loans and listed
on a list delivered to the Trustee pursuant to this Agreement.

         Opinion of Counsel: A written opinion of counsel, who may be in-house
counsel for the Servicer or the Subservicer, reasonably acceptable to the
Trustee and to the Certificate Insurer; provided that any Opinion of Counsel
relating to (a) qualification of the Mortgage Loans in a REMIC or (b) compliance
with the REMIC Provisions, must be (unless otherwise stated in such Opinion of
Counsel) an opinion of counsel who (i) is in fact independent of the Servicer of
the Mortgage Loans, (ii) does not have any material direct or indirect financial
interest in the Servicer of the Mortgage Loans or in an affiliate of either and
(iii) is not connected with the Servicer of the Mortgage Loans as an officer,
employee, director or person performing similar functions.

         Optional Termination Date: means:

                                       30
<PAGE>

         (i) For so long as the Class X Certificates are 100% owned, either
     directly or indirectly, by the Unaffiliated Seller or any Affiliate
     thereof, then the Servicer may cause the Optional Termination Date to occur
     on any Distribution Date when the aggregate Stated Principal Balance of the
     Mortgage Loans is 10.00% or less of the Maximum Pool Principal Balance; and

         (ii) If the Class X Certificates are not 100% owned, either directly or
     indirectly, by the Unaffiliated Seller or any Affiliate thereof, then the
     Holders of a majority in Class Certificate Balance of the Class X
     Certificates may cause the Optional Termination Date to occur on any
     Distribution Date when the aggregate Stated Principal Balance of the
     Mortgage Loans is 10.00% or less of the Maximum Pool Principal Balance,
     and, if such Class X Certificateholders do not do so, then the Servicer
     shall also have such right.

         Originator: The party that originated or acquired a Mortgage Loan and,
more specifically, (i) with respect to any Aames Mortgage Loan, Aames, (ii) with
respect to any Accredited Mortgage Loan, Accredited, (iii) with respect to any
Aegis Mortgage Loan, Aegis, (iv) with respect to any Ameriquest Mortgage Loan,
Ameriquest, (v) with respect to any BNC Mortgage Loan, BNC, (vi) with respect to
any CIT Mortgage Loan, CIT (vii) with respect to any Chapel Mortgage Loan,
Chapel Mortgage, (viii) with respect to any Encore Mortgage Loan, Encore, (ix)
with respect to any First Banc Mortgage Loan, First Banc, (x) with respect to
any FGMC Mortgage Loan, FGMC, (xi) with respect to any Impac Mortgage Loan or
Novelle Mortgage Loan, Impac or Novelle, as applicable, (xii) with respect to
any Lenders Direct Mortgage Loan, Lenders Direct(xiii) with respect to any
Master Financial Mortgage Loan, Master Financial, (xiv) with respect to any
Oakmont Mortgage Loan, Oakmont, (xv) with respect to any People's Choice
Mortgage Loan, People's Choice and (xvi) with respect to any SIB Mortgage Loan,
SIB Mortgage.

         OTS: Office of Thrift Supervision, and any successor thereto.

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

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

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

         Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with a
Stated Principal Balance greater than zero which was not the subject of a
Principal Prepayment in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.

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

                                       31
<PAGE>

         P&I Advance: As to any Mortgage Loan or REO Property, any advance made
by the Servicer in respect of any Remittance Date with respect to any Mortgage
Loan representing the aggregate of all payments of principal and interest on
such Mortgage Loan, net of the related Servicing Fee, that were due during the
related Due Period on the Mortgage Loan, and that were delinquent or unpaid on
the related Determination Date, plus certain amounts representing assumed
payments not covered by any current net income on the Mortgaged Properties
acquired by foreclosure or deed in lieu of foreclosure as determined pursuant to
Section 4.01.

         Pass-Through Margin: With respect to each Class of Regular
Certificates, on or prior to the Optional Termination Date the following
percentages: Class A-1, 0.290%; Class A-2, 0.310%; Class A-3, 0.210%; Class A-4,
0.460%; Class M-1, 0.570%; Class M-2, 1.200%; Class M-3, 1.350%; Class B-1,
1.700%; Class B-2, 1.800%; and Class B-3, 3.750%. On the first Distribution Date
after the Optional Termination Date, the Pass-Through Margins shall increase to
the following percentages: Class A-1, 0.580%; Class A-2 0.620%; Class A-3,
0.420%; Class A-4, 0.920; Class M-1, 0.855%; Class M-2, 1.800%; Class M-3,
2.025%; Class B-1, 2.550%; Class B-2, 2.700%; and Class B-3, 5.625%.

         Pass-Through Rate: For each Class of Certificates and each Lower Tier
and Middle Tier Regular Interest, the per annum rate set forth or calculated in
the manner described in the Preliminary Statement.

         People's Choice: People's Choice Home Loan, Inc., a Wyoming
corporation.

         People's Choice Assignment Agreement: The Assignment and Recognition
Agreement, dated as of February 25, 2004 as amended to date, by and among the
Unaffiliated Seller, the Depositor and People's Choice, and each other
Assignment and Recognition Agreement by and among the Unaffiliated Seller, the
Depositor and People's Choice in connection with any Subsequent Transfer of
People's Choice Mortgage Loans.

         People's Choice Mortgage Loan: A Mortgage Loan which was acquired from
People's Choice by the Unaffiliated Seller pursuant to the People's Choice
Purchase Agreement, and which has been acquired by the Trust Fund.

         People's Choice Purchase Agreement: The Amended and Restated Mortgage
Loan Purchase and Warranties Agreement, dated as of October 24, 2002, as amended
to date, by and between the Unaffiliated Seller and People's Choice.

         Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.

         Periodic Mortgage Rate Cap: With respect to an Adjustable Rate Mortgage
Loan, the periodic limit on each Mortgage Rate adjustment as set forth in the
related Mortgage Note.

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

                                       32
<PAGE>

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

         (ii) demand and time deposits in, certificates of deposit of, or
     bankers' acceptances (which shall each have an original maturity of not
     more than 90 days and, in the case of bankers' acceptances, shall in no
     event have an original maturity of more than 365 days or a remaining
     maturity of more than 30 days) denominated in United States dollars and
     issued by, any Eligible Institution;

         (iii) repurchase obligations with respect to any security described in
     clause (i) above entered into with an Eligible Institution (acting as
     principal);

         (iv) securities bearing interest or sold at a discount that are issued
     by any corporation incorporated under the laws of the United States of
     America or any state thereof and that are rated by each Rating Agency that
     rates such securities in its highest long-term unsecured rating categories
     at the time of such investment or contractual commitment providing for such
     investment;

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

         (vi) units of money market funds, including money market funds advised
     by the Depositor or an Affiliate thereof, that have been rated "Aaa" by
     Moody's, "AAA" by Fitch and "AAA" by Standard & Poor's; and

         (vii) if previously confirmed in writing to the Trustee and to the
     Certificate Insurer, any other demand, money market or time deposit, or any
     other obligation, security or investment, as may be acceptable to the
     Rating Agencies as a permitted investment of funds backing "Aaa" or "AAA"
     rated securities;

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

         Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, international organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in section 860E(c)(1) of the Code) with respect to
any Residual Certificate, (iv) rural electric and telephone cooperatives
described in section 1381(a)(2)(C) of

                                       33
<PAGE>

the Code, (v) a Person that is not a U.S. Person, (vi) an "electing large
partnership" within the meaning of section 775 of the Code and (vii) any other
Person so designated by the Depositor based upon an Opinion of Counsel that the
Transfer of an Ownership Interest in a Residual Certificate to such Person may
cause any REMIC created hereunder to fail to qualify as a REMIC at any time that
the Certificates are outstanding. The terms "United States," "State" and
"international organization" shall have the meanings set forth in section 7701
of the Code or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and, with
the exception of the Federal Home Loan Mortgage Corporation, a majority of its
board of directors is not selected by such government unit.

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

         Physical Certificates: As specified in the Preliminary Statement.

         Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances of the Mortgage Loans for such
Distribution Date which were Outstanding Mortgage Loans as of the last day of
the related Due Period.

         Preference Amount: Any amounts distributed in respect of the Class A-1
Certificates that are recovered from any Holder of such Certificates as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code or other similar law in accordance with a final, nonappealable
order of a court having competent jurisdiction and which have not theretofore
been repaid to such Holder.

         Preference Claim: As defined in Section 4.05(f).

         Pre-Funding Account: The Group I Pre-Funding Account, the Group II
Pre-Funding Account and the Group III Pre-Funding Account, as applicable.

         Pre-Funding Amount: With respect to any date, the amount on deposit in
the Pre-Funding Accounts.

         Pre-Funding Earnings: The actual investment earnings realized on
amounts deposited in the Pre-Funding Accounts.

         Pre-Funding Period: The period commencing on the Startup Date and
ending on the earliest to occur of (i) the date on which the amount on deposit
in each Pre-Funding Account (exclusive of any investment earnings) is less than
$100,000, (ii) the date on which any Event of Default occurs and (iii) May 24,
2004.

         Premium Amount: The product of (i) the Premium Rate and (ii) the
Certificate Balance of the Class A-1 Certificates immediately prior to such
Distribution Date.

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<PAGE>

         Premium Rate: The rate at which the "Premium" is determined as
described in the letter dated February 25, 2004 between the Unaffiliated Seller
and the Certificate Insurer (a copy of which shall be provided by the
Unaffiliated Seller to the Trustee).

         Prepayment Charge: Any prepayment premium, penalty or charge collected
by the Servicer with respect to a Mortgage Loan from a Mortgagor in connection
with any voluntary Principal Prepayment in Full pursuant to the terms of the
related Mortgage Note.

         Prepayment Interest Shortfall: With respect to any Remittance Date, the
sum of, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment in Full, that was applied by the Servicer to
reduce the outstanding principal balance of such Mortgage Loan on a date
preceding the Due Date in the succeeding Prepayment Period, an amount equal to
the product of (a) the Mortgage Rate net of the Servicing Fee Rate for such
Mortgage Loan, (b) the amount of the Principal Prepayment for such Mortgage
Loan, (c) 1/360 and (d) the number of days commencing on the date on which such
Principal Prepayment was applied and ending on the last day of the related
Prepayment Period.

         Prepayment Period: With respect to any Distribution Date, the calendar
month preceding the calendar month in which such Distribution Date occurs.

         Principal Distribution Amount: For any Distribution Date, the sum of
(i) the Basic Principal Distribution Amount for such Distribution Date and (ii)
the Extra Principal Distribution Amount for such Distribution Date.

         Principal Parity Deficit: With respect to any Distribution Date, the
excess of (i) the aggregate Class Certificate Balances of the Class A
Certificates on that Distribution Date, after taking into account any reduction
(other than, with respect to the Class A-1 Certificates, reductions due to
payments from the Certificate Insurance Policy on that Distribution Date), of
those Class Certificate Balances on that Distribution Date, less the excess of
(a) any Principal Parity Deficits for all prior Distribution Dates over (b) any
Class A-1 Principal Parity Amount for all prior Distribution Dates over (ii) the
Current Maximum Amount for that Distribution Date. For the first Distribution
Date, the Principal Parity Deficit will equal zero.

         Principal Prepayment: Any full or partial payment or other recovery of
principal on a Mortgage Loan (including upon liquidation of a Mortgage Loan)
which is received in advance of its scheduled Due Date, excluding any prepayment
penalty or premium thereon and which 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.

         Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.

         Principal Remittance Amount: With respect to any Distribution Date, the
amount equal to the sum (without duplication) with respect to the related Due
Period, of: (i) all scheduled installments of principal due on the Mortgage
Loans during the related Due Period and received by the Servicer on or prior to
the related Determination Date or advanced by the Servicer for the related
Remittance Date; (ii) the principal component of all Condemnation Proceeds,
Insurance Proceeds and Liquidation Proceeds during the related Due Period (in
each

                                       35
<PAGE>

case, net of remaining (i.e., not deducted from the Interest Remittance Amount)
unreimbursed expenses incurred in connection with a liquidation or foreclosure
and unreimbursed Advances, if any); (iii) all partial or full prepayments on the
Mortgage Loans received during the related Prepayment Period; (iv) the principal
component of all Substitution Adjustment Amounts and Repurchase Prices received
by the Servicer during the related Due Period; and (v) the principal component
of the proceeds of any termination of the Trust Fund; reduced by remaining
amounts (i.e., not deducted from the Interest Remittance Amount) in
reimbursement for Advances previously made with respect to the Mortgage Loans
and other amounts as to which the Servicer is entitled to be reimbursed pursuant
to this Agreement.

         Private Certificates: As specified in the Preliminary Statement.

         Prospectus Supplement: The Prospectus Supplement, dated February 20,
2004, relating to the Offered Certificates.

         PTCE 95-60: As defined in Section 5.02(b).

         PUD: Planned Unit Development.

         Qualified Insurer: A mortgage guaranty insurance company duly qualified
as such under the laws of the state of its principal place of business and each
state having jurisdiction over such insurer in connection with the insurance
policy issued by such insurer, duly authorized and licensed in such states to
transact a mortgage guaranty insurance business in such states and to write the
insurance provided by the insurance policy issued by it, approved as a FNMA- or
FHLMC-approved mortgage insurer or having a claims paying ability rating of at
least "AA" or equivalent rating by a nationally recognized statistical rating
organization. Any replacement insurer with respect to a Mortgage Loan must have
at least as high a claims paying ability rating as the insurer it replaces had
on the Closing Date.

         Rating Agency: Each of Standard & Poor's, Fitch and Moody's. If such
organization or a successor is no longer in existence, "Rating Agency" shall be
such nationally recognized statistical rating organization, or other comparable
Person, as is designated by the Depositor, notice of which designation shall be
given to the Trustee. References herein to a given rating or rating category of
a Rating Agency shall mean such rating category without giving effect to any
modifiers. For purposes of Section 10.05(b), the addresses for notices to each
Rating Agency shall be the address specified therefor in the definition
corresponding to the name of such Rating Agency, or such other address as such
Rating Agency may hereafter furnish to the Depositor and the Servicer.

         Record Date: With respect to any Distribution Date, the close of
business on the Business Day immediately preceding such Distribution Date;
provided, however, that for any Certificate issued in Definitive Form, the
Record Date shall be the close of business on the last Business Day of the month
immediately preceding such applicable Distribution Date.

         Realized Loss: The excess of the unpaid principal balance of a
Liquidated Mortgage Loan together with accrued and unpaid interest thereon over
the Liquidation Proceeds, net of customary out-of-pocket expenses incurred by
the Servicer in connection with the

                                       36
<PAGE>

liquidation of such Liquidated Mortgage Loan and net of the amount of any
unreimbursed Servicing Advances with respect to such Liquidated Mortgage Loan.

         Reference Bank: As defined in Section 4.04.

         Regular Certificates: As specified in the Preliminary Statement.

         Reimbursement Amount: As of any Distribution Date, the sum of (a)(i)
all Insured Payments previously received by the Trustee and all Preference
Amounts previously paid by the Certificate Insurer and in each case not
previously repaid to the Certificate Insurer pursuant to Section 4.02(a) plus
(ii) interest accrued on each such Insured Payment and Preference Amounts not
previously repaid calculated at the Late Payment Rate from the date the Trustee
received the related Insured Payment or Preference Amounts were paid by the
Certificate Insurer and (b)(i) any amounts then due and owing to the Certificate
Insurer under the Insurance and Indemnity Agreement (excluding the Premium
Amount due on such Distribution Date), as certified to the Trustee by the
Certificate Insurer plus (ii) interest on such amounts at the rate specified in
the Insurance and Indemnity Agreement. The Certificate Insurer shall notify the
Trustee and the Unaffiliated Seller of the amount of any Reimbursement Amount.

         Relief Act Shortfall: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount of interest or principal collectible
on such Mortgage Loan for the most recently ended Due Period as a result of the
application of the Servicemembers Civil Relief Act and similar state laws.

         Remainder Amount: As defined in Section 9.01.

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

         REMIC Provisions: Provisions of the federal income tax law relating to
REMICs, which appear at sections 860A through 860G of Subchapter M of Chapter 1
of the Code, and related provisions, and regulations promulgated thereunder, as
the foregoing may be in effect from time to time as well as provisions of
applicable state laws.

         REMIC Trust: The segregated pool of assets consisting of the Trust
Fund, exclusive of Prepayment Charges and the Excess Reserve Fund Account.

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

         REO Disposition: The final sale by the Servicer of any REO Property.

         REO Imputed Interest: As to any REO Property, for any period, an amount
equivalent to interest (at the Mortgage Rate net of the Servicing Fee Rate that
would have been applicable to the related Mortgage Loan had it been outstanding)
on the unpaid principal balance of the Mortgage Loan as of the date of
acquisition thereof (as such balance is reduced pursuant to Section 3.17 by any
income from the REO Property treated as a recovery of principal).

                                       37
<PAGE>

         REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.

         Representative: Morgan Stanley & Co. Incorporated, as representative on
behalf of itself, Banc of America Securities LLC, CDC Securities LLC,
Countrywide Securities Corporation and Greenwich Capital Markets, Inc.

         Repurchase Price: With respect to any Mortgage Loan, an amount equal to
the sum (without duplication) of (i) the unpaid principal balance of such
Mortgage Loan as of the date of repurchase and (ii) (x) if such Mortgage Loan is
being repurchased by the Unaffiliated Seller, the sum of (A) interest on such
unpaid principal balance of such Mortgage Loan at the Mortgage Rate from the
last date through which interest has been paid and distributed to the Trustee to
the last day of the month in which such repurchase occurs, (B) all unreimbursed
P&I Advances and Servicing Advances, (C) all unpaid Servicing Fees, (D) all
expenses reasonably incurred by the Servicer, the Trustee, the Certificate
Insurer or the Unaffiliated Seller, as the case may be, in respect of a breach
or defect, including, without limitation, expenses arising out of any such
party's enforcement of the Originator's repurchase obligation, to the extent not
included in (B), and (E) all costs and expenses incurred by, or on behalf of,
the Trust Fund in connection with any violation by such Mortgage Loan of a
predatory or abusive-lending law or (y) if such Mortgage Loan is being
repurchased by the related Originator, all other amounts payable by such
Originator in accordance with the terms of the related Mortgage Loan Purchase
Agreement.

         Request for Release: The Request for Release submitted by the Servicer
to the Trustee, substantially in the form of Exhibit K.

         Residual Certificates: As specified in the Preliminary Statement.

         Responsible Officer: When used with respect to the Trustee, any vice
president, any assistant vice president, any assistant secretary, any assistant
treasurer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers who at such
time shall be officers to whom, with respect to a particular matter, such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Agreement.

         Rule 144A Letter: As defined in Section 5.02(b).

         Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan
which, unless otherwise specified herein, shall give effect to any related Debt
Service Reduction and any Deficient Valuation that affects the amount of the
scheduled payment due on such Mortgage Loan.

         Scheduled Principal Balance: With respect to any Mortgage Loan: (a) as
of the Cut-off Date, the outstanding principal balance of such Mortgage Loan as
of such date, net of the principal portion of all unpaid Scheduled Payments, if
any, due on or before such date; (b) as of any Due Date subsequent to the
Cut-off Date up to and including the Due Date in the calendar

                                       38
<PAGE>

month in which a Liquidation Event occurs with respect to such Mortgage Loan,
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion of each Scheduled Payment due on or
before such Due Date but subsequent to the Cut-off Date, whether or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any reduction in the principal balance of such Mortgage Loan incurred with
respect thereto as a result of a Deficient Valuation occurring before such Due
Date, but only to the extent such reduction in principal balance represents a
reduction in the portion of principal of such Mortgage Loan not yet due (without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note) as of the date of such Deficient Valuation; and (c) as of any Due Date
subsequent to the occurrence of a Liquidation Event with respect to such
Mortgage Loan, zero.

         SEC: As defined in Section 8.12(a).

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

         Senior Enhancement Percentage: With respect to any Distribution Date,
the percentage obtained by dividing (x) the sum of (i) the aggregate Class
Certificate Balances of the Subordinated Certificates and (ii) the Subordinated
Amount (in each case after taking into account the distributions of the
Principal Distribution Amount for such Distribution Date) by (y) the Current
Maximum Amount for that Distribution Date.

         Senior Specified Enhancement Percentage: As of any date of
determination, 36.00%.

         Servicer: Countrywide Home Loans Servicing LP, a Texas limited
partnership, and its successors and assigns, in its capacity as servicer
hereunder.

         Servicing Advances: The reasonable "out-of-pocket" costs and expenses
(including legal fees) incurred by the Servicer in the performance of its
servicing obligations in connection with a default, delinquency or other
unanticipated event, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures and litigation, in
respect of a particular Mortgage Loan, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property and
(iv) the performance of its obligations under Section 3.01, Section 3.09,
Section 3.13 and Section 3.15 hereof. Servicing Advances also include any
reasonable "out-of-pocket" costs and expenses (including legal fees) incurred by
the Servicer in connection with executing and recording instruments of
satisfaction, deeds of reconveyance or Assignments of Mortgage in connection
with any satisfaction or foreclosure in respect of any Mortgage Loan to the
extent not recovered from the Mortgagor or otherwise payable under this
Agreement. The Servicer shall not be required to make any Nonrecoverable
Servicing Advances.

                                       39
<PAGE>

         Servicing Fee: With respect to each Mortgage Loan and for any calendar
month, an amount equal to one month's interest (or in the event of any payment
of interest which accompanies a Principal Prepayment in Full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the applicable Stated
Principal Balance on such Mortgage Loan at the end of the related Due Period.
Such fee shall be payable monthly, and shall be pro rated for any portion of a
month during which the Mortgage Loan is serviced by the Servicer under this
Agreement. The Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds,
Insurance Proceeds, Condemnation Proceeds and proceeds received with respect to
REO Properties, to the extent permitted by Section 3.11) of such Scheduled
Payment collected by the Servicer, or as otherwise provided under Section 3.11.

         Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per
annum.

         Servicing File: With respect to each Mortgage Loan, the file retained
by the Servicer consisting of originals or copies of all documents in the
Mortgage File which are not delivered to the Trustee in the Custodial File and
copies of each of the other Mortgage Loan documents required to be delivered by
the related Originator pursuant to the terms of the related Mortgage Loan
Purchase Agreement.

         Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date pursuant to this Agreement, as
such list may from time to time be amended.

         Servicing Transfer Date: With respect to each Mortgage Loan, the date
on which Countrywide commenced servicing such Mortgage Loan, as set forth on the
Mortgage Loan Schedule.

         SIB Mortgage: SIB Mortgage Corp., a New Jersey corporation.

         SIB Mortgage Assignment Agreement: The Assignment and Recognition
Agreement, dated as of February 25, 2004, by and among the Unaffiliated Seller,
the Depositor and SIB Mortgage, and each other Assignment and Recognition
Agreement by and among the Unaffiliated Seller, the Depositor and SIB Mortgage
in connection with any Subsequent Transfer of SIB Mortgage Loans.

         SIB Mortgage Loan: A Mortgage Loan which was acquired from SIB Mortgage
by the Unaffiliated Seller pursuant to the SIB Mortgage Purchase Agreement, and
which has been acquired by the Trust Fund.

         SIB Mortgage Purchase Agreement: The Mortgage Loan Purchase and
Warranties Agreement, dated as of July 11, 2002, as amended to date, by and
between the Unaffiliated Seller and SIB Mortgage.

         Similar Law: As defined in Section 5.02(b).

                                       40
<PAGE>

         Specified Subordinated Amount: With respect to any Distribution Date
prior to the Stepdown Date, an amount equal to 1.35% of the Maximum Pool
Principal Balance; and with respect to any Distribution Date on and after the
Stepdown Date, an amount equal to 2.70% of the Current Maximum Amount for that
Distribution Date subject to a minimum amount equal to 0.50% of the Maximum Pool
Principal Balance; provided, however, that if, on any Distribution Date, a
Trigger Event has occurred, the Specified Subordinated Amount shall not be
reduced to the applicable percentage of the Current Maximum Amount, but instead
remain the same as the prior period's Specified Subordinated Amount until the
Distribution Date on which a Trigger Event is no longer occurring. When the
Class Certificate Balance of each Class of Offered Certificates has been reduced
to zero, the Specified Subordinated Amount shall thereafter equal zero.

         Standard & Poor's: Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies, Inc. If Standard & Poor's is designated as a Rating
Agency in the Preliminary Statement, for purposes of Section 10.05(b) the
address for notices to Standard & Poor's shall be Standard & Poor's, 55 Water
Street, New York, New York 10041, Attention: Residential Mortgage Surveillance
Group - CDC Mortgage Capital Trust 2004-HE1, or such other address as Standard &
Poor's may hereafter furnish to the Depositor and the Servicer.

         Startup Day: For each REMIC created hereunder, the Closing Date.

         Stated Principal Balance: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date, to the extent actually received, minus
(ii) all amounts previously remitted to the Trustee with respect to the related
Mortgage Loan representing payments or recoveries of principal, including
Advances in respect of Scheduled Payments of principal. For purposes of any
Distribution Date, the Stated Principal Balance of any Mortgage Loan will give
effect to any Scheduled Payments of principal received by the Servicer on or
prior to the related Determination Date or advanced by the Servicer prior to the
related Remittance Date and any unscheduled principal payments and other
unscheduled principal collections received during the related Prepayment Period.

         Stepdown Date: The later to occur of (i) the earlier to occur of (a)
the Distribution Date in March 2007 and (b) the Distribution Date following the
Distribution Date on which the aggregate Class Certificate Balance of the Class
A Certificates have been reduced to zero and (ii) the first Distribution Date on
which the Senior Enhancement Percentage (calculated for this purpose only after
taking into account scheduled and unscheduled payments of principal on the
Mortgage Loans on the last day of the related Due Period but prior to any
applications of Principal Distribution Amount to the Offered Certificates on the
applicable Distribution Date) is greater than or equal to the Senior Specified
Enhancement Percentage.

         Subordinated Amount: As of any Distribution Date, the excess, if any,
of (a) the Current Maximum Amount for that Distribution Date on such
Distribution Date over (b) the aggregate of the Class Certificate Balances of
the Offered Certificates as of such Distribution Date plus the Class Certificate
Balances of the Class P Certificates (after giving effect to the payment of the
Principal Remittance Amount on such Certificates on such Distribution Date).

                                       41
<PAGE>

         Subordinated Certificates: As specified in the Preliminary Statement.

         Subordination Deficiency: With respect to any Distribution Date, the
excess, if any, of (a) the Specified Subordinated Amount applicable to such
Distribution Date over (b) the Subordinated Amount applicable to such
Distribution Date.

         Subordination Reduction Amount: With respect to any Distribution Date
on or after the Stepdown Date on which no Trigger Event exists, an amount equal
to the lesser of (a) the Excess Subordinated Amount and (b) the Total Monthly
Excess Spread.

         Subservicer: As defined in Section 3.02(a).

         Subservicing Account: As defined in Section 3.08.

         Subservicing Agreement: As defined in Section 3.02.

         Subsequent Cut-off Date: As to any Subsequent Mortgage Loans, the date
specified in the Addition Notice delivered in connection therewith, which date
shall be the close of business on the first day of the month in which such
Subsequent Mortgage Loans will be conveyed to the Trust Fund.

         Subsequent Mortgage Loans: The Mortgage Loans hereafter transferred and
assigned to the Trust Fund pursuant to Section 2.01(c), each of which shall have
been purchased by the Unaffiliated Seller under a Mortgage Loan Purchase
Agreement.

         Subsequent Transfer: The transfer and assignment by the Depositor to
the Trust of the Subsequent Mortgage Loans pursuant to the terms hereof.

         Subsequent Transfer Agreement: A subsequent transfer agreement in
substantially the form of Exhibit L.

         Subsequent Transfer Date: The Business Day on which a Subsequent
Transfer occurs.

         Substitute Mortgage Loan: A Mortgage Loan substituted by the
Unaffiliated Seller or an Originator for a Deleted Mortgage Loan in accordance
with the terms of this Agreement or the related Mortgage Loan Purchase
Agreement, as applicable, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit K, (i)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
more than 10% less than, the Stated Principal Balance of the Deleted Mortgage
Loan; (ii) be accruing interest at a rate no lower than and not more than 1% per
annum higher than, that of the Deleted Mortgage Loan; (iii) have a Loan-to-Value
Ratio no higher than that of the Deleted Mortgage Loan; (iv) have a remaining
term to maturity no greater than (and not more than one year less than that of)
the Deleted Mortgage Loan; and (v) comply with each representation and warranty
set forth in Sections 3.01(f), 3.01(h), 3.01(n), 3.01(p) and 3.03 of the
Unaffiliated Seller's Agreement, each representation and warranty set forth in
the applicable Mortgage Loan Purchase Agreement and each of the requirements set
forth in Sections 2.01(c) hereof.

                                       42
<PAGE>

         Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03.

         Tax Service Contract: As defined in Section 3.09(a).

         Telerate Page 3750: The display page currently so designated on the
Bridge Telerate Service (or such other page as may replace that page on that
service for displaying comparable rates or prices).

         Termination Price: As defined in Section 9.01.

         Total Monthly Excess Spread: As to any Distribution Date, an amount
equal to the excess if any, of (i) the interest collected (prior to the
Remittance Date) or advanced on the Mortgage Loans for Due Dates during the
related Due Period (net of Expense Fees, Premium Amount and Reimbursement
Amounts, if any) over (ii) the sum of the interest payable to the Classes of
LIBOR Certificates on such Distribution Date.

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

         Transfer Affidavit: As defined in Section 5.02(b).

         Transferor Certificate: As defined in Section 5.02(b).

         Trigger Event: The occurrence of either a Delinquency Trigger Event or
a Loss Trigger Event.

         Trust Fund: The corpus of the trust created hereunder consisting of (i)
the Mortgage Loans and all interest and principal received on or with respect
thereto after the related Cut-off Date, other than such amounts which were due
on the Mortgage Loans on or before the related Cut-off Date; (ii) each Account,
and all amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure or otherwise; (iv) all rights of the
Depositor against the Unaffiliated Seller under the Unaffiliated Seller's
Agreement; (v) all rights of the Depositor against each Originator under the
related Assignment and Recognition Agreement and the related Mortgage Loan
Purchase Agreement; (vi) the Certificate Insurance Policy; (vii) the Cap
Agreements, for the benefit of the Holders of the Offered Certificates (other
than the Class A-1 Certificateholders); and (viii) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing.

         Trustee: Deutsche Bank National Trust Company and its successors and,
if a successor trustee is appointed hereunder, such successor.

         Trustee Fee: As to any Distribution Date, an amount equal to the sum of
(a) the product of one-twelfth of the Trustee Fee Rate times the sum of (i) the
aggregate Stated Principal Balances of the Mortgage Loans at the end of the
prior Due Period, and (ii) the amount on deposit in the Pre-Funding Accounts at
the end of such prior Due Period and (b) any reasonable

                                       43
<PAGE>

compensation and expenses of a separate trustee or co-trustee to be paid
pursuant to Section 8.10(d).

         Trustee Fee Rate: With respect to each Mortgage Loan, 0.0035% per
annum.

         Unaffiliated Seller's Agreement: The Unaffiliated Seller's Agreement,
dated as of the date hereof, among the Unaffiliated Seller and the Depositor
relating to the sale of the Mortgage Loans from the Unaffiliated Seller to the
Depositor.

         Unpaid Interest Amounts: As of any Distribution Date and any Class of
Certificates, the sum of (a) the excess of (i) the sum of the Accrued
Certificate Interest for such Distribution Date and any portion of such Accrued
Certificate Interest from prior Distribution Dates remaining unpaid over (ii)
the amount in respect of interest on such Class of Certificates actually
distributed on that Distribution Date and (b) 30 days' interest on such excess
at the applicable Pass-Through Rate (to the extent permitted by applicable law).

         Unpaid Realized Loss Amount: With respect to any Class of Subordinated
Certificates and as to any Distribution Date, is the excess of (i) Applied
Realized Loss Amounts with respect to such Class over (ii) the sum of all
distributions in reduction of such Applied Realized Loss Amounts on all previous
Distribution Dates. Any amounts distributed to a Class of Subordinated
Certificates in respect of any Unpaid Realized Loss Amount will not be applied
to reduce the Class Certificate Balance of such Class.

         Upper Tier Regular Interest: As described in the Preliminary Statement.

         Upper Tier REMIC: As described in the Preliminary Statement.

         U.S. Person: Shall mean (i) a citizen or resident of the United States;
(ii) a corporation (or entity treated as a corporation for tax purposes) created
or organized in the United States or under the laws of the United States or of
any state thereof, including, for this purpose, the District of Columbia; (iii)
a partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any state
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations); (iv) an estate whose income is
includible in gross income for United States income tax purposes regardless of
its source; or (v) a trust, if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. Persons have authority to control all substantial decisions of the
trust. Notwithstanding the last clause of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20,
1996, and treated as U.S. Persons prior to such date, may elect to continue to
be U.S. Persons.

         Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Class X
Certificates, if any (such Voting Rights to be allocated among the Holders of
Certificates of each such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the Class P
Certificates, if any, and (c) the remaining Voting Rights shall be allocated
among Holders of the remaining Classes of Certificates in proportion to the
Certificate Balances of their respective Certificates on such date.

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<PAGE>

         WAC Cap: With respect to the Mortgage Loans as of any Distribution
Date, the product of (i) the weighted average of the Adjusted Net Mortgage Rates
then in effect on the beginning of the related Due Period on the Mortgage Loans,
in the case of the Class A-1 Certificates, minus the Premium Rate and (ii) a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days in the Interest Accrual Period related to such
Distribution Date.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

         Section 2.01 Conveyance of Mortgage Loans.

         (a) The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee
for the benefit of the Certificateholders, without recourse, all the right,
title and interest of the Depositor in and to the Trust Fund and the Trustee, on
behalf of the Trust, hereby accepts the Trust Fund, other than any Subsequent
Mortgage Loans, which will be so sold, transferred, assigned, set-over and
conveyed on the related Subsequent Transfer Date. The Mortgage Loans permitted
by the terms of this Agreement to be included in the Trust Fund are limited to
(i) the Initial Mortgage Loans (which the Depositor acquired pursuant to the
Unaffiliated Seller's Agreement, which contains, among other representations and
warranties, a representation and warranty of the Unaffiliated Seller that no
Mortgage Loan is a "High-Cost Home Loan" as defined in the New Jersey Home
Ownership Act effective November 27, 2003 or in the New Mexico Home Loan
Protection Act effective January 1, 2004), (ii) Subsequent Mortgage Loans (which
the Depositor is required hereunder to have acquired pursuant to Subsequent
Transfer Agreements, each of which shall contain, among other representations
and warranties, a representation and warranty of the Unaffiliated Seller that no
Mortgage Loan is a "High-Cost Home Loan" as defined in the New Jersey Home
Ownership Act effective November 27, 2003 or in the New Mexico Home Loan
Protection Act effective January 1, 2004) and (iii) Substitute Mortgage Loans
(which, by definition as set forth herein and referred to in the Unaffiliated
Seller's Agreement and Subsequent Transfer Agreements, are required to conform
to, among other representations and warranties, the representation and warranty
of the Unaffiliated Seller that no Subsequent Mortgage Loan is a "High-Cost Home
Loan" as defined in the New Jersey Home Ownership Act effective November 27,
2003 or in the New Mexico Home Loan Protection Act effective January 1, 2004, it
is agreed and understood by the parties hereto that it is not intended that any
Mortgage Loan be included in the Trust that is a "High-Cost Home Loan" as
defined in the New Jersey Home Ownership Act effective November 27, 2003 or in
the New Mexico Home Loan Protection Act effective January 1, 2004.

         (b) In connection with the transfer and assignment of each Mortgage
Loan, the Unaffiliated Seller has delivered or caused to be delivered to the
Trustee for the benefit of the Certificateholders the following documents or
instruments with respect to each Mortgage Loan so assigned (to the extent such
documents or instruments are required to be delivered by the related Originator
under each Mortgage Loan Purchase Agreement):

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<PAGE>

         (i) the original Mortgage Note bearing all intervening endorsements
     evidencing a complete chain of assignment from the originator to the
     related Originator, endorsed "Pay to the order of _________, without
     recourse" and signed in the name of the related Originator by an authorized
     officer. To the extent that there is no room on the face of the Mortgage
     Notes for endorsements, the endorsement may be contained on an allonge, if
     state law so allows and the Trustee is so advised by the related Originator
     that state law so allows. If the Mortgage Loan was acquired by an
     Originator in a merger, the endorsement must be by "[related Originator],
     successor by merger to [name of predecessor]". If the Mortgage Loan was
     acquired or originated by the related Originator while doing business under
     another name, the endorsement must be by "[related Originator], formerly
     known as [previous name]";

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

         (iii) the original Mortgage with evidence of recording thereon. If in
     connection with any Mortgage Loan, the original Mortgage with evidence of
     recording thereon cannot be delivered on or prior to the related Delivery
     Date because of a delay caused by the public recording office where such
     Mortgage has been delivered for recordation or because such Mortgage has
     been lost or because such public recording office retains the original
     recorded Mortgage, then the related Originator, as required by the terms of
     the related Mortgage Loan Purchase Agreement, will be required to deliver
     to the Trustee a photocopy of such Mortgage and (i) the original recorded
     Mortgage or a copy of such Mortgage certified by such public recording
     office to be a true and complete copy of the original recorded Mortgage
     promptly upon receipt thereof by the related Originator (but in any event
     within 360 days from the related Delivery Date); or (ii) in the case of a
     Mortgage where a public recording office retains the original recorded
     Mortgage or in the case where a Mortgage is lost after recordation in a
     public recording office, a copy of such Mortgage certified by such public
     recording office to be a true and complete copy of the original recorded
     Mortgage;

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

         (v) the original Assignment of Mortgage for each Mortgage Loan endorsed
     in blank, in form and substance acceptable for recording (except with
     respect to MERS Designated Loans);

         (vi) the originals of all intervening assignments of mortgage,
     evidencing a complete chain of assignment from the originator (or MERS with
     respect to each MERS Designated Mortgage Loan) to the related Originator,
     with evidence of recording thereon or if any such intervening assignment
     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;

         (vii) the original or duplicate lender's title policy and all riders
     thereto or, if such original is unavailable, either an original title
     binder or an original or copy of the

                                       46
<PAGE>

     title commitment, and if copies then certified to be true and complete by
     the title company; and

         (viii) the security agreement, chattel mortgage or equivalent document
     executed in connection with the Mortgage, if any.

         If any Mortgage has been recorded in the name of Mortgage Electronic
Registration System, Inc. ("MERS") or its designee, no Assignment of Mortgage in
favor of the Trustee will be required to be prepared or delivered and instead,
the Servicer shall take all reasonable actions as are necessary at the expense
of the applicable Originator to the extent permitted under the related Purchase
Agreement and otherwise at the expense of the Depositor to cause the Trust to be
shown as the owner of the related Mortgage Loan on the records of MERS for the
purpose of the system of recording transfers of beneficial ownership of
mortgages maintained by MERS.

         From time to time, the Servicer shall forward to the Trustee additional
original documents, additional documents evidencing an assumption, modification,
consolidation or extension of a Mortgage Loan approved by the Servicer, in
accordance with the terms of this Agreement. All such mortgage documents held by
the Trustee as to each Mortgage Loan shall constitute the "Custodial File".

         On or prior to the related Delivery Date, the Unaffiliated Seller shall
deliver, or cause the related Originator to deliver, to the Trustee Assignments
of Mortgage, in blank, for each Mortgage Loan. If an Assignment of Mortgage is
required to be recorded pursuant to the terms hereof, the Trustee shall promptly
forward such Assignment of Mortgage to the Servicer for recording. No later than
thirty (30) Business Days following the date of receipt by the Servicer of all
necessary recording information for a Mortgage, the Servicer shall promptly
submit or cause to be submitted for recording, at the expense of the
Unaffiliated Seller (the Unaffiliated Seller to seek reimbursement from the
related Originator under the applicable Mortgage Loan Purchase Agreement) in the
appropriate public office for real property records, each Assignment of Mortgage
referred to in Section 2.01(b)(v). Notwithstanding the foregoing, however, for
administrative convenience and facilitation of servicing and to reduce closing
costs, the Assignment of Mortgage shall not be required to be completed and
submitted for recording with respect to any MERS Designated Mortgage Loan or any
Mortgage Loan (other than any Mortgage Loan where the Mortgaged Property is
located in any state where recordation is required by any Rating Agency to
obtain the initial ratings on the Certificates, which states as of the date
hereof, are Florida and Maryland) until the earliest to occur of (i) direction
by the Certificate Insurer or (ii) upon a determination by the Servicer that
recordation is necessary for the enforcement of rights under, or satisfaction or
assignment of, the related Mortgage, at which time, the Servicer shall record
any such Assignment of Mortgage in accordance with the terms hereof. If any
Assignment of Mortgage is required to be recorded pursuant to the terms hereof,
the Mortgage shall be assigned from the related Originator, to "Deutsche Bank
National Trust Company, as trustee under the Pooling and Servicing Agreement
dated as of February 1, 2004, CDC Mortgage Capital Trust 2004-HE1." In the event
that any such assignment is lost or returned unrecorded because of a defect
therein, the Unaffiliated Seller shall cause the related Originator to promptly
prepare a substitute assignment to cure such defect and thereafter cause each
such assignment to be duly recorded. In the event the Unaffiliated Seller does
not pay or

                                       47
<PAGE>

otherwise reimburse the Servicer for any of the foregoing costs of recording any
such Assignment of Mortgage, the Servicer shall be entitled to be reimbursed
from the Trust Fund from amounts on deposit in the Collection Account. In the
event the related Originator fails to reimburse the Unaffiliated Seller for the
recording costs described above, upon receipt of written direction from the
Unaffiliated Seller, the Trustee shall assign its rights under the applicable
Mortgage Loan Purchase Agreement solely with respect to payment of such expenses
to the Unaffiliated Seller.

         The Unaffiliated Seller shall use commercially reasonable efforts to
assist the Servicer in causing the related Originator to deliver (at the expense
of such Originator pursuant to the related Mortgage Loan Purchase Agreement) to
the Servicer copies of all trailing documents required to be included in the
Custodial File at the same time the originals or certified copies thereof are
delivered to the Trustee, such documents, including, but not limited to, the
mortgagee policy of title insurance and any mortgage loan documents upon return
from the recording office. The Unaffiliated Seller shall use commercially
reasonable efforts to assist the Servicer in seeking reimbursement from the
related Originator pursuant to the related Mortgage Loan Purchase Agreement for
any fees or costs incurred by the Servicer in obtaining such documents.

         On or prior to the Closing Date, the Unaffiliated Seller shall deliver
to the Trustee and the Servicer a copy of the Data Tape Information in
electronic, machine readable medium in a form mutually acceptable to the Trustee
and the Servicer. Within ten days of the Closing Date, the Unaffiliated Seller
shall deliver a copy of the complete Mortgage Loan Schedule to the Trustee and
the Servicer.

         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 Trustee within 90 days following the related Delivery Date, and in the event
that the Originator does not cure such failure within 30 days of discovery or
receipt of written notification of such failure from the Depositor, the Trustee
or the Certificate Insurer, the Trustee shall notify the related Originator to
repurchase the Mortgage Loan pursuant to the related Mortgage Loan Purchase
Agreement, upon the request of the Depositor, the Trustee or the Certificate
Insurer, at the Repurchase Price and in the manner specified in Section 2.03.
The foregoing repurchase provision shall not apply in the event that the related
Originator cannot deliver such original or 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 related Originator shall instead be required 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
Originator confirming that such document has been accepted for recording.

         (c) Purchase and Sale of Subsequent Mortgage Loans.

         (i) Subject to the satisfaction of the conditions set forth in
     paragraph (ii) below, and upon the Trustee's receipt of a Subsequent
     Transfer Agreement executed by all other parties thereto, in consideration
     of the Trustee's delivery on the related Subsequent Transfer Dates to or
     upon the order of the Depositor of all or a portion of the balance of funds
     in the related Pre-Funding Accounts, the Depositor shall on any

                                       48
<PAGE>

     Subsequent Transfer Date sell, transfer, assign, set over and convey to the
     Trustee without recourse but subject to terms and provisions of this
     Agreement, all of the right, title and interest of the Depositor in and to
     the Group I Subsequent Mortgage Loans, Group II Subsequent Mortgage Loans
     or the Group III Subsequent Mortgage Loans, as applicable, including the
     outstanding principal of and interest due on such Subsequent Mortgage
     Loans, and all other related assets included or to be included in the Trust
     Fund with respect thereto.

         The amount released from the Group I Pre-Funding Account with respect
     to a transfer of Group I Subsequent Mortgage Loans, Group II Pre-Funding
     Account with respect to a transfer of Group II Subsequent Mortgage Loans,
     or Group III Pre-Funding Account with respect to a transfer of Group III
     Subsequent Mortgage Loans, shall be one-hundred percent (100%) of the
     aggregate Stated Principal Balances as of the related Subsequent Cut-off
     Date of the Subsequent Mortgage Loans so transferred.

         (ii) The Subsequent Mortgage Loans and the other property and rights
     related thereto described in paragraph (a) above shall be transferred by
     the Depositor to the Trust Fund only upon the satisfaction of each of the
     following conditions on or prior to the related Subsequent Transfer Date:

               (a) the Unaffiliated Seller shall have provided the Depositor,
         the Trustee, the Rating Agencies and the Certificate Insurer with a
         timely Addition Notice, which shall include a Mortgage Loan Schedule,
         listing the Subsequent Mortgage Loans and shall have provided any other
         information reasonably requested by any of the foregoing with respect
         to the Subsequent Mortgage Loans;

               (b) the Servicer shall have deposited in the Collection Account
         all collections of (x) principal in respect of the Subsequent Mortgage
         Loans received and due after the related Subsequent Cut-off Date and
         (y) interest due on the Subsequent Mortgage Loans after the related
         Subsequent Cut-off Date;

               (c) as of each Subsequent Transfer Date, the Unaffiliated Seller
         was not insolvent nor will be made insolvent by such transfer nor is
         the Unaffiliated Seller aware of any pending insolvency;

               (d) such addition will not result in a "prohibited transaction"
         (as defined in the REMIC Provisions) for any REMIC held by the Trust
         Fund, and will not cause any REMIC held by the Trust Fund to cease to
         qualify as a REMIC, as evidenced by an Opinion of Counsel with respect
         to such matters (which may be a blanket opinion dated the Closing
         Date);

               (e) the Pre-Funding Period shall not have terminated;

               (f) the Unaffiliated Seller shall have delivered to the Trustee
         an executed Assignment and Recognition Agreement with respect to each
         related Originator of Subsequent Mortgage Loans to be added to the
         Trust Fund on such Subsequent Transfer Date (which Assignment and
         Recognition Agreement shall

                                       49
<PAGE>

         include a representation and warranty from the related Originator that
         none of the Subsequent Mortgage Loans is a High Cost Loan, none of the
         Subsequent Mortgage Loans is covered by the Home Ownership and Equity
         Protection Act of 1994 and none of the Subsequent Mortgage Loans is in
         violation of any comparable state law);

               (g) the Unaffiliated Seller shall have delivered to the Trustee
         an Officer's Certificate confirming the satisfaction of each condition
         precedent specified in this paragraph (ii), and the Opinion of Counsel
         referenced in clause (d);

               (h) the Unaffiliated Seller and the Depositor shall have
         delivered to the Trustee an executed copy of a Subsequent Transfer
         Agreement, substantially in the form of Exhibit L hereto; and

               (i) the Unaffiliated Seller shall have obtained the consent of
         the Certificate Insurer.

         (iii) The obligation of the Trust Fund to purchase the Subsequent
     Mortgage Loans on a Subsequent Transfer Date is subject to the requirements
     that, following the purchase of such Subsequent Mortgage Loans, with
     respect to the entire mortgage loan pool:

         (A)   no more than 3.00% may be second lien mortgage loans;

         (B)   no more than 33.00% and no less than 26.00% may be Fixed Rate
               Mortgage Loans;

         (C)   the weighted average original term to maturity may not exceed 360
               months;

         (D)   the weighted average gross Mortgage Rate must not be less than
               7.40%, or more than 7.65%;

         (E)   the weighted average LTV must not exceed 82.50%, and no more than
               46.00% of the Mortgage Loans may have LTVs in excess of 80.00%;

         (F)   no Mortgage Loan may have a Stated Principal Balance in excess of
               $1,000,000 as of the related Cut-off Date;

         (G)   at least 75.00% of the Mortgage Loans must have prepayment
               penalties;

         (H)   the weighted average Gross Margin for the Adjustable Rate
               Mortgage Loans must be at least 5.93%;

         (I)   the weighted average credit score (FICO Score) must be at least
               615, and none of the Mortgage Loans may have credit scores below
               500;

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<PAGE>

         (J)   no Mortgage Loan originated on or after October 1, 2002 but
               before or on March 7, 2003 will be secured by property located in
               the State of Georgia and no mortgage loan originated on or after
               March 7, 2003 is a "high cost home loan" as defined under the
               Georgia Fair Lending Act;

         (K)   any Mortgage Loan originated on or after November 27, 2003, which
               is secured by an owner-occupied property located in the State of
               New Jersey, will be a purchase money home loan, and no Mortgage
               Loan originated on or after November 27, 2003, which is secured
               by owner-occupied property located in the State of New Jersey,
               will be a "covered" loan, "high cost" loan or a home improvement
               loan or be secured by manufactured housing;

         (L)   the weighted average Stated Documentation and No Ratio
               Documentation percentage must not exceed 50.00%; and

         (M)   all of the Group I Subsequent Mortgage Loans will conform with
               Freddie Mac Guidelines and none of the Group II Subsequent
               Mortgage Loans will be second-lien mortgage loans.

         Any of the requirements set forth in clauses (ii) and (iii) above may
     be waived or modified in any respect with the consent of the Certificate
     Insurer and the Rating Agencies.

         (iv) In connection with the transfer and assignment of the Subsequent
     Mortgage Loans, the Unaffiliated Seller shall satisfy the document delivery
     requirements set forth in Section 2.01(b).

         Section 2.02 Acceptance by the Trustee of the Mortgage Loans.

         The Trustee shall acknowledge, on each Delivery Date, receipt of the
documents identified in the Initial Certification in the form annexed hereto as
Exhibit F, and declares that it holds and will hold such documents and the other
documents delivered to it pursuant to Section 2.01, and that it holds or will
hold such other assets as are included in the Trust Fund, in trust for the
exclusive use and benefit of all present and future Certificateholders and the
Certificate Insurer. The Trustee acknowledges that it will maintain possession
of the related Mortgage Notes in the State of California, unless otherwise
permitted by the Rating Agencies and the Certificate Insurer.

         In connection with each Delivery, the Trustee shall deliver via
facsimile (with original to follow the next Business Day) to the Depositor, the
Unaffiliated Seller, the Servicer and the Certificate Insurer an Initial
Certification on or prior to the related Delivery Date, certifying receipt of
the related Mortgage Notes and Assignments of Mortgage for each related Mortgage
Loan. The Trustee shall not be responsible to verify the validity, sufficiency
or genuineness of any document in any Custodial File.

         Within 120 days after the related Delivery Date, the Trustee shall
ascertain that all documents required to be reviewed by it are in its
possession, and shall deliver to the Depositor, the Unaffiliated Seller, the
Servicer and the Certificate Insurer a Final Certification to the effect

                                       51
<PAGE>

that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
such certification as an exception and not covered by such certification): (i)
all documents required to be reviewed by it are in its possession; (ii) such
documents have been reviewed by it and appear regular on their face and relate
to such Mortgage Loan; (iii) based on its examination and only as to the
foregoing documents, the information set forth in items (1), (2) and (18) of the
Mortgage Loan Schedule and items (1), (9) and (17) of the Data Tape Information
respecting such Mortgage Loan is correct; (iv) each Mortgage Note has been
endorsed as provided in Section 2.01 of this Agreement; and (v) with respect to
each MERS Designated Loan, the Trustee, on behalf of the Trust Fund, is the
beneficial owner of such MERS Designated Loan on the MERS System. The Trustee
shall not be responsible to verify the validity, sufficiency or genuineness of
any document in any Custodial File. Upon receipt of such Final Certification, if
the Depositor, the Unaffiliated Seller or the Certificate Insurer determines
that any noncompliance identified by the Trustee is a breach of a representation
or warranty relating to such Mortgage Loan, such party shall give written notice
to the Trustee thereof.

         The Trustee shall retain possession and custody of each Custodial File
in accordance with and subject to the terms and conditions set forth herein. The
Servicer shall promptly deliver to the Trustee, upon the execution or receipt
thereof, the originals of such other documents or instruments constituting the
Custodial File as come into the possession of the Servicer from time to time.

         Section 2.03 Representations, Warranties and Covenants of the
Unaffiliated Seller and the Servicer.

         (a) The Servicer hereby makes the representations and warranties set
forth in (i) Schedule II hereto to the Depositor, the Unaffiliated Seller, the
Certificate Insurer and the Trustee and (ii) Schedule IIA hereto to the
Unaffiliated Seller and the Certificate Insurer, in each case, as of the Closing
Date, and with respect to Subsequent Mortgage Loans, as of the related
Subsequent Transfer Date; provided, however, that in the case of clause (ii),
the Servicer only makes representations and warranties with respect to those
Mortgage Loans on Schedule IA hereto for which the Servicing Transfer Date has
occurred prior to the Closing Date or the related Subsequent Transfer Date, as
applicable.

         (b) CDC Mortgage Capital Inc., in its capacity as the Unaffiliated
Seller, hereby makes the representations and warranties set forth in Schedule
III hereto to the Depositor, the Trustee and the Certificate Insurer, as of the
Closing Date.

         (c) It is understood and agreed by the Servicer and the Unaffiliated
Seller that the representations and warranties set forth in Section 2.03 shall
survive the transfer of the Mortgage Loans to the Trust Fund, and shall inure to
the benefit of the Trust Fund notwithstanding any restrictive or qualified
endorsement on any Mortgage Note or Assignment of Mortgage or the examination or
failure to examine any Mortgage File. Upon discovery by any of the Depositor,
the Unaffiliated Seller, the Certificate Insurer, the Trustee or the Servicer of
a breach by the Unaffiliated Seller of any of the foregoing representations or
any of the representations and warranties made pursuant to Sections 3.01(f),
3.01(h), 3.01(n), 3.01(p) or 3.03 of the Unaffiliated Seller's Agreement or by
any Originator of the representations and


                                       52
<PAGE>



warranties made pursuant to the related Assignment and Recognition Agreement,
the party discovering such breach shall give prompt written notice to the
others.

         (d) Within 90 days of the earlier of either discovery by or notice to
the Unaffiliated Seller of any breach of a representation or warranty set forth
in Section 3.01(f), 3.01(h), 3.01(n), 3.01(p) or 3.03 of the Unaffiliated
Seller's Agreement that materially and adversely affects the value of the
Mortgage Loans or the interest of the Trustee, the Certificate Insurer or the
Certificateholders therein, the Unaffiliated Seller shall use its best efforts
to cure such breach in all material respects and, if such breach cannot be
remedied, the Unaffiliated Seller shall, (i) if such 90-day period expires prior
to the second anniversary of the related Delivery Date, remove such Mortgage
Loan from the Trust Fund and substitute in its place a Substitute Mortgage Loan,
in the manner and subject to the conditions set forth in this Section 2.03; or
(ii) repurchase such Mortgage Loan at the Repurchase Price; provided, however,
that any such substitution pursuant to (i) above shall not be effected prior to
the delivery to the Trustee of the Opinion of Counsel required by Section 2.05,
if any, and a Request for Release substantially in the form of Exhibit K, and
the Mortgage File for any such Substitute Mortgage Loan.

         With respect to any Substitute Mortgage Loan or Loans, the Unaffiliated
Seller shall deliver to the Trustee for the benefit of the Certificateholders
the Mortgage Note, the Mortgage, the related Assignment of the Mortgage, and
such other documents and agreements as are required by Section 2.01, with the
Mortgage Note endorsed and the Mortgage assigned as required by Section 2.01. No
substitution is permitted to be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Substitute Mortgage Loans in the Due Period of substitution shall not be part of
the Trust Fund and will be retained by the related Originator on the next
succeeding Distribution Date. For the Due Period of substitution, distributions
to Certificateholders will include the Scheduled Payment due on any Deleted
Mortgage Loan for such Due Period and thereafter the related Originator shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan.

         For any month in which the Unaffiliated Seller substitutes one or more
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
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 the scheduled principal portion of the Scheduled Payments due in
the Due Period of substitution). The Unaffiliated Seller shall deposit the
amount of such shortage (the "Substitution Adjustment Amount") plus, an amount
equal to the aggregate of any unreimbursed Advances and accrued and unpaid
Servicing Fees with respect to such Deleted Mortgage Loans into the Collection
Account on or before the Remittance Date for the Distribution Date in the month
succeeding the calendar month during which the related Mortgage Loan became
required to be purchased or replaced hereunder.

         Upon discovery that any document does not comply with the requirements
set forth in clauses (i) through (iv) of the Trustee's review of the Custodial
Files pursuant to Section 2.02 or receipt of written notice of a breach of a
representation and warranty, the Trustee shall in turn promptly notify the
applicable Originator (with a copy to the Servicer, the Certificate Insurer and
the Unaffiliated Seller) in writing of such non-compliance or breach and request
that

                                       53
<PAGE>

the related Originator cure such non-compliance or breach within the time period
set forth in the applicable Mortgage Loan Purchase Agreement (but in any event,
within 60 days from the date the related Originator is notified of such
non-compliance or breach) and if the related Originator does not cure such
non-compliance or breach in all material respects during such period, the
Trustee shall notify such Originator to repurchase such Mortgage Loan from the
Trust Fund at the Repurchase Price. In the event the Trustee receives written
notice of a breach by any Originator of a representation and warranty that is
subject to an automatic sixty-day repurchase obligation pursuant to Section 9.03
of the related Mortgage Loan Purchase Agreement, which representations and
warranties relate to Prepayment Fees, Predatory Lending Regulations, Single
Premium Credit Insurance, the Georgia Fair Lending Act, the Fair Credit
Reporting Act, New York State Banking Law or failure of a Mortgage Loan to
constitute a "qualified mortgage" within the meaning of Section 860G(a)(3) of
the Code, the Trustee shall notify such Originator to repurchase the Mortgage
Loan at the Repurchase Price within sixty (60) days of such Originator's receipt
of such notice.

         (e) Upon delivery of the Final Certification with respect to each
Mortgage Loan, the Trustee will notify the related Originator within 5 Business
Days of such delivery of any missing documents from the Custodial File and if
the related Originator does not deliver such missing documents within 60 days
from the date the related Originator is notified of such noncompliance or
breach, the Trustee shall notify such Originator to repurchase such Mortgage
Loan from the Trust Fund at the Repurchase Price.

         (f) Based solely on information received with respect to any Substitute
Mortgage Loan from the Unaffiliated Seller or the related Originator, as
applicable, the Servicer shall amend the Mortgage Loan Schedule to reflect the
removal of such Deleted Mortgage Loan and the substitution of the Substitute
Mortgage Loan or Loans and the Servicer shall deliver the amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, the Substitute Mortgage Loan or
Loans shall be subject to the terms of this Agreement in all respects, and the
Unaffiliated Seller shall be deemed to have made with respect to such Substitute
Mortgage Loan or Loans, as of the date of substitution, the representations and
warranties made pursuant to Sections 3.01(f), 3.01(h), 3.01(n), 3.01(p) and 3.03
of the Unaffiliated Seller's Agreement with respect to such Mortgage Loan. Upon
any such substitution and the deposit to the Collection Account of the amount
required to be deposited therein in connection with such substitution as
described in the following paragraph, the Trustee shall release the Mortgage
File relating to such Deleted Mortgage Loan to the Unaffiliated Seller or the
related Originator, as applicable, and shall execute and deliver at the
Unaffiliated Seller's or related Originator's direction, as applicable, such
instruments of transfer or assignment prepared by such party, in each case
without recourse, as shall be necessary to vest title in the Unaffiliated Seller
or the related Originator, or its designee, as applicable, the Trustee's
interest in any Deleted Mortgage Loan substituted for pursuant to this Section
2.03.

         (g) In the event that the Unaffiliated Seller or the related
Originator, as applicable, shall have repurchased a Mortgage Loan, the
Repurchase Price therefor shall be deposited in the Collection Account pursuant
to Section 3.10 on or before the Remittance Date for the Distribution Date in
the month following the month during which the Unaffiliated Seller or the
related Originator, as applicable, became obligated hereunder to repurchase or
replace such Mortgage Loan and upon such deposit of the Repurchase Price, the
delivery of the Opinion

                                       54
<PAGE>

of Counsel required by Section 2.05 and receipt of a Request for Release in the
form of Exhibit K hereto, the Trustee shall release the related Custodial File
to such Person as directed by the Servicer, and the Trustee shall execute and
deliver at such Person's direction such instruments of transfer or assignment
prepared by such Person, in each case without recourse, as shall be necessary to
transfer title from the Trustee. It is understood and agreed that the obligation
under this Agreement of any Person to cure, repurchase or replace any Mortgage
Loan as to which a breach has occurred and is continuing shall constitute the
sole remedy against such Persons respecting such breach available to
Certificateholders, the Depositor, the Unaffiliated Seller, the Certificate
Insurer or the Trustee on their behalf. In the event such required repurchase or
replacement does not occur, the Trustee shall take such actions as directed upon
written direction from the Depositor or the Certificate Insurer and the
provision of reasonable indemnity satisfactory to the Trustee in accordance with
Sections 6.03 and 8.02.

         (h) If the Unaffiliated Seller is required to repurchase or replace a
Mortgage Loan pursuant to the terms hereof, upon receipt by the Trustee of
written direction from the Unaffiliated Seller and either the related Repurchase
Price or Substitute Mortgage Loan, as applicable, the Trustee shall assign to
the Unaffiliated Seller its rights under the related Mortgage Loan Purchase
Agreement solely with respect to such Mortgage Loan by an assignment in form and
substance mutually satisfactory to the Unaffiliated Seller and the Trustee.

         (i) The representations and warranties made pursuant to this Section
2.03 shall survive delivery of the respective Custodial Files to the Trustee.

         Section 2.04 The Depositor and the Mortgage Loans.

         The Depositor hereby represents and warrants to the Trustee and to the
Certificate Insurer with respect to each Mortgage Loan as of the date hereof or
such other date set forth herein that as of the related Delivery Date, and
following the transfer of the Mortgage Loans to it by the Unaffiliated Seller,
the Depositor had good title to the Mortgage Loans and the Mortgage Notes were
subject to no offsets, defenses or counterclaims.

         The Depositor hereby assigns, transfers and conveys to the Trustee all
of its rights with respect to the Initial Mortgage Loans and shall, on each
subsequent Transfer Date, convey all of its right, title and interest with
respect to the related subsequent Mortgage Loans.

         Section 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions and Non-Qualified Mortgages.

         Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.03 shall be made more than 30 days after the
related Delivery Date unless the Unaffiliated Seller delivers, or causes the
related Originator to deliver, as applicable, to the Trustee an Opinion of
Counsel, at the expense of the Unaffiliated Seller or the related Originator, as
applicable, addressed to the Trustee, to the effect that such substitution will
not (i) result in the imposition of the tax on "prohibited transactions" on the
Trust Fund or contributions after the Startup Day, as defined in Sections
860F(a)(2) and 860G(d) of the Code, respectively, or (ii) cause the Trust Fund
to fail to qualify as one or more REMICs at any time that any Certificates are
outstanding.

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<PAGE>

         Section 2.06 Execution and Delivery of Certificates.

         The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, has executed and
delivered to or upon the order of the Depositor, the Certificates in authorized
denominations evidencing directly or indirectly the entire ownership of the
Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights
referred to above for the benefit of all present and future Holders of the
Certificates, and for the benefit of the Certificate Insurer.

         Section 2.07 REMIC Matters.

         The Preliminary Statement sets forth the designations for federal
income tax purposes of all interests created hereby. The "Startup Day" for
purposes of the REMIC Provisions shall be the Closing Date. The "latest possible
maturity date" is June 25, 2034, which is the sixth Distribution Date following
the latest Mortgage Loan maturity date.

         Section 2.08 Representations and Warranties of the Depositor.

         The Depositor hereby represents, warrants and covenants to the Trustee,
the Servicer and to the Certificate Insurer that as of the date of this
Agreement or as of such date specifically provided herein:

         (a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware;

         (b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement;

         (c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes or will constitute the legal, valid and binding
agreement of the Depositor, enforceable against the Depositor in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);

         (d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except as have been made on or prior to the Closing Date;

         (e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration

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<PAGE>

under (A) the charter or by-laws of the Depositor, or (B) of any term, condition
or provision of any material indenture, deed of trust, contract or other
agreement or instrument to which the Depositor or any of its subsidiaries is a
party or by which it or any of its subsidiaries is bound; (ii) results or will
result in a violation of any law, rule, regulation, order, judgment or decree
applicable to the Depositor of any court or governmental authority having
jurisdiction over the Depositor or its subsidiaries; or (iii) results in the
creation or imposition of any lien, charge or encumbrance which would have a
material adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans;

         (f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement;

         (g) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency that may materially and adversely affect its performance
hereunder; and

         (h) Immediately prior to the transfer and assignment by the Depositor
to the Trustee, the Depositor had, or, with respect to the subsequent Mortgage
Loans, will have, good title to, and was, or will be, the sole owner of each
Mortgage Loan, free of any interest of any other Person, and the Depositor has
transferred, or shall transfer, all right, title and interest in each Mortgage
Loan to the Trustee. The transfer of the Mortgage Note and the Mortgage as and
in the manner contemplated by this Agreement is sufficient either (i) fully to
transfer to the Trustee, for the benefit of the Certificateholders and for the
benefit of the Certificate Insurer, all right, title, and interest of the
Depositor thereto as note holder and mortgagee or (ii) to grant to the Trustee,
for the benefit of the Certificateholders and for the benefit of the Certificate
Insurer, the security interest referred to in Section 10.04.

         It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.08 shall survive delivery of the
respective Custodial Files to the Trustee or to a custodian, as the case may be,
and shall inure to the benefit of the Trustee.

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

         Section 3.01 Servicer to Service Mortgage Loans.

         (a) For and on behalf of the Certificateholders, and for the benefit of
the Certificate Insurer, the Servicer shall service and administer the Mortgage
Loans in accordance with the terms of this Agreement and the respective Mortgage
Loans and, to the extent consistent with such terms, in the same manner in which
it services and administers similar mortgage loans

                                       57
<PAGE>

for its own portfolio, giving due consideration to customary and usual standards
of practice of mortgage lenders and loan servicers administering similar
mortgage loans but without regard to:

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

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

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

         (iv) the Servicer's or any Subservicer's right to receive compensation
     for its services hereunder or with respect to any particular transaction.

         To the extent consistent with the foregoing, the Servicer shall seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Servicer shall
have full power and authority, acting alone or through Subservicers as provided
in Section 3.02, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer in its own name
or in the name of a Subservicer is hereby authorized and empowered by the
Trustee when the Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee. The Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.15, the Trustee shall execute, at the
written request of the Servicer, and furnish to the Servicer and any Subservicer
such documents as are necessary or appropriate to enable the Servicer or any
Subservicer to carry out their servicing and administrative duties hereunder,
and the Trustee hereby grants to the Servicer, and this Agreement shall
constitute, a power of attorney to carry out such duties including a power of
attorney to take title to Mortgaged Properties after foreclosure on behalf of
the Trustee. The Trustee shall execute a separate power of attorney in favor of
the Servicer for the purposes described herein to the extent necessary or
desirable to enable the Servicer to perform its duties hereunder. The Trustee
shall not be liable for the actions of the Servicer or any Subservicers under
such powers of attorney.

         (b) Subject to Section 3.09(b), in accordance with the standards of the
preceding paragraph, the Servicer shall advance or cause to be advanced funds as
necessary for the purpose of effecting the timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from

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<PAGE>

related collections from the Mortgagors pursuant to Section 3.09(b), and further
as provided in Section 3.11. Any cost incurred by the Servicer or by
Subservicers in effecting the timely payment of taxes and assessments on a
Mortgaged Property shall not be added to the unpaid principal balance of the
related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so
permit.

         (c) Notwithstanding anything in this Agreement to the contrary, the
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.01) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for reductions resulting
from actual payments of principal) or change the final maturity date on such
Mortgage Loan (except for a reduction of interest payments resulting from the
application of the Servicemembers Relief Act or any similar state statutes) or
(ii) permit any modification, waiver or amendment of any term of any Mortgage
Loan that would both (A) effect an exchange or reissuance of such Mortgage Loan
under Section 1001 of the Code (or final, temporary or proposed Treasury
regulations promulgated thereunder) and (B) cause any REMIC to fail to qualify
as a REMIC under the Code or the imposition of any tax on "prohibited
transactions" or "contributions after the startup day" under the REMIC
Provisions, or (iii) except as provided in Section 3.07(a), waive any Prepayment
Charges.

         (d) The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Servicer
from the responsibilities or liabilities arising under this Agreement.

         Section 3.02 Subservicing Agreements Between the Servicer and
Subservicers.

         (a) Subject to the consent of the Certificate Insurer (so long as no
Certificate Insurer Default has occurred and is continuing), which consent shall
not be unreasonably withheld, the Servicer may enter into subservicing
agreements with Subservicers (each, a "Subservicer"), for the servicing and
administration of the Mortgage Loans.

         Unless otherwise approved by the Certificate Insurer (so long as no
Certificate Insurer Default has occurred and is continuing), each Subservicer
shall be (i) authorized to transact business in the state or states in which the
related Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Subservicer to perform its obligations
hereunder and under the Subservicing Agreement, (ii) an institution approved as
a mortgage loan originator by the Federal Housing Administration or an
institution that has deposit accounts insured by the FDIC and (iii) a Freddie
Mac or Fannie Mae approved mortgage servicer. Each Subservicing Agreement must
impose on the Subservicer requirements conforming to the provisions set forth in
Section 3.08 and provide for servicing of the Mortgage Loans consistent with the
terms of this Agreement. The Servicer will examine each Subservicing Agreement
and will be familiar with the terms thereof. The terms of any Subservicing
Agreement will not be inconsistent with any of the provisions of this Agreement.
The Servicer and the Subservicers may enter into and make amendments to the
Subservicing Agreements or enter into different forms of Subservicing
Agreements; provided, however, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Agreement, and that no
such amendment or different form shall be made or entered into

                                       59
<PAGE>

which could be reasonably expected to be materially adverse to the interests of
the Trustee, without the consent of the Trustee. Any variation without the
consent of the Trustee from the provisions set forth in Section 3.08 relating to
insurance or priority requirements of Subservicing Accounts, or credits and
charges to the Subservicing Accounts or the timing and amount of remittances by
the Subservicers to the Servicer, are conclusively deemed to be inconsistent
with this Agreement and therefore prohibited. The Servicer shall deliver to the
Trustee, the Unaffiliated Seller, the Certificate Insurer and the Depositor
copies of all Subservicing Agreements, and any amendments or modifications
thereof, promptly upon the Servicer's execution and delivery of such
instruments.

         (b) As part of its servicing activities hereunder, the Servicer (except
as otherwise provided in the last sentence of this paragraph), for the benefit
of the Trustee, shall enforce the obligations of each Subservicer under the
related Subservicing Agreement, including, without limitation, any obligation to
make advances in respect of delinquent payments as required by a Subservicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements, and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Servicer
shall pay the costs of such enforcement at its own expense, and shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed.

         Section 3.03 Successor Subservicers.

         The Servicer shall be entitled to terminate any Subservicing Agreement
and the rights and obligations of any Subservicer pursuant to any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement. In the event of termination of any Subservicer, all servicing
obligations of such Subservicer shall be assumed simultaneously by the Servicer
without any act or deed on the part of such Subservicer or the Servicer, and the
Servicer either shall service directly the related Mortgage Loans or shall enter
into a Subservicing Agreement with a successor Subservicer which qualifies under
Section 3.02.

         Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Depositor or the Trustee without
fee, in accordance with the terms of this Agreement, in the event that the
Servicer shall, for any reason, no longer be the Servicer (including termination
due to an Event of Default).

         Section 3.04 Liability of the Servicer.

         Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from

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<PAGE>

the Subservicer and to the same extent and under the same terms and conditions
as if the Servicer alone were servicing and administering the Mortgage Loans.
The Servicer shall be entitled to enter into any agreement with a Subservicer
for indemnification of the Servicer by such Subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.

         Section 3.05 No Contractual Relationship Between Subservicers and the
Trustee.

         Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
Servicer alone, and the Trustee (or any successor Servicer) shall not be deemed
a party thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer except as set forth in Section 3.06.
The Servicer shall be solely liable for all fees owed by it to any Subservicer,
irrespective of whether the Servicer's compensation pursuant to this Agreement
is sufficient to pay such fees.

         Section 3.06 Assumption or Termination of Subservicing Agreements by
Trustee.

         In the event the Servicer at any time shall for any reason no longer be
the Servicer (including by reason of the occurrence of a Event of Default), the
Trustee or its designee shall thereupon assume all of the rights and obligations
of the Servicer under each Subservicing Agreement that the Servicer may have
entered into, with copies thereof provided to the Trustee prior to the Trustee
assuming such rights and obligations, unless the Trustee elects to terminate any
Subservicing Agreement in accordance with its terms as provided in Section 3.03.

         Upon such assumption, the Trustee, its designee or the successor
servicer shall be deemed, subject to Section 3.03, to have assumed all of the
Servicer's interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if each Subservicing Agreement had
been assigned to the assuming party, except that (i) the Servicer shall not
thereby be relieved of any liability or obligations under any Subservicing
Agreement that arose before it ceased to be the Servicer and (ii) none of the
Depositor, the Trustee, their designees or any successor Servicer shall be
deemed to have assumed any liability or obligation of the Servicer that arose
before it ceased to be the Servicer.

         The Servicer at its expense shall, upon request of the Trustee, deliver
to the assuming party all documents and records relating to each Subservicing
Agreement and the Mortgage Loans then being serviced and an accounting of
amounts collected and held by or on behalf of it, and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.

         Section 3.07 Collection of Certain Mortgage Loan Payments;
Establishment of Certain Accounts.

         (a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any

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<PAGE>

applicable Insurance Policies, follow such collection procedures as it would
follow with respect to mortgage loans comparable to the Mortgage Loans and held
for its own account. Consistent with the foregoing, the Servicer may (i) waive
any late payment charge or, if applicable, any penalty interest, or (ii) extend
the due dates for the Scheduled Payments due on a Mortgage Note for a period of
not greater than 180 days; provided that any extension pursuant to clause (ii)
above shall not affect the amortization schedule of any Mortgage Loan for
purposes of any computation hereunder, except as provided below. In the event of
any such arrangement pursuant to clause (ii) above, the Servicer shall make
timely advances on such Mortgage Loan during such extension pursuant to Section
4.01 and in accordance with the amortization schedule of such Mortgage Loan
without modification thereof by reason of such arrangements, subject to Section
4.01(d) pursuant to which the Servicer shall not be required to make any such
advances that are Nonrecoverable P&I Advances. Notwithstanding the foregoing,
the Servicer may not waive, in whole or in part, a Prepayment Charge, except
under the following circumstances: (i) such waiver relates to a default or a
reasonably foreseeable default and would, in the reasonable judgment of the
Servicer, maximize recovery of total proceeds taking into account the value of
such Prepayment Charge and the related Mortgage Loan, and doing so is standard
and customary in servicing mortgage loans similar to the Mortgage Loans
(including any waiver of a Prepayment Charge in connection with a refinancing of
a Mortgage Loan that is related to a default or a reasonably foreseeable
default), and in no event will the Servicer waive a Prepayment Charge in
connection with a refinancing of a Mortgage Loan that is not related to a
default or a reasonably foreseeable default or (ii) such Prepayment Charge is
not permitted to be collected by applicable law. If a Prepayment Charge is
waived other than as permitted by the prior sentence, then the Servicer is
required to pay the amount of such waived Prepayment Charge, for the benefit of
the Holders of the Class P Certificates, by depositing such amount into the
Collection Account together with and at the time that the amount prepaid on the
related Mortgage Loan is required to be deposited into the Collection Account.
Notwithstanding any provision in this Agreement to the contrary, in the event
the Prepayment Charge payable under the terms of the Mortgage Note is less than
the amount of the Prepayment Charge set forth in the Mortgage Loan Schedule or
other information provided to the Servicer, the Servicer shall not have any
liability or obligation with respect to such difference, and in addition shall
not have any liability or obligation to pay the amount of any uncollected
Prepayment Charge if the failure to collect such amount is the direct result of
inaccurate or incomplete information on the Mortgage Loan Schedule.

         (b) (i) The Trustee shall establish and maintain the Excess Reserve
Fund Account, on behalf of the Class X Certificateholders to receive any Basis
Risk Payment and any Interest Rate Cap Payments and, to secure their limited
recourse obligation to pay to the LIBOR Certificateholders Basis Risk Carry
Forward Amounts.

             (ii) On each Distribution Date, the Trustee shall deposit the
amount of any Basis Risk Payment made for the benefit of the Certificateholders
and any Interest Rate Cap Payment made for the benefit of the Offered
Certificates for such date into the Excess Reserve Fund Account.

         (c) (i) On each Distribution Date on which there exists a Basis Risk
Carry Forward Amount on any Class of Certificates, the Trustee shall (1)
withdraw from the Distribution Account and deposit in the Excess Reserve Fund
Account, as set forth in Section

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<PAGE>

4.02(a)(iii)(N), the lesser of (a) the sum of (x) the Class X Distributable
Amount (without regard to the reduction in the definition thereof with respect
to the Basis Risk Payment) (to the extent remaining after the distributions
specified in Sections 4.02(a)(iii)(A)-(M), and (y) each Interest Rate Cap
Payment, if any, with respect to such Distribution Date, and (b) the Basis Risk
Carry Forward Amount and (2) withdraw from the Excess Reserve Fund Account
amounts necessary to pay to such Class or Classes of Certificates the Basis Risk
Carry Forward Amount. Such payments shall be allocated to those Classes on a pro
rata basis based upon the amount of Basis Risk Carry Forward Amount owed to each
such Class and shall be paid in the priority set forth in Section
4.02(a)(iii)(O).

             (ii) The Trustee shall account for the Excess Reserve Fund Account
as an outside reserve fund within the meaning of Treasury Regulation 1.860G-2(h)
and not as an asset of any REMIC created pursuant to this Agreement. The
beneficial owner of the Excess Reserve Fund Account is the Class X
Certificateholder. For all federal tax purposes, amounts transferred by the
Upper Tier REMIC to the Excess Reserve Fund Account shall be treated as
distributions by the Trustee to the Class X Certificateholder.

             (iii) Any Basis Risk Carry Forward Amounts paid by the Trustee to
the LIBOR Certificateholders shall be accounted for by the Trustee as amounts
paid first to the Holders of the Class X Certificate and then to the respective
Class or Classes of LIBOR Certificates. In addition, the Trustee shall account
for the LIBOR Certificateholders' rights to receive payments of Basis Risk Carry
Forward Amounts as rights in a limited recourse interest rate cap contract
written by the Class X Certificateholders in favor of the LIBOR
Certificateholders.

             (iv) Notwithstanding any provision contained in this Agreement, the
Trustee shall not be required to make any payments from the Excess Reserve Fund
Account except as expressly set forth in this Section 3.07(c).

         (d) The Trustee shall establish and maintain the Distribution Account
on behalf of the Certificateholders. The Trustee shall, promptly upon receipt,
deposit in the Distribution Account and retain therein the following:

         (i) the aggregate amount remitted by the Servicer to the Trustee
     pursuant to Section 3.11;

         (ii) any amount deposited by the Servicer pursuant to Section 3.10 in
     connection with any losses on Permitted Investments; and

         (iii) any other amounts deposited hereunder which are required to be
     deposited in the Distribution Account.

         In the event that the Servicer shall remit any amount not required to
be remitted, it may at any time direct the Trustee in writing to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering notice to the
Trustee which describes the amounts deposited in error in the Distribution
Account. All funds deposited in the Distribution Account shall be held by the
Trustee in trust for the Certificateholders until disbursed in accordance with
this Agreement or

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<PAGE>

withdrawn in accordance with Section 4.02. In no event shall the Trustee incur
liability for withdrawals from the Distribution Account at the direction of the
Servicer.

         (e) The Trustee shall establish and maintain the Capitalized Interest
Account, on behalf of the Certificateholders. On the Closing Date, the Trustee
shall deposit $759,988 into the Capitalized Interest Account from the proceeds
of the sale of the Offered Certificates. Withdrawals from the Capitalized
Interest Account shall be made in accordance with Sections 4.02(c) and (d). The
Trustee shall account for the Capitalized Interest Account as an outside reserve
fund within the meaning of Treasury Regulation 1.860G-2(h) and not as an asset
of any REMIC created pursuant to this Agreement. The beneficial owner of the
Capitalized Interest Account shall be the Unaffiliated Seller.

         (f) The Trustee shall establish and maintain the Pre-Funding Accounts
on behalf of the Certificateholders. On the Closing Date, the Trustee shall
deposit the Group I Initial Pre-Funded Amount into the Group I Pre-Funding
Account, the Group II Initial Pre-Funded Amount into the Group II Pre-Funding
Account and the Group III Initial Pre-Funded Amount into the Group III
Pre-Funding Account, in each case from the proceeds of the sale of the Offered
Certificates. Withdrawals from the Pre-Funding Accounts shall be made in
accordance with Sections 4.02(e) and (f).

         (g) The Servicer or the Trustee (if directed in writing by the
Servicer) may invest the funds in the Accounts with respect to the Collection
Account and the Distribution Account or by the Unaffiliated Seller, with respect
to the Pre-Funding Accounts and the Capitalized Interest Account in each case,
in Permitted Investments, which directions shall be in accordance with Section
3.12. Amounts on deposit in the Excess Reserve Fund Account shall not be
invested.

         (h) The Servicer shall give prior written notice to the Trustee, each
Rating Agency and the Depositor of any proposed change of the location of the
Collection Account.

         (i) In order to comply with its duties under the U.S. Patriot Act, the
Trustee shall obtain and verify certain information and documentation from the
owners of the accounts that the Trustee establishes pursuant to this Agreement
including, but not limited to, each account owner's name, address and other
identifying information.

         Section 3.08 Subservicing Accounts.

         In those cases where a Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement, the Subservicer will be required to
establish and maintain one or more accounts (collectively, the "Subservicing
Account"). The Subservicing Account shall be an Eligible Account and shall
otherwise be acceptable to the Servicer. The Subservicer shall deposit in the
clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Subservicer's receipt thereof, all proceeds
of Mortgage Loans received by the Subservicer less its servicing compensation to
the extent permitted by the Subservicing Agreement, and shall thereafter deposit
such amounts in the Subservicing Account, in no event

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more than two Business Days after the deposit of such funds into the clearing
account. The Subservicer shall thereafter deposit such proceeds in the
Collection Account or remit such proceeds to the Servicer for deposit in the
Collection Account not later than two Business Days after the deposit of such
amounts in the Subservicing Account. For purposes of this Agreement, the
Servicer shall be deemed to have received payments on the Mortgage Loans when
the Subservicer receives such payments.

         Section 3.09 Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.

         (a) The Servicer shall ensure that each of the Mortgage Loans shall be
covered by a paid-in-full, life-of-the-loan tax service contract with a
nationally recognized provider acceptable to the Servicer (each, a "Tax Service
Contract"). Each Tax Service Contract shall be assigned to the Trustee, or its
designee, at the Servicer's expense in the event that the Servicer is terminated
as Servicer of the related Mortgage Loan.

         (b) To the extent that the services described in this paragraph (b) are
not otherwise provided pursuant to the Tax Service Contracts described in
paragraph (a) hereof, the Servicer undertakes to perform such functions. The
Servicer shall establish and maintain, or cause to be established and
maintained, one or more accounts (the "Escrow Accounts"), which shall be
Eligible Accounts. The Servicer shall deposit in the clearing account (which
account must be an Eligible Account) in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Servicer's receipt thereof, all collections from the Mortgagors (or related
advances from Subservicers) for the payment of taxes, assessments, hazard
insurance premiums and comparable items for the account of the Mortgagors
("Escrow Payments") collected on account of the Mortgage Loans and shall
thereafter deposit such Escrow Payments in the Escrow Accounts, in no event more
than two Business Days after the deposit of such funds in the clearing account,
for the purpose of effecting the payment of any such items as required under the
terms of this Agreement. Withdrawals of amounts from an Escrow Account may be
made only to (i) effect payment of taxes, assessments, hazard insurance
premiums, and comparable items; (ii) reimburse the Servicer (or a Subservicer to
the extent provided in the related Subservicing Agreement) out of related
collections for any advances made pursuant to Section 3.01 (with respect to
taxes and assessments) and Section 3.13 (with respect to hazard insurance);
(iii) refund to Mortgagors any sums as may be determined to be overages; (iv)
pay interest, if required and as described below, to Mortgagors on balances in
the Escrow Account, and the Servicer shall be entitled to withdraw from the
Escrow Account any interest earned and not required to be paid to Mortgagors;
(v) clear and terminate the Escrow Account at the termination of the Servicer's
obligations and responsibilities in respect of the Mortgage Loans under this
Agreement; or (vi) recover amounts deposited in error. As part of its servicing
duties, the Servicer or Subservicers shall pay to the Mortgagors interest on
funds in Escrow Accounts, to the extent required by law and, to the extent that
interest earned on funds in the Escrow Accounts is insufficient, to pay such
interest from its or their own funds, without any reimbursement therefor. To the
extent that a Mortgage does not provide for Escrow Payments, the Servicer shall
determine whether any such payments are made by the Mortgagor in a manner and at
a time that avoids the loss of the Mortgaged Property due to a tax sale or the
foreclosure of a tax lien. The Servicer assumes full responsibility for the
payment of all such bills within such time and shall

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effect payments of all such bills irrespective of the Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make advances from its own funds to effect such payments; provided,
however, that such advances are deemed to be Servicing Advances.

         Section 3.10 Collection Account.

         (a) On behalf of the Trustee, the Servicer shall establish and
maintain, or cause to be established and maintained, one or more Eligible
Accounts (such account or accounts, the "Collection Account"), held in trust for
the benefit of the Trustee entitled "Deutsche Bank National Trust Company on
behalf of CDC Mortgage Capital Trust 2004-HE1". On behalf of the Trustee, the
Servicer shall deposit or cause to be deposited in the clearing account (which
account must be an Eligible Account) in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Servicer's receipt thereof, and shall thereafter deposit in the Collection
Account, in no event more than two Business Days after the deposit of such funds
into the clearing account, as and when received or as otherwise required
hereunder, the following payments and collections received or made by it
subsequent to the related Cut-off Date (other than in respect of principal or
interest on the related Mortgage Loans due on or before the related Cut-off
Date, and except for $69,940.29 in interest, which is being retained by the
Unaffiliated Seller), or payments (other than Principal Prepayments) received by
it on or prior to the related Cut-off Date but allocable to a Due Period
subsequent thereto:

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

         (ii) all payments on account of interest (net of the related Servicing
     Fee) on each Mortgage Loan;

         (iii) all Insurance Proceeds to the extent such Insurance Proceeds are
     not to be applied to the restoration of the related Mortgaged Property or
     released to the related Mortgagor in accordance with the express
     requirements of law or in accordance with prudent and customary servicing
     practices, Condemnation Proceeds and Liquidation Proceeds;

         (iv) any amounts required to be deposited pursuant to Section 3.12 in
     connection with any losses realized on Permitted Investments with respect
     to funds held in the Collection Account;

         (v) any amounts required to be deposited by the Servicer pursuant to
     the second paragraph of Section 3.13(a) in respect of any blanket policy
     deductibles;

         (vi) all proceeds of any Mortgage Loan repurchased or purchased in
     accordance with this Agreement; and

         (vii) all Prepayment Charges collected by the Servicer.

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

         (b) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. The
Servicer shall give notice to the Trustee and the Depositor of the location of
the Collection Account maintained by it when established and prior to any change
thereof.

         Section 3.11 Withdrawals from the Collection Account.

         (a) The Servicer shall, from time to time, make withdrawals from the
Collection Account for any of the following purposes or as described in Section
4.01:

         (i) On or prior to the Remittance Date, to remit to the Trustee the
     Interest Remittance Amount and the Principal Remittance Amount in respect
     of the related Distribution Date together with all amounts representing
     Prepayment Charges from the Mortgage Loans received during the related
     Prepayment Period;

         (ii) to reimburse the Servicer for unreimbursed P&I Advances, but only
     to the extent of amounts received which represent Late Collections (net of
     the related Servicing Fees) of Scheduled Payments on Mortgage Loans with
     respect to which such P&I Advances were made in accordance with the
     provisions of Section 4.01;

         (iii) to pay the Servicer or any Subservicer (a) any unpaid Servicing
     Fees or (b) any unreimbursed Servicing Advances with respect to each
     Mortgage Loan, but only to the extent of any Late Collections or other
     amounts as may be collected by the Servicer from the related Mortgagor, or
     otherwise received with respect to such Mortgage Loan (or the related REO
     Property);

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

         (v) to pay to the Unaffiliated Seller or the related Originator, as
     applicable, with respect to each Mortgage Loan that has previously been
     purchased or replaced by the Unaffiliated Seller or such Originator, as
     applicable, pursuant to this Agreement, all amounts received thereon
     subsequent to the date of purchase or substitution, as the case may be;

         (vi) to reimburse the Servicer for (a) any P&I Advance or Servicing
     Advance previously made which the Servicer has determined to be a
     Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance in
     accordance with the provisions of Section 4.01

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     and (b) any unpaid Servicing Fees to the extent not recoverable from Late
     Collections or other amounts received with respect to the related Mortgage
     Loan under Section 3.11(a)(iii); provided, that this clause (b) shall only
     apply with respect to Servicing Fees to second lien Mortgage Loans;

         (vii) to pay, or to reimburse the Servicer for advances in respect of,
     expenses incurred in connection with any Mortgage Loan pursuant to Section
     3.15;

         (viii) to reimburse the Servicer, the Depositor or the Trustee for
     expenses incurred by or reimbursable to the Servicer, the Depositor or the
     Trustee, as the case may be, pursuant to Section 6.03;

         (ix) to reimburse the Servicer, the Unaffiliated Seller, the Depositor,
     the Certificate Insurer or the Trustee, as the case may be, for expenses
     reasonably incurred in respect of the breach or defect giving rise to the
     repurchase obligation under Section 2.03 of this Agreement that were
     included in the Repurchase Price of the Mortgage Loan, including any
     expenses arising out of the enforcement of the repurchase obligation to the
     extent not otherwise paid pursuant to the terms hereof;

         (x) to withdraw any amounts deposited in the Collection Account in
     error; and

         (xi) to clear and terminate the Collection Account upon termination of
     this Agreement.

         (b) The Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (a)(ii), (iii), (v), (vi), (vii), (viii) and (ix)
above. The Servicer shall provide written notification to the Trustee, on or
prior to the next succeeding Remittance Date, upon making any withdrawals from
the Collection Account pursuant to subclause (a)(vii) above.

         Section 3.12 Investment of Funds in the Accounts.

         (a) The Servicer may direct the investment of funds in the Collection
Account and may direct the Trustee to invest funds in the Distribution Account,
and the Unaffiliated Seller may direct the Trustee to invest the funds in the
Pre-Funding Accounts and the Capitalized Interest Account (each of such
Accounts, for purposes of this Section 3.12, an "Investment Account"), in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand no later than the Business Day immediately preceding
the date on which such funds are required to be withdrawn from such account
pursuant to this Agreement. All such investment directions shall be in writing
and if the Trustee does not receive such written instructions no investment
shall be made. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds in an Investment Account shall be
made in the name of the Trustee. The Trustee shall be entitled to sole
possession (except with respect to investment direction of funds held in the
related Account and any income and gain realized thereon) over each such
investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee. In the

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event amounts on deposit in an Investment Account are at any time invested in a
Permitted Investment payable on demand, the Trustee may:

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

         (y)   demand payment of all amounts due thereunder that such Permitted
               Investment would not constitute a Permitted Investment in respect
               of funds thereafter on deposit in the Investment Account.

         (b) (i) (i) All income and gain realized from the investment of funds
     deposited in the Collection Account and the Distribution Account held by or
     on behalf of the Servicer, shall be for the benefit of the Servicer and
     shall be subject to its withdrawal in the manner set forth in Section 3.11
     in the case of income in the Collection Account, and on each Distribution
     Date, the Trustee shall withdraw from the Distribution Account, and remit
     to the Servicer all amounts in respect of such income and gain in the
     Distribution Account. Whether in regard to the Collection Account or the
     Distribution Account, the Servicer shall deposit in the Collection Account
     or the Distribution Account, as applicable, the amount of any loss of
     principal incurred in respect of any such Permitted Investment directed by
     the Servicer made with funds in such accounts immediately upon realization
     of such loss.

             (ii) All income and gain realized from the investment of funds
     deposited in the Pre-Funding Accounts and the Capitalized Interest Account
     held by or on behalf of the Unaffiliated Seller shall be retained in such
     Investment Account, subject to withdrawal as provided in Section 4.02.
     Whether in regard to the Pre-Funding Accounts or the Capitalized Interest
     Account, the Unaffiliated Seller shall deposit in the Pre-Funding Accounts
     or the Capitalized Interest Account, as applicable, the amount of any loss
     of principal incurred in respect of any such Permitted Investment made with
     funds in such accounts immediately upon realization of such loss.

         (c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee shall take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate proceedings. The Trustee shall not be liable for the amount of any
loss incurred in respect of any investment or lack of investment of funds held
in any Investment Account or the Distribution Account if made in accordance with
this Section 3.12.

         (d) The Trustee or its Affiliates are permitted to receive additional
compensation that could be deemed to be in the Trustee's economic self-interest
for (i) serving as investment adviser, administrator, shareholder, servicing
agent, custodian or sub-custodian with respect to certain of the Permitted
Investments, (ii) using Affiliates to effect transactions in certain Permitted
Investments and (iii) effecting transactions in certain Permitted Investments.

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Such compensation shall not be considered an amount that is reimbursable or
payable pursuant to this Agreement.

         Section 3.13 Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage.

         (a) The Servicer shall cause to be maintained for each Mortgage Loan
fire insurance with extended coverage on the related Mortgaged Property in an
amount which is at least equal to the least of (i) the outstanding principal
balance of such Mortgage Loan, (ii) the amount necessary to fully compensate for
any damage or loss to the improvements that are a part of such property on a
replacement cost basis and (iii) the maximum insurable value of the improvements
which are a part of such Mortgaged Property, in each case in an amount not less
than such amount as is necessary to avoid the application of any coinsurance
clause contained in the related hazard insurance policy. The Servicer shall also
cause to be maintained fire insurance with extended coverage on each REO
Property in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property, plus accrued interest at the Mortgage Rate and related
Servicing Advances. The Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Servicer would follow in
servicing loans held for its own account, subject to the terms and conditions of
the related Mortgage and Mortgage Note) shall be deposited in the Collection
Account, subject to withdrawal pursuant to Section 3.11. Any cost incurred by
the Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to the Trustee, be added to the unpaid principal
balance of the related Mortgage Loan, notwithstanding that the terms of such
Mortgage Loan so permit. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If the Mortgaged Property or REO
Property is at any time in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards and flood
insurance has been made available, the Servicer will cause to be maintained a
flood insurance policy in respect thereof. Such flood insurance shall be in an
amount equal to the lesser of (i) the unpaid principal balance of the related
Mortgage Loan and (ii) the maximum amount of such insurance available for the
related Mortgaged Property under the national flood insurance program (assuming
that the area in which such Mortgaged Property is located is participating in
such program).

         In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of A:X or better in Best's
(or such other rating that is comparable to such rating) insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first two sentences of this
Section 3.13, it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property or REO Property
a policy complying with the first two sentences of this Section 3.13, and there
shall have been one or more losses which would have been

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covered by such policy, deposit to the Collection Account from its own funds the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself,
the Trustee claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.

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

         Section 3.14 Enforcement of Due-On-Sale Clauses Assumption Agreements.

         The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that the
Servicer shall not be required to take such action if, in its sole business
judgment, the Servicer believes it is not in the best interests of the Trust
Fund and shall not exercise any such rights if prohibited by law from doing so.
If the Servicer reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause or if any of the other conditions set forth in the
proviso to the preceding sentence apply, the Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the Mortgage
Note; provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer, has a credit risk rating at
least equal to that of the original Mortgagor and such substitution is in the
best interest of the Certificateholders as determined by the Servicer. In
connection with any assumption, modification or substitution, the Servicer shall
apply such underwriting standards and follow such practices and procedures as
shall be normal and usual in its general mortgage servicing activities and as it
applies to other mortgage loans owned solely

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<PAGE>

by it. The Servicer shall not take or enter into any assumption and modification
agreement, however, unless (to the extent practicable in the circumstances) it
shall have received confirmation, in writing, of the continued effectiveness of
any applicable hazard insurance policy, or a new policy meeting the requirements
of this Section is obtained. Any fee collected by the Servicer in respect of an
assumption or substitution of liability agreement will be retained by the
Servicer as additional servicing compensation. In connection with any such
assumption, no material term of the Mortgage Note (including, but not limited
to, the related Mortgage Rate and the amount of the Scheduled Payment) may be
amended or modified, except as otherwise required pursuant to the terms thereof.
The Servicer shall notify the Trustee that any such substitution, modification
or assumption agreement has been completed by forwarding to the Trustee the
executed original of such substitution or assumption agreement, which document
shall be added to the related Mortgage File and shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof.

         Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatsoever. For purposes of this Section 3.14, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.

         Section 3.15 Realization Upon Defaulted Mortgage Loans.

         The Servicer shall use its best efforts, consistent with customary
servicing practices as described in Section 3.01, to foreclose upon or otherwise
comparably convert (which may include an acquisition of REO Property) the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.07, and which are not
released from this Agreement pursuant to any other provision hereof. The
Servicer shall use reasonable efforts to realize upon such defaulted Mortgage
Loans in such manner as will maximize the receipt of principal and interest by
the Trustee, taking into account, among other things, the timing of foreclosure
proceedings. The foregoing is subject to the provisions that, in any case in
which Mortgaged Property shall have suffered damage from an uninsured cause, the
Servicer shall not be required to expend its own funds toward the restoration of
such property unless it shall determine in its sole discretion (i) that such
restoration will increase the net proceeds of liquidation of the related
Mortgage Loan to the Trustee, after reimbursement to itself for such expenses,
and (ii) that such expenses will be recoverable by the Servicer through
Insurance Proceeds, Condemnation Proceeds or Liquidation Proceeds from the
related Mortgaged Property, as contemplated in Section 3.11. The Servicer shall
be responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the related property, as contemplated in Section 3.11.

         The proceeds of any liquidation or REO Disposition, as well as any
recovery resulting from a partial collection of Insurance Proceeds, Condemnation
Proceeds or Liquidation Proceeds or any income from an REO Property, will be
applied in the following order of priority:

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<PAGE>

first, to reimburse the Servicer or any Subservicer for any related unreimbursed
Servicing Advances, pursuant to Section 3.11 or 3.17; second, to accrued and
unpaid interest on the Mortgage Loan or REO Imputed Interest, at the Mortgage
Rate, to the date of the liquidation or REO Disposition, or to the Due Date
prior to the Remittance Date on which such amounts are to be distributed if not
in connection with a liquidation or REO Disposition; third, to reimburse the
Servicer for any related unreimbursed P&I Advances, pursuant to Section 3.11;
and fourth, as a recovery of principal of the Mortgage Loan. If the amount of
the recovery so allocated to interest is less than a full recovery thereof, that
amount will be allocated as follows: first, to unpaid Servicing Fees; and
second, as interest at the Mortgage Rate (net of the Servicing Fee Rate). The
portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Servicer or any Subservicer pursuant to Section 3.11 or 3.17.
The portions of the recovery so allocated to interest at the Mortgage Rate (net
of the Servicing Fee Rate) and to principal of the Mortgage Loan shall be
applied as follows: first, to reimburse the Servicer or any Subservicer for any
related unreimbursed Servicing Advances in accordance with Section 3.11 or 3.17,
and second, to the Trustee in accordance with the provisions of Section 4.02,
subject to the last paragraph of Section 3.17 with respect to certain excess
recoveries from an REO Disposition.

         Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Servicer has received actual notice of, or has actual knowledge of
the presence of, hazardous or toxic substances or wastes on the related
Mortgaged Property, or if the Trustee otherwise requests, the Servicer shall
cause an environmental inspection or review of such Mortgaged Property to be
conducted by a qualified inspector. Upon completion of the inspection, the
Servicer shall promptly provide the Trustee with a written report of the
environmental inspection.

         After reviewing the environmental inspection report, the Servicer shall
determine how to proceed with respect to the Mortgaged Property. In the event
(a) the environmental inspection report indicates that the Mortgaged Property is
contaminated by hazardous or toxic substances or wastes and (b) the Servicer
determines to proceed with foreclosure or acceptance of a deed in lieu of
foreclosure, the Servicer shall be reimbursed for all reasonable costs
associated with such foreclosure or acceptance of a deed in lieu of foreclosure
and any related environmental clean-up costs, as applicable, from the related
Liquidation Proceeds, or if the Liquidation Proceeds are insufficient to fully
reimburse the Servicer, the Servicer shall be entitled to be reimbursed from
amounts in the Collection Account pursuant to Section 3.11 hereof. In the event
the Servicer determines not to proceed with foreclosure or acceptance of a deed
in lieu of foreclosure, the Servicer shall be reimbursed from general
collections for all Servicing Advances made with respect to the related
Mortgaged Property from the Collection Account pursuant to Section 3.11 hereof.

         Section 3.16 Release of Mortgage Files.

         (a) Upon the payment in full of any Mortgage Loan, or the receipt by
the Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Servicer will, within five (5) Business
Days of the payment in full, notify the Trustee by a certification (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Collection Account pursuant to Section 3.10 have been or will
be so deposited)

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of a Servicing Officer and shall request delivery to it of the Custodial File.
Upon receipt of such certification and Request for Release, the Trustee shall
promptly release the related Custodial File to the Servicer within five (5)
Business Days. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Collection
Account.

         (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Insurance Policy relating to the Mortgage Loans, the Trustee shall, upon
request of the Servicer and delivery to the Trustee, of a Request for Release,
release the related Custodial File to the Servicer, and the Trustee shall, at
the direction of the Servicer, execute such documents as shall be necessary to
the prosecution of any such proceedings and the Servicer shall retain the
Mortgage File in trust for the benefit of the Trustee. Such Request for Release
shall obligate the Servicer to return each and every document previously
requested from the Custodial File to the Trustee when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or the Mortgage File or such document has been delivered to
an attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Servicer has delivered to the Trustee a certificate of a Servicing Officer
certifying as to the name and address of the Person to which such Mortgage File
or such document was delivered and the purpose or purposes of such delivery.
Upon receipt of a certificate of a Servicing Officer stating that such Mortgage
Loan was liquidated and that all amounts received or to be received in
connection with such liquidation that are required to be deposited into the
Collection Account have been so deposited, or that such Mortgage Loan has become
an REO Property, a copy of the Request for Release of documents shall be
released by the Trustee to the Servicer or its designee.

         Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Servicer any court pleadings, requests for trustee's
sale or other documents reasonably necessary to the foreclosure or trustee's
sale in respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity, or shall
exercise and deliver to the Servicer a power of attorney sufficient to authorize
the Servicer to execute such documents on its behalf. Each such certification
shall include a request that such pleadings or documents be executed by the
Trustee and a statement as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee will not
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.

         Upon receipt of a Request for Release under this Section 3.16, the
Trustee shall deliver the related Custodial File to the Servicer by regular
mail, unless the Servicer requests that the Trustee deliver such Custodial File
to the Servicer by overnight courier (in which case such delivery shall be at
the Servicer's expense). To the extent that the Servicer requires an overnight
courier for such delivery and incurs the related expense due to the Servicer not
having previously received copies of the documents required to be delivered to
the Servicer hereunder, the Unaffiliated Seller shall use commercially
reasonable efforts to assist the Servicer in causing the

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related Originator pursuant to the related Mortgage Loan Purchase Agreement to
reimburse the Servicer for such expense.

         Section 3.17 Title, Conservation and Disposition of REO Property.

         (a) This Section shall apply only to REO Properties acquired for the
account of the Trustee and shall not apply to any REO Property relating to a
Mortgage Loan which was purchased or repurchased from the Trustee pursuant to
any provision hereof. In the event that title to any such REO Property is
acquired, the Servicer shall cause the deed or certificate of sale to be issued
in the name of the Trustee, on behalf of the Certificateholders.

         (b) The Servicer shall manage, conserve, protect and operate each REO
Property for the Trustee solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall 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. The Servicer shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Servicer
deems to be in the best interest of the Trustee. The Servicer shall notify the
Trustee from time to time as to the status of each REO Property.

         (c) [Reserved].

         (d) [Reserved].

         (e) The Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets and shall deposit such funds in the
Collection Account.

         (f) The Servicer shall deposit net of reimbursement to the Servicer for
any related outstanding P&I Advances, Servicing Advances and unpaid Servicing
Fees provided in Section 3.11 hereof, or cause to be deposited, on a daily basis
in the Collection Account all revenues received with respect to the related REO
Property and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of the REO Property.

         (g) The Servicer, upon an REO Disposition, shall be entitled to
reimbursement for any related unreimbursed P&I Advances and Servicing Advances
as well as any unpaid Servicing Fees from proceeds received in connection with
the REO Disposition, as further provided in Section 3.11.

         (h) Any net proceeds from a REO Disposition which are in excess of the
applicable Stated Principal Balance plus all unpaid REO Imputed Interest thereon
through the date of the REO Disposition shall be retained by the Servicer as
additional servicing compensation.

         (i) The Servicer shall use its reasonable best efforts to sell, or
cause the Subservicer to sell, any REO Property as soon as possible, but in no
event later than the

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conclusion of the third calendar year beginning after the year of its
acquisition by the REMIC unless (i) the Servicer applies for an extension of
such period from the Internal Revenue Service pursuant to the REMIC Provisions
and Code Section 856(e)(3), in which event such REO Property shall be sold
within the applicable extension period, or (ii) the Servicer obtains for the
Trustee an Opinion of Counsel, addressed to the Depositor, the Trustee and the
Servicer, to the effect that the holding by the REMIC of such REO Property
subsequent to such period will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code or cause the
REMIC to fail to qualify as a REMIC under the REMIC Provisions or comparable
provisions of relevant state laws at any time. The Servicer shall manage,
conserve, protect and operate each REO Property for the Trustee solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) or result in the receipt by the 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" which is subject to taxation under
Section 860G(a)(1) of the Code. Pursuant to its efforts to sell such REO
Property, the Servicer shall either itself or through an agent selected by the
Servicer protect and conserve such REO Property in the same manner and to such
extent as is customary in the locality where such REO Property is located and
may, incident to its conservation and protection of the interests of the Trustee
on behalf of the Certificateholders, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Trustee on behalf of the
Certificateholders for the period prior to the sale of such REO Property;
provided, however, that any rent received or accrued with respect to such REO
Property qualifies as "rents from real property" as defined in Section 856(d) of
the Code.

         Section 3.18 Notification of Adjustments.

         With respect to each Adjustable Rate Mortgage Loan, the Servicer shall
adjust the Mortgage Rate on the related Adjustment Date and shall adjust the
Scheduled Payment on the related mortgage payment adjustment date, if
applicable, in compliance with the requirements of applicable law and the
related Mortgage and Mortgage Note. The Servicer shall execute and deliver any
and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Rate and Scheduled
Payment adjustments. The Servicer shall promptly, upon written request therefor,
deliver to the Trustee such notifications and any additional applicable data
regarding such adjustments and the methods used to calculate and implement such
adjustments. Upon the discovery by the Servicer or the receipt of notice from
the Trustee that the Servicer has failed to adjust a Mortgage Rate or Scheduled
Payment in accordance with the terms of the related Mortgage Note, the Servicer
shall deposit in the Collection Account from its own funds the amount of any
interest loss caused as such interest loss occurs.

         Section 3.19 Access to Certain Documentation and Information Regarding
the Mortgage Loans.

         The Servicer shall provide, or cause the Subservicer to provide, to the
Depositor, the Unaffiliated Seller, the Certificate Insurer, the Trustee, the
OTS or the FDIC and the examiners and supervisory agents thereof access to the
documentation regarding the Mortgage Loans in its possession. Such access shall
be afforded without charge, but only upon reasonable

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and prior written request and during normal business hours at the offices of the
Servicer or any Subservicer. Nothing in this Section shall derogate from the
obligation of any such party to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of any such
party to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.

         Section 3.20 Documents, Records and Funds in Possession of the Servicer
to be Held for the Trustee.

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

         Section 3.21 Servicing Compensation.

         (a) As compensation for its activities hereunder, the Servicer shall,
with respect to each Mortgage Loan, be entitled to retain from deposits to the
Collection Account and from Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds and REO Proceeds related to such Mortgage Loan, the Servicing
Fee with respect to each Mortgage Loan (less any portion of such amounts
retained by any Subservicer). In addition, the Servicer shall be entitled to
recover unpaid Servicing Fees out of related late collections and as otherwise
permitted under Section 3.11. The right to receive the Servicing Fee may not be
transferred in whole or in part except in connection with the transfer of all of
the Servicer's responsibilities and obligations under this Agreement; provided,
however, that the Servicer may pay from the Servicing Fee any amounts due to a
Subservicer pursuant to a Subservicing Agreement entered into under Section
3.02.

         (b) Additional servicing compensation in the form of assumption or
modification fees, late payment charges, NSF fees, reconveyance fees and other
similar fees and charges (other than Prepayment Charges) shall be retained by
the Servicer only to the extent such fees or charges are received by the
Servicer. The Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to
withdraw from the Collection Account and the Distribution Account, as additional
servicing compensation, interest or other income earned on deposits therein.

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         (c) The Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder (including payment of
premiums for any blanket policy insuring against hazard losses pursuant to
Section 3.13, servicing compensation of the Subservicer to the extent not
retained by it and the fees and expenses of independent accountants and any
agents appointed by the Servicer), and shall not be entitled to reimbursement
therefor except as specifically provided in Section 3.11.

         Section 3.22 Annual Statement as to Compliance.

         The Servicer will deliver or cause to be delivered to the Depositor,
the Rating Agencies, the Unaffiliated Seller, the Certificate Insurer, and the
Trustee on or before March 15th of each calendar year, commencing in 2005, an
Officer's Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Servicer during the preceding calendar year and of
performance under this Agreement has been made under such officer's supervision,
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officers and the nature
and status thereof.

         Section 3.23 Annual Independent Public Accountants' Servicing
Statement; Financial Statements.

         (a) Not later than March 15th of each calendar year commencing in 2005,
the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Depositor, the
Unaffiliated Seller, the Certificate Insurer, the Rating Agencies and the
Trustee a report stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Servicer which includes an
assertion that the Servicer has complied with certain minimum residential
mortgage loan servicing standards, identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association of
America, with respect to the servicing of residential mortgage loans during the
most recently completed calendar year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of residential mortgage loans by
Subservicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Subservicers.

         (b) As soon as available, and in any event within 90 days after the
close of each fiscal year of the Servicer, the Servicer, at its expense, shall
cause the audited balance sheets of the Servicer, as of the end of such fiscal
year and the audited statements of income, changes in equity and cash flows of
the Servicer, for such fiscal year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and period in
the preceding fiscal year, prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by the certificate
of the nationally recognized firm of independent certified public accountants to
be delivered to the Certificate Insurer.

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         Section 3.24 Trustee to Act as Servicer.

         In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), except as
provided under Section 7.02, the Trustee or its successor shall thereupon assume
all of the rights and obligations of the Servicer hereunder arising thereafter
(except that the Trustee shall not be (i) liable for losses of the Servicer
pursuant to Section 3.10 or any acts or omissions of the predecessor Servicer
hereunder, (ii) obligated to make Advances if it is prohibited from doing so by
applicable law, (iii) obligated to effectuate repurchases or substitutions of
Mortgage Loans hereunder, including, but not limited to, repurchases or
substitutions pursuant to Section 2.03, (iv) responsible for expenses of the
predecessor Servicer pursuant to Section 2.03 or (v) deemed to have made any
representations and warranties of the Servicer hereunder). Any such assumption
shall be subject to Section 7.02.

         Every subservicing agreement entered into by the Servicer shall contain
a provision giving the successor Servicer the option to terminate such agreement
in the event a successor Servicer is appointed.

         If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Event of Default), the Trustee (or any other
successor Servicer) may, at its option, succeed to any rights and obligations of
the Servicer under any subservicing agreement in accordance with the terms
thereof; provided that the Trustee (or any other successor Servicer) shall not
incur any liability or have any obligations in its capacity as successor
Servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to succeed to the rights and obligations
of the Servicer thereunder; and the Servicer shall not thereby be relieved of
any liability or obligations under the subservicing agreement arising prior to
the date of such succession.

         The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each subservicing agreement (if any) and the Mortgage Loans then being
serviced thereunder and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.

         Section 3.25 Compensating Interest.

         The Servicer shall remit to the Trustee on each Remittance Date an
amount from its own funds equal to the Compensating Interest payable by the
Servicer for the related Distribution Date.

         Section 3.26 Credit Reporting; Gramm-Leach-Bliley Act.

         (a) With respect to each Mortgage Loan, the Servicer agrees to fully
furnish, in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (i.e., 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.

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         (b) The Servicer shall comply with Title V of the Gramm-Leach-Bliley
Act of 1999 and all applicable regulations promulgated thereunder, relating to
the Mortgage Loans and the related borrowers and shall provide all required
notices thereunder.

         Section 3.27 Advance Facilities.

         With the prior written consent of the Certificate Insurer, the Servicer
is hereby authorized to enter into a financing or other facility (an "Advance
Facility") under which (l) the Servicer sells, assigns or pledges to another
Person (an "Advancing Person") the Servicer's rights under this Agreement to be
reimbursed for any Advances and/or (2) an Advancing Person agrees to fund some
or all P&I Advances or Servicing Advances required to be made by the Servicer
pursuant to this Agreement. Except as provided in the preceding sentence, no
consent of any party is required before the Servicer may enter into an Advance
Facility. Notwithstanding the existence of any Advance Facility under which an
Advancing Person agrees to fund P&I Advances and/or Servicing Advances on the
Servicer's behalf, the Servicer shall remain obligated pursuant to this
Agreement to make P&I Advances and Servicing Advances pursuant to and as
required by this Agreement, and shall not be relieved of such obligations by
virtue of such Advance Facility.

         Reimbursement amounts ("Advance Reimbursement Amounts") shall consist
solely of amounts in respect of P&I Advances and/or Servicing Advances made with
respect to the Mortgage Loans for which the Servicer would be permitted to
reimburse itself in accordance with this Agreement, assuming the Servicer had
made the related P&I Advance(s) and/or Servicing Advance(s).

         The Servicer shall maintain and provide to any successor Servicer a
detailed accounting on a loan-by-loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any Advancing Person. The successor Servicer
shall be entitled to rely on any such information provided by the predecessor
Servicer, and the successor Servicer shall not be liable for any errors in such
information.

         An Advancing Person who purchases or receives an assignment or pledge
of the rights to be reimbursed for P&I Advances and/or Servicing Advances,
and/or whose obligations hereunder are limited to the funding of P&I Advances
and/or Servicing Advances shall not be required to meet the criteria for
qualification of a subservicer set forth in this Agreement.

         The documentation establishing any Advance Facility shall require that
Advance Reimbursement Amounts distributed with respect to each Mortgage Loan be
allocated to outstanding unreimbursed P&I Advances or Servicing Advances (as the
case may be) made with respect to that Mortgage Loan on a "first-in, first out"
(FIFO) basis. Such documentation shall also require the Servicer to provide to
the related Advancing Person or its designee loan-by-loan information with
respect to each Advance Reimbursement Amount distributed to such Advancing
Person or to a trustee or custodian (an "Advance Facility Trustee") on each
Distribution Date, to enable the Advancing Person or Advance Facility Trustee to
make the FIFO allocation of each Advance Reimbursement Amount with respect to
each Mortgage Loan. The Servicer shall remain entitled to be reimbursed pursuant
to the Advance Facility by the Advancing Person or Advance Facility Trustee for
all P&I Advances and Servicing Advances

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funded by the Servicer to the extent the related rights to be reimbursed
therefor have not been sold, assigned or pledged to an Advancing Person.

         Any amendment to this Section 3.27 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 3.27, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee, the Depositor, the Unaffiliated Seller and the Servicer without the
consent of any Certificateholder, but with the consent of the Certificate
Insurer, notwithstanding anything to the contrary in this Agreement. Prior to
entering into an Advance Facility, the Servicer shall notify the lender under
such facility in writing that: (a) the Advances financed by and/or pledged to
the lender are obligations owed to the Servicer on a non-recourse basis payable
only from the cash flows and proceeds received under this Agreement for
reimbursement of such Advances only to the extent provided herein, and the
Trustee is not otherwise obligated or liable to repay any Advances financed by
the lender; (b) the Servicer will be responsible for remitting to the lender the
applicable amounts collected by it as reimbursement for Advances funded by the
lender, subject to the restrictions and priorities created in this Agreement;
(c) the Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between the Servicer and the lender;
(d) if the Servicer is replaced by a successor servicer, the lender shall
continue to be entitled to receive reimbursements as provided in clause (a)
above but shall have no further right to make advances with respect to the
transaction subject to this Agreement; and (e) (i) the pledge, if any, of
Servicer's rights to the lender under the facility conveys no rights (such as a
right to fees after the removal of the Servicer or the right to become a
substitute servicer) under this Agreement, or against the Trust Fund, any
investor in or guarantor of securities issued hereunder, or any person other
than the Servicer, (ii) the Servicer is only pledging assets and rights that it
owns and any purported pledge of any assets or rights that are not property of
the Servicer shall be of force and effect and will not be deemed to create any
additional rights or assets of either the lender or the Servicer and (iii) the
lender shall take such steps as are reasonably necessary to confirm to a
successor servicer that it has no rights in any collateral due or payable on or
after the date of servicing transfer other than the Servicer's rights to
reimbursement of Advances (to be repaid pursuant to the terms of this Agreement)
for Advances made prior to such servicing transfer.

                                   ARTICLE IV

                                DISTRIBUTIONS AND
                            ADVANCES BY THE SERVICER

         Section 4.01 Advances.

         (a) The amount of P&I Advances to be made by the Servicer for any
Remittance Date shall equal, subject to Section 4.01(c), the sum of (i) with
respect to the Mortgage Loans, the aggregate amount of Scheduled Payments (with
each interest portion thereof net of the related Servicing Fee), due on the Due
Date immediately preceding such Remittance Date in respect of such Mortgage
Loans, which Scheduled Payments were not received as of the related
Determination Date, plus (ii) with respect to each REO Property, which REO
Property was acquired during or prior to the related Prepayment Period and as to
which such REO Property an REO Disposition did not occur during the related
Prepayment Period, an

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amount equal to the excess, if any, of the Scheduled Payments (with each
interest portion thereof net of the related Servicing Fee) that would have been
due on the related Due Date in respect of the related Mortgage Loans, over the
net income from such REO Property transferred to the Collection Account for
distribution on such Remittance Date.

         (b) On the Remittance Date, the Servicer shall remit in immediately
available funds to the Trustee an amount equal to the aggregate amount of P&I
Advances, if any, to be made in respect of the Mortgage Loans and REO Properties
for the related Remittance Date either (i) from its own funds, (ii) from the
Collection Account, to the extent of funds held therein for future distribution
(in which case, it will cause to be made an appropriate entry in the records of
Collection Account that Amounts Held For Future Distribution have been, as
permitted by this Section 4.01, used by the Servicer in discharge of any such
P&I Advance) or (iii) in the form of any combination of (i) and (ii) aggregating
the total amount of P&I Advances to be made by the Servicer with respect to the
Mortgage Loans and REO Properties. Any Amounts Held For Future Distribution and
so used shall be appropriately reflected in the Servicer's records and replaced
by the Servicer by deposit in the Collection Account on or before any future
Remittance Date to the extent required.

         (c) The obligation of the Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from coverage under this Agreement, except as otherwise provided
in this Section.

         (d) Notwithstanding anything herein to the contrary, no P&I Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
P&I Advance or Servicing Advance would, if made, constitute a Nonrecoverable P&I
Advance or Nonrecoverable Servicing Advance. The determination by the Servicer
that it has made a Nonrecoverable P&I Advance or a Nonrecoverable Servicing
Advance or that any proposed P&I Advance or Servicing Advance, if made, would
constitute a Nonrecoverable P&I Advance or a Nonrecoverable Servicing Advance,
respectively, shall be evidenced by an Officers' Certificate of the Servicer
delivered to the Trustee.

         (e) Except as otherwise provided herein, the Servicer shall be entitled
to reimbursement pursuant to Section 3.11 hereof for P&I Advances and Servicing
Advances from recoveries from the related Mortgagor or from all Liquidation
Proceeds and other payments or recoveries (including Insurance Proceeds and
Condemnation Proceeds) with respect to the related Mortgage Loan.

         Section 4.02 Priorities of Distribution.

         (a) On each Distribution Date, the Trustee will make the disbursements
and transfers from amounts then on deposit in the Distribution Account in the
following order of priority and to the extent of the Available Funds remaining:

         (i) from the Interest Remittance Amount, in the following order of
    priority:

         (A)   to the Certificate Insurer, the Premium Amount for such
               Distribution Date;

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         (B)   concurrently, with equal priority of payment:

               (1)  payable solely from the Group I Interest Remittance Amount
                    for that Distribution Date, to the Holders of the Class A-1
                    Certificates, the Accrued Certificate Interest and any
                    Unpaid Interest Amounts for the Class A-1 Certificates, and
                    to the extent that the Group I Interest Remittance Amount is
                    less than the Accrued Certificate Interest and any Unpaid
                    Interest Amounts for the Class A-1 Certificates, payable
                    from the Class A-1 Certificates' pro rata portion of any
                    Group II Interest Remittance Amount or Group III Interest
                    Remittance Amount for that Distribution Date remaining after
                    payment of the Accrued Certificate Interest, any Unpaid
                    Interest Amounts and related administrative fees with
                    respect to the Class A-2 Certificates or the Group III Class
                    A Sequential Certificates, as applicable, to the Holders of
                    the Class A-1 Certificates, the unpaid portion of the
                    Accrued Certificate Interest and any Unpaid Interest Amounts
                    for the Class A-1 Certificates;

               (2)  payable solely from the Group II Interest Remittance Amount
                    for that Distribution Date, to the Holders of the Class A-2
                    Certificates, the Accrued Certificate Interest and any
                    Unpaid Interest Amounts for the Class A-2 Certificates, and
                    to the extent that the Group II Interest Remittance Amount
                    is less than the Accrued Certificate Interest and any Unpaid
                    Interest Amounts for the Class A-2 Certificates, payable
                    from the Class A-2 Certificates' pro rata portion of any
                    Group I Interest Remittance Amount or Group III Interest
                    Remittance Amount for that Distribution Date remaining after
                    payment of the Accrued Certificate Interest, any Unpaid
                    Interest Amounts and related administrative fees with
                    respect to the Class A-1 Certificates or the Group III Class
                    A Sequential Certificates, as applicable, to the Holders of
                    the Class A-2 Certificates the unpaid portion of the Accrued
                    Certificate Interest and any Unpaid Interest Amounts for the
                    Class A-2 Certificates; and

               (3)  payable solely from the Group III Interest Remittance Amount
                    for that Distribution Date, to the Holders of the Group III
                    Class A Sequential Certificates, pro rata, the Accrued
                    Certificate Interest and any Unpaid Interest Amounts for the
                    Group III Class A Sequential Certificates, and to the extent
                    that the Group III Interest Remittance Amount is less than
                    the Accrued Certificate Interest and any Unpaid Interest
                    Amounts for the Group III Class A Sequential Certificates,
                    payable from the Group III Class A Sequential Certificates'
                    pro rata portion of any Group I Interest Remittance Amount
                    or Group II Interest Remittance Amount for that Distribution
                    Date remaining after payment of the Accrued Certificate
                    Interest, any Unpaid Interest Amounts and related

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                    administrative fees with respect to the Class A-1
                    Certificates or the Class A-2 Certificates, as applicable,
                    to the Holders of each class of the Group III Class A
                    Sequential Certificates, pro rata, the unpaid portion of the
                    Accrued Certificate Interest and any Unpaid Interest Amounts
                    for the Group III Class A Sequential Certificates;

         (C)   payable from any remaining Interest Remittance Amounts, to the
               Certificate Insurer, any Reimbursement Amount then owing to it on
               account of a prior draw relating to interest on the Class A-1
               Certificates;

         (D)   payable from any remaining Interest Remittance Amounts, to the
               Class M-1 Certificates, the Accrued Certificate Interest for such
               Class on such Distribution Date;

         (E)   payable from any remaining Interest Remittance Amounts, to the
               Class M-2 Certificates, the Accrued Certificate Interest for such
               class on such Distribution Date;

         (F)   payable from any remaining Interest Remittance Amounts, to the
               Class M-3 Certificates, the Accrued Certificate Interest for such
               Class on such Distribution Date;

         (G)   payable from any remaining Interest Remittance Amounts, to the
               Class B-1 Certificates, the Accrued Certificate Interest for such
               Class on such Distribution Date;

         (H)   payable from any remaining Interest Remittance Amounts, to the
               Class B-2 Certificates, the Accrued Certificate Interest for such
               Class on such Distribution Date; and

         (I)   payable from any remaining Interest Remittance Amounts, to the
               Class B-3 Certificates, the Accrued Certificate Interest for such
               Class on such Distribution Date;

         (ii) (x) on each Distribution Date (A) before the related Stepdown Date
     or (B) with respect to which a Trigger Event is in effect, to the Holders
     of the Class or Classes of Offered Certificates then entitled to
     distributions of principal as set forth below, and to the Certificate
     Insurer, from the amounts remaining on deposit in the Distribution Account
     after making distributions pursuant to clause (i) above, an amount equal to
     the Principal Distribution Amount in the following order of priority:

         (A)   concurrently, with equal priority of payment:

               (1)  to the Holders of the Class A-1 Certificates, the Group I
                    Allocation Percentage of the Principal Distribution Amount,
                    until the Certificate Balance of the Class A-1 Certificates
                    has been reduced to zero;

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               (2)  to the Holders of the Class A-2 Certificates, the Group II
                    Allocation Percentage of the Principal Distribution Amount,
                    until the Certificate Balance of the Class A-2 Certificates
                    has been reduced to zero ;

               (3)  to the Holders of the Group III Class A Sequential
                    Certificates, the Group III Allocation Percentage of the
                    Principal Distribution Amount, first to the Class A-3
                    Certificates until those Certificates are reduced to zero
                    and then to the Class A-4 Certificates until those
                    Certificates are reduced to zero;

         (B)   to the Certificate Insurer, the amount of any Reimbursement
               Amount then owing to the Certificate Insurer on account of a
               prior draw relating to principal on the Class A-1 Certificates;

         (C)   concurrently, with equal priority of payment:

               (1) if the Class Certificate Balance of the Class A-1
         Certificates has been reduced to zero, then to the Holders of the Class
         A-2 Certificates and the Group III Class A Sequential Certificates pro
         rata, the amount of any remaining Principal Distribution Amount, until
         the Class Certificate Balance of each Class of the Class A Certificates
         has been reduced to zero, such amount to be allocated pro rata to the
         Class A-2, and Group III Class A Sequential Certificates, with amounts
         allocated to the Group III Class A Sequential Certificates further
         allocated first to the Class A-3 Certificates until those Certificates
         are reduced to zero and then to the Class A-4 Certificates until those
         Certificates are reduced to zero; provided, however, that on and after
         the Distribution Date on which the aggregate Class Certificate Balances
         of the Subordinated Certificates and the Class X Certificates have been
         reduced to zero, any principal distributions allocated to the Group III
         Class A Sequential Certificates shall be allocated pro rata among the
         Class A-3 and Class A-4 Certificates, based on their respective Class
         Certificate Balances, and distributed concurrently to the Class A-3 and
         Class A-4 Certificates; or

               (2) if the Class Certificate Balance of the Class A-2
         Certificates has been reduced to zero, then to the Holders of the Class
         A-1 Certificates and the Group III Class A Sequential Certificates pro
         rata, the amount of any remaining Principal Distribution Amount, until
         the Class Certificate Balance of each Class of the Class A Certificates
         has been reduced to zero, such amount to be allocated pro rata to the
         Class A-1, and Group III Class A Sequential Certificates, with amounts
         allocated to the Group III Class A Sequential Certificates further
         allocated first to the Class A-3 Certificates until those Certificates
         are reduced to zero and then to the Class A-4 Certificates until those
         Certificates are reduced to zero; provided, however, that on and after
         the Distribution Date on which the aggregate Class Certificate Balances
         of the Subordinated Certificates and the Class X Certificates have been
         reduced to zero, any principal distributions allocated to the Group III
         Class A

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         Sequential Certificates shall be allocated pro rata among the Class A-3
         and Class A-4 Certificates, based on their respective Class Certificate
         Balances, and distributed concurrently to the Class A-3 and Class A-4
         Certificates; or

               (3) if the Class Certificate Balance of each Class of the Group
         III Class A Sequential Certificates has been reduced to zero, then to
         the Holders of the Class A-1 Certificates and the Class A-2
         Certificates pro rata, the amount of any remaining Principal
         Distribution Amount, until the Class Certificate Balance of each Class
         of the Class A Certificates has been reduced to zero, such amount to be
         allocated pro rata to the Class A-1, and Class A-2 Certificates;

         (D)   sequentially, to the Class M-1, Class M-2, Class M-3, Class B-1,
               Class B-2 and Class B-3 Certificates, in that order, until the
               respective Class Certificate Balances are reduced to zero;

             (y) on each Distribution Date (1) on and after the related Stepdown
     Date and (2) as long as a Trigger Event is not in effect, to the Holders of
     the related Class or Classes of Offered Certificates then entitled to
     distribution of principal, from amounts remaining on deposit in the
     Distribution Account after making distributions pursuant to clause (i)
     above, an amount equal to, in the aggregate, the Principal Distribution
     Amount in the following amounts and order of priority:

         (A)   concurrently, with equal priority of payment:

               (1)  to the Holders of the Class A-1 Certificates, the Group I
                    Allocation Percentage of the lesser of the Principal
                    Distribution Amount and the Class A Principal Distribution
                    Amount, until the Class Certificate Balance of the Class A-1
                    Certificates has been reduced to zero;

               (2)  to the Holders of the Class A-2 Certificates, the Group II
                    Allocation Percentage of the lesser of the Principal
                    Distribution Amount and the Class A Principal Distribution
                    Amount, until the Class Certificate Balance of the Class A-2
                    Certificates has been reduced to zero; and

               (3)  to the Holders of the Group III Class A Sequential
                    Certificates, the Group III Allocation Percentage of the
                    lesser of the Principal Distribution Amount and the Class A
                    Principal Distribution Amount, until the Class Certificate
                    Balance of each Class of Group III Class A Sequential
                    Certificates has been reduced to zero, with amounts
                    allocated to the Group III Class A Sequential Certificates
                    further allocated first to the Class A-3 Certificates until
                    those Certificates are reduced to zero and then to the Class
                    A-4 Certificates until those Certificates are reduced to
                    zero;

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<PAGE>

         (B)   to the Certificate Insurer, the amount of any Reimbursement
               Amount then owing to the Certificate Insurer on account of a
               prior draw relating to principal on the Class A-1 Certificates;

         (C)   concurrently, with equal priority of payment:

               (1) if the Class Certificate Balance of the Class A-1
         Certificates has been reduced to zero, then to the Holders of the Class
         A-2 Certificates and the Group III Class A Sequential Certificates pro
         rata, any remaining amounts allocable but not required to be
         distributed pursuant to clauses (A)(1) or (B) above, until the Class
         Certificate Balance of each Class of the Class A Certificates has been
         reduced to zero, such amount to be allocated pro rata to the Class A-2,
         and Group III Class A Sequential Certificates, with amounts allocated
         to the Group III Class A Sequential Certificates further allocated
         first to the Class A-3 Certificates until those Certificates are
         reduced to zero and then to the Class A-4 Certificates until those
         Certificates are reduced to zero; or

               (2) if the Class Certificate Balance of the Class A-2
         Certificates has been reduced to zero, then to the Holders of the Class
         A-1 Certificates and the Group III Class A Sequential Certificates pro
         rata, any remaining amounts allocable but not required to be
         distributed pursuant to clauses (A)(2) or (B) above, until the Class
         Certificate Balance of each Class of the Class A Certificates has been
         reduced to zero, such amount to be allocated pro rata to the Class A-1,
         and Group III Class A Sequential Certificates, with amounts allocated
         to the Group III Class A Sequential Certificates further allocated
         first to the Class A-3 Certificates until those Certificates are
         reduced to zero and then to the Class A-4 Certificates until those
         Certificates are reduced to zero; or

               (3) if the Class Certificate Balance of each Class of the Group
         III Class A Sequential Certificates has been reduced to zero, then to
         the Holders of the Class A-1 Certificates and the Class A-2
         Certificates pro rata, any remaining amounts allocable but not required
         to be distributed pursuant to clauses (A)(3) or (B) above, until the
         Class Certificate Balance of each Class of the Class A Certificates has
         been reduced to zero, such amount to be allocated pro rata to the Class
         A-1, and Class A-2 Certificates;

         (D)   to the Class M-1 Certificates, the lesser of the remaining
               Principal Distribution Amount and the Class M-1 Principal
               Distribution Amount, until the Class Certificate Balance thereof
               has been reduced to zero;

         (E)   to the Class M-2 Certificates, the lesser of the remaining
               Principal Distribution Amount and the Class M-2 Principal
               Distribution Amount, until the Class Certificate Balance thereof
               has been reduced to zero;

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         (F)   to the Class M-3 Certificates, the lesser of the remaining
               Principal Distribution Amount and the Class M-3 Principal
               Distribution Amount, until the Class Certificate Balance thereof
               has been reduced to zero;

         (G)   to the Class B-1 Certificates, the lesser of the remaining
               Principal Distribution Amount and the Class B-1 Principal
               Distribution Amount, until the Class Certificate Balance thereof
               has been reduced to zero;

         (H)   to the Class B-2 Certificates, the lesser of the remaining
               Principal Distribution Amount and the Class B-2 Principal
               Distribution Amount, until the Class Certificate Balance thereof
               has been reduced to zero; and

         (I)   to the Class B-3 Certificates, the lesser of the remaining
               Principal Distribution Amount and the Class B-3 Principal
               Distribution Amount, until the Class Certificate Balance thereof
               has been reduced to zero;

         (iii) any amount remaining in the Distribution Account after the
     distributions in clauses (i) and (ii) above, plus as specifically indicated
     below, from amounts on deposit in the Excess Reserve Fund Account, shall be
     distributed in the following order of priority:

         (A)   to the Certificate Insurer, to the extent of any remaining
               Reimbursement Amount then owing to it;

         (B)   to the Holders of the Class M-1 Certificates, any Unpaid Interest
               Amounts for such Class;

         (C)   to the Holders of the Class M-1 Certificates, any Unpaid Realized
               Loss Amount for such Class;

         (D)   to the Holders of the Class M-2 Certificates, any Unpaid Interest
               Amounts for such Class;

         (E)   to the Holders of the Class M-2 Certificates, any Unpaid Realized
               Loss Amount for such Class;

         (F)   to the Holders of the Class M-3 Certificates, any Unpaid Interest
               Amounts for such Class;

         (G)   to the Holders of the Class M-3 Certificates, any Unpaid Realized
               Loss Amount for such Class;

         (H)   to the Holders of the Class B-1 Certificates, any Unpaid Interest
               Amounts for such Class;

         (I)   to the Holders of the Class B-1 Certificates, any Unpaid Realized
               Loss Amount for such Class;

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<PAGE>

         (J)   to the Holders of the Class B-2 Certificates, any Unpaid Interest
               Amounts for such Class;

         (K)   to the Holders of the Class B-2 Certificates, any Unpaid Realized
               Loss Amount for such Class;

         (L)   to the Holders of the Class B-3 Certificates, any Unpaid Interest
               Amounts for such Class;

         (M)   to the Holders of the Class B-3 Certificates, any Unpaid Realized
               Loss Amount for such Class;

         (N)   to the Excess Reserve Fund Account, the amount of any Basis Risk
               Payment for such Distribution Date;

         (O)   (i) from any Group II/Group III Class A Interest Rate Cap Payment
               on deposit in the Excess Reserve Fund Account with respect to
               that Distribution Date, an amount equal to any unpaid remaining
               Basis Risk Carry Forward Amount with respect to the Class A-2 and
               Group III Class A Sequential Certificates for that Distribution
               Date, allocated (a) first, between the Class A-2, Class A-3 and
               Class A-4 Certificates pro rata, based upon their respective
               Class Certificate Balances and (b) second, any remaining amounts
               to the Class A-2, Class A-3 and Class A-4 Certificates, pro rata,
               based on any Basis Risk Carry Forward Amounts remaining unpaid,
               in order to reimburse such unpaid amounts, (ii) from any Class M
               Interest Rate Cap Payment on deposit in the Excess Reserve Fund
               Account with respect to that Distribution Date, an amount equal
               to any unpaid remaining Basis Risk Carry Forward Amount with
               respect to the Class M Certificates for that Distribution Date,
               allocated (a) first, among the Class M-1, Class M-2 and Class M-3
               Certificates pro rata, based upon their respective Class
               Certificate Balances and (b) second, any remaining amounts to the
               Class M-1, Class M-2 and Class M-3 Certificates, pro rata, based
               on any Basis Risk Carry Forward Amounts remaining unpaid, in
               order to reimburse such unpaid amounts, and (iii) from any Class
               B Interest Rate Cap Payment on deposit in the Excess Reserve Fund
               Account with respect to that Distribution Date, an amount equal
               to any unpaid remaining Basis Risk Carry Forward Amount with
               respect to the Class B Certificates for that Distribution Date,
               allocated (a) first, among the Class B-1, Class B-2 and Class B-3
               Certificates pro rata, based upon their respective Class
               Certificate Balances and (b) second, any remaining amounts to the
               Class B-1, Class B-2 and Class B-3 Certificates, pro rata, based
               on any Basis Risk Carry Forward Amounts remaining unpaid, in
               order to reimburse such unpaid amounts;

         (P)   from amounts on deposit in the Excess Reserve Fund Account (not
               including any Interest Rate Cap Payments included in that
               account) with respect to such Distribution Date, an amount equal
               to any Basis Risk

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               Carry Forward Amount for such Distribution Date in the same order
               and priority in which Accrued Certificate Interest is allocated
               among those Classes of Certificates;

         (Q)   to the Holders of the Class P Certificates, the outstanding
               principal balance thereof, if any, and to the Holders of the
               Class X Certificates, the remainder of the Class X Distributable
               Amount not distributed pursuant to Sections 4.02(a)(iii)(A)-(P)
               (to the extent stated in clause (i) of the definition of Class X
               Distributable Amount, as interest, and to the extent stated in
               clause (ii) of the definition of Class X Distributable Amount, as
               principal); and

         (R)   to the Holders of the Class R Certificates, any remaining amount.

     In furtherance of the foregoing, any amounts payable to the Class A-1,
Class A-2, or Group III Class A Sequential Certificates from remaining Interest
Remittance Amounts on mortgage loans included in loan groups not related to such
Class of Certificates, will be distributed pro rata among such non-related Class
A Certificates based on the remaining Accrued Certificate Interest for such
Class of Class A Certificates (after taking into account payments of Accrued
Certificate Interest from Interest Remittance Amount from the related loan
group) over the total amount of remaining Accrued Certificate Interest for all
such non-related Class of Class A Certificates (after taking into account
payments of Accrued Certificate Interest from Interest Remittance Amount from
the related loan groups).

         (b) On each Distribution Date, all amounts representing Prepayment
Charges from the Mortgage Loans received during the related Prepayment Period
will be distributed to the Holders of the Class P Certificates.

         (c) On the March 2004, April 2004 and May 2004 Distribution Dates, the
Trustee shall transfer from the Capitalized Interest Account to the Distribution
Account the Capitalized Interest Requirement, if any, for such Distribution
Date.

         (d) On the Distribution Date following either the final Subsequent
Transfer Date or May 24, 2004, whichever date is earlier, any amounts remaining
in the Capitalized Interest Account and all Pre-Funding Earnings in the
Pre-Funding Accounts, after taking into account the transfers in respect of the
Distribution Date described in clause (c) above, shall be paid by the Trustee to
the Unaffiliated Seller.

         (e) On each Subsequent Transfer Date, the Unaffiliated Seller shall
instruct in writing the Trustee to withdraw from related Pre-Funding Account an
amount equal to 100% of the aggregate Stated Principal Balances as of the
related Subsequent Cut-off Date of the Subsequent Mortgage Loans sold to the
Trust Fund on such Subsequent Transfer Date and pay such amount to or upon the
order of the Unaffiliated Seller upon satisfaction of the conditions set forth
in Section 2.01(c) with respect to such transfer. The Trustee may conclusively
rely on such written instructions from the Unaffiliated Seller.

         (f) If the Pre-Funding Amount available in any Pre-Funding Account
(exclusive of Pre-Funding Earnings) has been reduced to $100,000 or less by the
close of

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business on April 1, 2004 then, on the April 26, 2004 Distribution Date, after
giving effect to any reductions in such Pre-Funding Amount on such date, the
Trustee shall withdraw from the related Pre-Funding Account on such date and
deposit in the Distribution Account the amount on deposit in such Pre-Funding
Account other than any Pre-Funding Earnings; if the Pre-Funding Amount available
in such Pre-Funding Account has not been reduced to zero by the close of
business on May 24, 2004, the Trustee shall withdraw from such Pre-Funding
Account the amount on deposit therein, other than the Pre-Funding Earnings, and
deposit such amount on the May 25, 2004 Distribution Date into the Distribution
Account. Any amount deposited into the Distribution Account pursuant to the
preceding sentence from the Group I Pre-Funding Account shall be distributed
first, to the Holders of the Class A-1 Certificates until those certificates are
reduced to zero, second, pro rata based on their relative Class Certificate
Balances immediately prior to the related Distribution Date, to the Holders of
the Class A-2 Certificates and the Group III Class A Sequential Certificates
until those Certificates are reduced to zero and third, pro rata based on their
relative Class Certificate Balances immediately prior to the related
Distribution Date, to the Holders of the Class M Certificates and the Class B
Certificates, as a separate payment of principal, on the related Distribution
Date. Any amount deposited into the Distribution Account pursuant to the
preceding sentence from the Group II Pre-Funding Account shall be distributed
first, to the Holders of the Class A-2 Certificates until those Certificates are
reduced to zero, second, pro rata based on their relative Class Certificate
Balances immediately prior to the related Distribution Date, to the Holders of
the Class A-1 Certificates and the Group III Class A Sequential Certificates
until those certificates are reduced to zero and third, pro rata based on their
relative Class Certificate Balances immediately prior to the related
Distribution Date, to the Holders of the Class M Certificates and Class B
Certificates, as a separate payment of principal, on the related Distribution
Date. Any amount deposited into the Distribution Account pursuant to the
preceding sentence from the Group III Pre-Funding Account shall be distributed
first, to the Holders of the Group III Class A Sequential Certificates until
those Certificates are reduced to zero, second, to the Holders of the Class A-4
Certificates until those Certificates are reduced to zero, third, pro rata based
on their relative Class Certificate Balances immediately prior to the related
Distribution Date, to the Holders of the Class A-1 Certificates and the Class
A-2 Certificates until those Certificates are reduced to zero and fourth, pro
rata based on their relative Class Certificate Balances immediately prior to the
related Distribution Date, to the Holders of the Class M Certificates and Class
B Certificates.

         (g) On any Distribution Date, any Relief Act Shortfalls and Net
Prepayment Interest Shortfalls for such Distribution Date will be allocated as a
reduction in the following order:

         (1) First, to the amount of interest payable to the Class X
     Certificates; and

         (2) Second, pro rata, as a reduction of the Accrued Certificate
     Interest for the Class A-1, Class A-2, Class A-3, Class A-4, Class M-1,
     Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates,
     based on the amount of interest to which such Classes would otherwise be
     entitled.

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         Section 4.03 Monthly Statements to Certificateholders.

         (a) Not later than each Distribution Date, the Trustee shall make
available to each Certificateholder, the Servicer, the Depositor, the
Unaffiliated Seller, the Certificate Insurer and each Rating Agency a statement
setting forth with respect to the related distribution:

         (i) the amount thereof allocable to principal, separately identifying
     the aggregate amount of any Principal Prepayments and Liquidation Proceeds
     included therein;

         (ii) the amount thereof allocable to interest, any Unpaid Interest
     Amounts included in such distribution and any remaining Unpaid Interest
     Amounts after giving effect to such distribution, any Basis Risk Carry
     Forward Amount for such Distribution Date and the amount of all Basis Risk
     Carry Forward Amount covered by withdrawals from the Excess Reserve Fund
     Account on such Distribution Date;

         (iii) if the distribution to the Holders of such Class of Certificates
     is less than the full amount that would be distributable to such Holders if
     there were sufficient funds available therefor, the amount of the shortfall
     and the allocation thereof as between principal and interest, including any
     Basis Risk Carry Forward Amount not covered by amounts in the Excess
     Reserve Fund Account;

         (iv) the Class Certificate Balance of each Class of Certificates after
     giving effect to the distribution of principal on such Distribution Date;

         (v) the Pool Stated Principal Balance for the following Distribution
     Date;

         (vi) the amount of the Servicing Fees paid to or retained by the
     Servicer or Subservicer (with respect to the Subservicers, in the
     aggregate) with respect to such Distribution Date;

         (vii) the Pass-Through Rate for each such Class of Certificates with
     respect to such Distribution Date;

         (viii) the amount of Advances included in the distribution on such
     Distribution Date and the aggregate amount of Advances reported by the
     Servicer as outstanding as of the close of business on such Distribution
     Date;

         (ix) the number and aggregate Scheduled Principal Balances of Mortgage
     Loans (1) as to which the Scheduled Payment is delinquent 31 to 60 days, 61
     to 90 days and 91 or more days, (2) that have become REO Property, (3) that
     are in foreclosure and (4) that are in bankruptcy, in each case as of the
     close of business on the last Business Day of the immediately preceding
     month;

         (x) with respect to any Mortgage Loan that became an REO Property
     during the preceding calendar month, the loan number and Stated Principal
     Balance of such Mortgage Loan as of the close of business on the
     Determination Date preceding such Distribution Date and the date of
     acquisition thereof;

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         (xi) the total number and principal balance of any REO Properties (and
     market value, if available) as of the close of business on the
     Determination Date preceding such Distribution Date;

         (xii) whether a Trigger Event has occurred and is continuing (including
     the calculation of thereof and the aggregate outstanding balance of all 60+
     Day Delinquent Loans);

         (xiii) the amount on deposit in the Excess Reserve Fund Account (after
     giving effect to distributions on such Distribution Date);

         (xiv) the aggregate amount of Applied Realized Loss Amounts incurred
     during the preceding calendar month and aggregate Applied Realized Loss
     Amounts through such Distribution Date;

         (xv) the amount of any Net Monthly Excess Cash Flow on such
     Distribution Date and the allocation thereof to the Certificateholders with
     respect to Applied Realized Loss Amounts and Unpaid Interest Amounts;

         (xvi) the Subordinated Amount and Required Subordinated Amount;

         (xvii) the Interest Remittance Amount, the Principal Remittance Amount
     and the Prepayment Charges remitted by Servicer with respect to that
     Distribution Date;

         (xviii) the Pre-Funded Amount as of the end of the prior Due Period;

         (xix) the amount of any principal prepayment on the Certificates
     resulting from the application of unused moneys in the Pre-Funding
     Accounts;

         (xx) the Class A-1 Deficiency and the Insured Payment for such
     Distribution Date;

         (xxi) the Reimbursement Amount immediately prior to such Distribution
     Date, and the amount of any payments to the Certificate Insurer on account
     thereof on such Distribution Date; and

         (xxii) the Group II/Group III Class A Interest Rate Cap Payment, if
     any, the Class M Interest Rate Cap Payment, if any, and the Class B
     Interest Rate Cap Payment, if any, for such Distribution Date.

         (b) The Trustee's responsibility for providing the above statement is
limited to the availability, timeliness and accuracy of the information derived
from the Servicer pursuant to Section 4.03(d) below or, in the case of the
Reimbursement Amount, from the Certificate Insurer. The Trustee will provide the
above statement via the Trustee's internet website, except that the Trustee
shall deliver a hard copy of such statement to the Certificate Insurer on each
Distribution Date. The Trustee's website will initially be located at
https://www.corporatetrust.db.com and assistance in using the website can be
obtained by calling

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the Trustee's investor relations desk at 1-800-735-7777. A paper copy of the
statement will also be made available upon request.

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

         (d) Not later than the Determination Date, the Servicer shall furnish
to the Trustee a monthly remittance advice statement containing such information
as shall be reasonably requested by the Trustee to provide the reports required
by Section 4.03(a) as to the accompanying remittance and the period ending on
the close of business on the last Business Day of the immediately preceding
month.

         The Servicer shall furnish to the Trustee an individual loan accounting
report, as of the last Business Day of each month, to document Mortgage Loan
payment activity on an individual Mortgage Loan basis. With respect to each
month, the corresponding individual loan accounting report (in electronic
format) shall be received by the Trustee no later than the related Determination
Date, which report shall contain the following:

         (i) with respect to each Scheduled Payment, the amount of such
     remittance allocable to principal (including a separate breakdown of any
     Principal Prepayment, including the date of such prepayment, and any
     Prepayment Charges, along with a detailed report of interest on principal
     prepayment amounts remitted in accordance with Section 3.25);

         (ii) with respect to each Scheduled Payment, the amount of such
     remittance allocable to interest and assumption fees;

         (iii) the amount of servicing compensation received by the Servicer
     during the prior distribution period;

         (iv) the individual and aggregate Stated Principal Balance of the
     Mortgage Loans (combined and for each of the Group I, Group II and Group
     III Mortgage Loans);

         (v) the individual and aggregate Scheduled Principal Balances of the
     Mortgage Loans (combined and for each of the Group I, Group II and Group
     III Mortgage Loans);

         (vi) the aggregate of any expenses reimbursed to the Servicer during
     the prior distribution period pursuant to Section 3.05 and 3.11;

         (vii) the number and aggregate Scheduled Principal Balances of Group I
     Mortgage Loans (a) as to which the Scheduled Payment is delinquent (1) 31
     to 60 days,

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<PAGE>

     (2) 61 to 90 days and (3) 91 days or more; (b) as to which foreclosure has
     commenced; (c) as to which REO Property has been acquired and (d) that are
     in bankruptcy;

         (viii) the number and aggregate Scheduled Principal Balances of Group
     II Mortgage Loans (a) as to which the Scheduled Payment is delinquent (1)
     31 to 60 days, (2) 61 to 90 days and (3) 91 days or more; (b) as to which
     foreclosure has commenced; (c) as to which REO Property has been acquired
     and (d) that are in bankruptcy; and

         (ix) the number and aggregate Scheduled Principal Balances of Group III
     Mortgage Loans (a) as to which the Scheduled Payment is delinquent (1) 31
     to 60 days, (2) 61 to 90 days and (3) 91 days or more; (b) as to which
     foreclosure has commenced; (c) as to which REO Property has been acquired
     and (d) that are in bankruptcy.

         Section 4.04 Certain Matters Relating to the Determination of LIBOR.

         LIBOR shall be calculated in accordance with the definition of LIBOR.
Until all of the LIBOR Certificates are paid in full, the Trustee will at all
times retain at least four Reference Banks for the purpose of determining LIBOR
with respect to each Interest Determination Date. The Trustee, after
consultation with the Depositor, initially shall designate the Reference Banks.
Each "Reference Bank" shall be a leading bank engaged in transactions in
Eurodollar deposits in the international Eurocurrency market, shall not control,
be controlled by, or be under common control with, the Trustee and shall have an
established place of business in London. If any such Reference Bank should be
unwilling or unable to act as such or if the Trustee should terminate a
Reference Bank, the Trustee, after consultation with the Depositor, shall
promptly appoint or cause to be appointed another Reference Bank. The Trustee
shall have no liability or responsibility to any Person for (i) the selection of
any Reference Bank for purposes of determining LIBOR or (ii) any inability to
retain at least four Reference Banks which is caused by circumstances beyond its
reasonable control.

         The Pass-Through Rate for each Class of LIBOR Certificates for each
Interest Accrual Period shall be determined by the Trustee on each LIBOR
Determination Date so long as the LIBOR Certificates are outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes corresponding
to the LIBOR Certificates in the table relating to the Certificates in the
Preliminary Statement. The Trustee shall not have any liability or
responsibility to any Person for its inability, following a good-faith
reasonable effort, to obtain quotations from the Reference Banks or to determine
the arithmetic mean referred to in the definition of LIBOR, all as provided for
in this Section 4.04 and the definition of LIBOR. The establishment of LIBOR and
each Pass-Through Rate for the LIBOR Certificates by the Trustee shall (in the
absence of manifest error) be final, conclusive and binding upon each Holder of
a Certificate and the Trustee.

         Section 4.05 The Certificate Insurance Policy.

         (a) Within two (2) days following each Remittance Date, the Trustee
shall determine with respect to the immediately following Distribution Date, the
amount to be on deposit in the Distribution Account on such Distribution Date as
a result of the (i) Servicer's remittance of the Interest Remittance Amount and
the Principal Remittance Amount on the

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related Remittance Date, and (ii) any transfers to the Distribution Account made
from the Capitalized Interest Account and/or the Pre-Funding Accounts relating
to such Distribution Date pursuant to Section 4.02 hereof, excluding the amount
of any Insured Payment.

         (b) If on any Distribution Date there is a Class A-1 Deficiency, the
Trustee shall complete a Notice in the form of Exhibit A to the Certificate
Insurance Policy and submit such notice to the Certificate Insurer no later than
12:00 noon New York City time on the second Business Day preceding such
Distribution Date as a claim for an Insured Payment in an amount equal to such
Class A-1 Deficiency.

         (c) The Trustee shall establish a separate Eligible Account for the
benefit of Holders of the Class A-1 Certificates and the Certificate Insurer,
referred to herein as the "Insurance Payment Account," over which the Trustee
shall have exclusive control and sole right of withdrawal. The Trustee shall
deposit upon receipt any amount paid under the Certificate Insurance Policy in
the Insurance Payment Account and distribute such amount only for purposes of
payment to the Class A-1 Certificateholders of the Insured Amount and such
amount may not be applied to satisfy any costs, expenses or liabilities of the
Servicer, the Trustee or the Trust Fund. Amounts paid under the Certificate
Insurance Policy, to the extent needed to pay the Insured Amount, shall be
transferred to the Distribution Account on the related Distribution Date and
disbursed by the Trustee to the Class A-1 Certificateholders in accordance with
Section 4.02. It shall not be necessary for such payments to be made by checks
or wire transfers separate from the checks or wire transfers used to pay other
distributions to the Class A-1 Certificateholders with other funds available to
make such payment. However, the amount of any payment of principal or of
interest on the Class A-1 Certificates to be paid from funds transferred from
the Insurance Payment Account shall be noted as provided in paragraph (d) below
in the Certificate Register and in the statement to be furnished to Holders of
such Certificates pursuant to Section 4.03(a). Funds held in the Insurance
Payment Account shall not be invested. Any funds remaining in the Insurance
Payment Account on the first Business Day following a Distribution Date shall be
returned to the Certificate Insurer pursuant to the written instructions of the
Certificate Insurer by the end of such Business Day.

         (d) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Class A-1 Certificate from
moneys received under the Certificate Insurance Policy. The Certificate Insurer
shall have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.

         (e) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Insured Payment has been voided in whole
or in part as a preference payment under applicable bankruptcy law, the Trustee
shall so notify the Certificate Insurer, shall comply with the provisions of the
Certificate Insurance Policy to obtain payment by the Certificate Insurer of
such voided Insured Payment, and shall, at the time it provides notice to the
Certificate Insurer, notify, by mail to the Class A-1 Certificateholders of the
affected Certificates that, in the event any Class A-1 Certificateholder's
Insured Payment is so recovered, such Class A-1 Certificateholder will be
entitled to payment pursuant to the Certificate Insurance Policy, a copy of
which shall be made available through the Trustee, the Certificate Insurer or
the Certificate Insurer's fiscal agent, if any, and the Trustee shall furnish to

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the Certificate Insurer or its fiscal agent, if any, its records evidencing the
payments which have been made by the Trustee and subsequently recovered from the
Class A-1 Certificateholders, and dates on which such payments were made.

         (f) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Class A-1
Certificates. Each Class A-1 Certificateholder, by its purchase of Class A-1
Certificates, the Servicer and the Trustee agree that the Certificate Insurer
(so long as no Certificate Insurer Default exists) may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without limitation, (i) the
direction of any appeal of any order relating to such Preference Claim and (ii)
the posting of any surety, supersedes or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to, and each Class A-1 Certificateholder, the
Servicer and the Trustee hereby delegate and assign to the Certificate Insurer,
to the fullest extent permitted by law, the rights of the Trustee, the Servicer
and each Class A-1 Certificateholder in the conduct of any such Preference
Claim, including, without limitation, all rights of any party to any adversary
proceeding or action with respect to any court order issued in connection with
any such Preference Claim.

         (g) The Trustee shall, upon retirement of the Class A-1 Certificates,
furnish to the Certificate Insurer a notice of such retirement, and, upon
retirement of the Class A-1 Certificates and the expiration of the term of the
Certificate Insurance Policy, surrender the Certificate Insurance Policy to the
Certificate Insurer for cancellation.

         Section 4.06 Effect of Payments by the Certificate Insurer;
Subrogation.

         Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Class A-1 Certificates which is made
with moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of the Class A-1 Certificates from the Trust
Fund. The Depositor, the Servicer and the Trustee acknowledge, and each Holder
by its acceptance of a Class A-1 Certificate agrees, that without the need for
any further action on the part of the Certificate Insurer, the Depositor, the
Servicer, the Trustee or the Certificate Registrar (a) to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on the Class A-1 Certificates to the Holders of such
Class A-1 Certificates, the Certificate Insurer will be fully subrogated to, and
each Class A-1 Certificateholder, the Servicer and the Trustee hereby delegate
and assign to the Certificate Insurer, to the fullest extent permitted by law,
the rights of such Holders to receive such principal and interest from the Trust
Fund, including, without limitation, any amounts due to the Class A-1
Certificateholders in respect of securities law violations arising from the
offer and sale of the Class A-1 Certificates, and (b) the Certificate Insurer
shall be paid such amounts from the sources and in the manner provided herein
for the payment of such amounts and as provided in the Insurance and Indemnity
Agreement. The Trustee and the Servicer shall cooperate in all respects with any
reasonable request by the Certificate Insurer for action to preserve or enforce
the Certificate Insurer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Holders as otherwise set
forth herein.

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         Section 4.07 Allocation of Applied Realized Loss Amounts.

         Any Applied Realized Loss Amounts will be allocated to the most junior
Class of Subordinated Certificates then outstanding in reduction of the Class
Certificate Balance thereof.

                                   ARTICLE V

                                THE CERTIFICATES

         Section 5.01 The Certificates.

         The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
denominations, integral multiples in excess thereof (except that one Certificate
in each Class may be issued in a different amount which must be in excess of the
applicable minimum denomination) and aggregate denominations per Class set forth
in the Preliminary Statement.

         The Depositor hereby directs the Trustee to register the Class X and
the Class P Certificates initially to "CDC Mortgage Capital Inc." and then on
the Closing Date as follows: "Deutsche Bank National Trust Company, as Indenture
Trustee on behalf of the Noteholders of the CDC Mortgage Capital Inc. NIM Trust
2004-HE1N", and to deliver such Class X and Class P Certificates on the NIM
Closing Date to Deutsche Bank National Trust Company, as trustee of the NIM
Trust.

         Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (x) by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if such Holder has so
notified the Trustee at least five Business Days prior to the related Record
Date or (y) by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register.

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

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

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         Section 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates.

         (a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.06, a Certificate Register for the Trust Fund
in which, subject to the provisions of subsections (b) and (c) below and to such
reasonable regulations as it may prescribe, the Trustee shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. Upon surrender for registration of transfer of any Certificate,
the Trustee shall execute and deliver, in the name of the designated transferee
or transferees, one or more new Certificates of the same Class and aggregate
Percentage Interest.

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

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

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

         (b) No transfer of a Private Certificate shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such state securities laws. Except
with respect to (i) the initial transfer of the Class X and Class P Certificates
to the NIMs Trust on the Closing Date or (ii) a transfer of the Class X or Class
P Certificates from the NIMs Trust to the Depositor, Unaffiliated Seller or an
Affiliate of the Depositor or the Unaffiliated Seller, in the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer shall certify to the
Trustee in writing the facts surrounding the transfer in substantially the form
set forth in Exhibit I (the "Transferor Certificate") and either (i) there shall
be delivered to the Trustee a letter in substantially the form of Exhibit J (the
"Rule 144A Letter") or (ii) there shall be delivered to the Trustee at the
expense of the transferor an Opinion of Counsel that such transfer may be made
without registration under the Securities Act. The Depositor shall provide to
any Holder of a Private Certificate and any prospective transferee designated by
any such Holder, information regarding the related Certificates and the Mortgage
Loans and such other information as shall be necessary to satisfy the condition
to eligibility set forth in Rule

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144A(d)(4) for transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee and the Servicer shall cooperate with the Depositor in
providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee and the
Depositor and the Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.

         Except with respect to (i) the initial transfer of the Class X and
Class P Certificates to the NIMs Trust on the Closing Date or (ii) a transfer of
the Class X or Class P Certificates from the NIMs Trust to the Depositor,
Unaffiliated Seller or an Affiliate of the Depositor or the Unaffiliated Seller,
no transfer of an ERISA-Restricted Certificate shall be made unless the Trustee
shall have received a representation letter from the transferee in substantially
the form of Exhibit J, to the effect that either (A) such transferee is not an
employee benefit plan or arrangement subject to Title I of ERISA, Section 4975
of the Code or any Federal, state or local law ("Similar Law") materially
similar to the foregoing provisions of ERISA or the Code, nor a person acting on
behalf of any such plan or arrangement nor using the assets of any such plan or
arrangement to effect such transfer or (B) with respect to the transfer of an
ERISA-Restricted Certificate that is not a Private Certificate, such transferee
is an insurance company that is purchasing the Certificate with funds contained
in an "insurance company general account" (as such term is defined in Section
V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and the
purchase and holding of such Certificate are covered under Sections I and III of
PTCE 95-60. For purposes of the preceding sentence, with respect to (i) the
transfer of an ERISA-Restricted Certificate that is not a Private Certificate
and (ii) the transfer of the Class X or Class P Certificates from the NIMs Trust
to an Affiliate of the Depositor or Unaffiliated Seller, in the event the
representation letter referred to in the preceding sentence is not furnished,
such representation shall be deemed to have been made to the Trustee by the
transferee's (including an initial acquiror's) acceptance of the
ERISA-Restricted Certificates. In the event that such representation is
violated, such attempted transfer or acquisition shall be void and of no effect.

         To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.

         (c) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:

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

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

         (iii) Each Person holding or acquiring any Ownership Interest in a
     Residual Certificate shall agree (A) to obtain a Transfer Affidavit from
     any other Person to whom such Person attempts to Transfer its Ownership
     Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit from
     any Person for whom such Person is acting as nominee, trustee or agent in
     connection with any Transfer of a Residual Certificate, (C) not to Transfer
     its Ownership Interest in a Residual Certificate or to cause the Transfer
     of an Ownership Interest in a Residual Certificate to any other Person if
     it has actual knowledge that such Person (i) is a Non-Permitted Transferee
     or that such Transfer Affidavit is false, (ii) if such transfer is for the
     purpose of impeding the assessment or collection of tax, (iii) if it has
     actual knowledge or reason to know that the proposed transferee would be
     unwilling or unable to pay taxes attributed to the Residual Certificate or
     (iv) if it has actual knowledge or reason to know that the proposed
     transferee will not honor the restrictions on subsequent transfers of the
     Residual Certificate set forth in this Section 5.02(c) and in the Transfer
     Affidavit, (D) to conduct a reasonable investigation of the financial
     condition of the proposed transferee and transfer its Ownership Interest in
     the Residual Certificate only if, as a result of such investigation, it
     concludes that the proposed transferee has historically paid its debts as
     they came due and will continue to pay its debts as they come due in the
     future, and (E) not to cause income from its Ownership Interest in a
     Residual Certificate to be attributable to a foreign permanent
     establishment or fixed base (within the meaning of an applicable income tax
     treaty) of the Person or another U.S. taxpayer.

         (iv) Any attempted or purported Transfer of any Ownership Interest in a
     Residual Certificate in violation of the provisions of this Section 5.02(c)
     shall be absolutely null and void and shall vest no rights in the purported
     Transferee. If any purported transferee shall become a Holder of a Residual
     Certificate in violation of the provisions of this Section 5.02(c), then
     the last preceding Permitted Transferee shall be restored to all rights as
     Holder thereof retroactive to the date of registration of Transfer of such
     Residual Certificate. The Trustee shall be under no liability to any Person
     for any registration of Transfer of a Residual Certificate that is in fact
     not permitted by Section 5.02(b) and this Section 5.02(c) or for making any
     payments due on such Certificate to the Holder thereof or taking any other
     action with respect to such Holder under the provisions of this Agreement
     so long as the Transfer was registered after receipt of the related
     Transfer Affidavit, Transferor Certificate and the Rule 144A Letter. The
     Trustee shall be entitled but not obligated to recover from any Holder of a
     Residual Certificate that was in fact a Non-Permitted Transferee at the
     time it became a Holder or, at such

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     subsequent time as it became a Non-Permitted Transferee, all payments made
     on such Residual Certificate at and after either such time. Any such
     payments so recovered by the Trustee shall be paid and delivered by the
     Trustee to the last preceding Permitted Transferee of such Certificate.

         (v) The Depositor shall use its best efforts to make available, upon
     receipt of written request from the Trustee, all information necessary to
     compute any tax imposed under Section 860E(e) of the Code as a result of a
     Transfer of an Ownership Interest in a Residual Certificate to any Holder
     who is a Non-Permitted Transferee.

         The restrictions on Transfers of a Residual Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Residual Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund, the Trustee, the
Unaffiliated Seller or the Servicer, to the effect that the elimination of such
restrictions will not cause the transfer to be disregarded under Treasury
Regulation 1.860E-1(c), cause the Trust Fund hereunder to fail to qualify as a
REMIC at any time that the Certificates are outstanding or result in the
imposition of any tax on the Trust Fund, a Certificateholder or another Person.
Each Person holding or acquiring any Ownership Interest in a Residual
Certificate hereby consents to any amendment of this Agreement which, based on
an Opinion of Counsel furnished to the Trustee, is reasonably necessary (a) to
ensure that the record ownership of, or any beneficial interest in, a Residual
Certificate is not transferred, directly or indirectly, to a Person that is a
Non-Permitted Transferee and (b) to provide for a means to compel the Transfer
of a Residual Certificate which is held by a Person that is a Non-Permitted
Transferee to a Holder that is a Permitted Transferee.

         (d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 in connection with transfer shall be at
the expense of the parties to such transfers.

         (e) Except as provided below, the Book-Entry Certificates shall at all
times remain registered in the name of the Depository or its nominee and at all
times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Certificate Owners of the Book-Entry Certificates for
purposes of exercising the rights of Holders under this Agreement, and requests
and directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.

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         All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.

         If (x) (i) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Trustee or the Depositor is
unable to locate a qualified successor, (y) the Depositor at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository or (z) after the occurrence of an Event of Default, Certificate
Owners representing at least 51% of the Certificate Balance of the Book-Entry
Certificates together advise the Trustee and the Depository through the
Depository Participants in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Certificate
Owners, the Trustee shall notify all Certificate Owners, through the Depository,
of the occurrence of any such event and of the availability of definitive,
fully-registered Certificates (the "Definitive Certificates") to Certificate
Owners requesting the same. Upon surrender to the Trustee of the related Class
of Certificates by the Depository, accompanied by the instructions from the
Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Servicer, the Depositor nor the Trustee shall be
liable for any delay in delivery of such instruction and each may conclusively
rely on, and shall be protected in relying on, such instructions. The Depositor
shall provide the Trustee with an adequate inventory of Certificates to
facilitate the issuance and transfer of Definitive Certificates. Upon the
issuance of Definitive Certificates all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder; provided, that the
Trustee shall not by virtue of its assumption of such obligations become liable
to any party for any act or failure to act of the Depository.

         Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.

         If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and (b) there is delivered to the Depositor, the Servicer,
the Certificate Insurer and the Trustee such security or indemnity as may be
required by them to hold each of them harmless, then, in the absence of notice
to the Trustee that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute, countersign and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 5.03, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.

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         Section 5.04 Persons Deemed Owners.

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

         Section 5.05 Access to List of Certificateholders' Names and Addresses.

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

         Section 5.06 Maintenance of Office or Agency.

         The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in New York City where Certificates may
be surrendered for registration of transfer or exchange. The Trustee initially
designates the offices of its agent for such purposes located at c/o DTC
Transfer Agent Services, 55 Water Street, Jeanette Park Entrance, New York, New
York 10041. The Trustee shall give prompt written notice to the
Certificateholders of any change in such location of any such office or agency.

         Section 5.07 Rights of the Certificate Insurer to Exercise Rights of
Class A-1 Certificateholders.

         By accepting its Class A-1 Certificate, each Class A-1
Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall be deemed to be the Class A-1 Certificateholders for
all purposes (other than with respect to the receipt of payment on the Class A-1
Certificates) and shall have the right to exercise all rights of the Class A-1
Certificateholders under this Agreement and under the Class A-1 Certificates
without any further consent of the Class A-1 Certificateholders, including,
without limitation:

         (a) the right to require the Unaffiliated Seller to repurchase Mortgage
Loans pursuant to Section 2.03 to the extent set forth in such Section;

         (b) the right to give notices of breach or to terminate the rights and
obligations of the Servicer as servicer pursuant to Section 7.01;

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         (c) the right to direct the actions of the Trustee during the
continuance of a Servicer default pursuant to Sections 3.24, 7.01 and 7.02;

         (d) the right to institute proceedings against the Servicer pursuant to
Section 7.01;

         (e) the right to direct the Trustee to investigate certain matters
pursuant to Sections 8.01 and 8.02;

         (f) the right to remove the Trustee pursuant to Section 8.07; and

         (g) any rights or remedies expressly given the Class A-1
Certificateholders.

         In addition, each Certificateholder agrees that, subject to Section
10.11, unless a Certificate Insurer Default exists, the rights specifically
enumerated above may only be exercised by the Certificateholders with the prior
written consent of the Certificate Insurer.

         Section 5.08 Trustee To Act Solely with Consent of the Certificate
Insurer.

         Unless a Certificate Insurer Default exists, the Trustee shall not,
without the Certificate Insurer's consent or unless directed by the Certificate
Insurer:

         (a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 7.01;

         (b) agree to any amendment pursuant to Section 10.01; or

         (c) undertake any litigation.

         The Certificate Insurer may, in writing and in its sole discretion
renounce all or any of its rights under this Agreement or any requirement for
the Certificate Insurer's consent for any period of time.

         Section 5.09 Mortgage Loans, Trust Fund and Accounts Held for Benefit
of the Certificate Insurer.

         (a) The Trustee shall hold the Trust Fund and the Custodial Files for
the benefit of the Certificateholders and the Certificate Insurer and all
references in this Agreement and in the Certificates to the benefit of Holders
of the Certificates shall be deemed to include the Certificate Insurer. The
Trustee shall follow all reasonable instructions and requests of the Certificate
Insurer to assist it to take action to preserve or enforce the Certificate
Insurer's rights or interests under this Agreement unless a Certificate Insurer
Default exists.

         (b) The Servicer hereby acknowledges and agrees that it shall service
the Mortgage Loans for the benefit of the Certificateholders and for the benefit
of the Certificate Insurer, and all references in this Agreement to the benefit
of or actions on behalf of the Certificateholders shall be deemed to include the
Certificate Insurer.

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         Section 5.10 Certificate Insurer Default.

         Notwithstanding anything elsewhere in this Agreement or in the
Certificates to the contrary, if a Certificate Insurer Default exists, or if and
to the extent the Certificate Insurer has delivered its written renunciation of
all of its rights under this Agreement, all provisions of this Agreement which
(a) permit the Certificate Insurer to exercise rights of the Class A-1
Certificateholders, (b) restrict the ability of the Certificateholders, the
Servicer or the Trustee to act without the consent or approval of the
Certificate Insurer, (c) provide that a particular act or thing must be
acceptable to the Certificate Insurer, (d) permit the Certificate Insurer to
direct (or otherwise to require) the actions of the Trustee, the Servicer or the
Certificateholders, (e) provide that any action or omission taken with the
consent, approval or authorization of the Certificate Insurer shall be
authorized hereunder or shall not subject the party taking or omitting to take
such action to any liability hereunder or (f) which have a similar effect, shall
be of no further force and effect and the Trustee shall administer the Trust
Fund and perform its obligations hereunder solely for the benefit of the Holders
of the Certificates. Nothing in the foregoing sentence, nor any action taken
pursuant thereto or in compliance therewith, shall be deemed to have released
the Certificate Insurer from any obligation or liability it may have to any
party or to the Class A-1 Certificateholders hereunder, under any other
agreement, instrument or document (including, without limitation, the
Certificate Insurance Policy) or under applicable law.

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

         Section 6.01 Respective Liabilities of the Depositor and the Servicer.

         The Depositor and the Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by them herein.

         Section 6.02 Merger or Consolidation of the Depositor or the Servicer.

         The Depositor and the Servicer will each keep in full effect its
existence, rights and franchises as a corporation or limited partnership, as the
case may be, under the laws of the United States or under the laws of one of the
states thereof and will each obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

         Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor or surviving Person to the Servicer shall be qualified to sell
mortgage loans to, and to service mortgage loans on behalf of, Fannie Mae or
FHLMC.

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         The Servicer is and shall continue to be an institution which is a
Fannie Mae and FHLMC approved seller/servicer in good standing and shall
maintain a net worth of at least $30,000,000.

         Section 6.03 Limitation on Liability of the Depositor, the Servicer and
Others.

         Neither the Depositor, the Servicer, the Trustee nor any of their
respective directors, officers, employees or agents shall be under any liability
to the Certificateholders for any action taken or for refraining from the taking
of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
Depositor, the Servicer, the Trustee or any such Person against any breach of
representations or warranties made by it herein or protect the Depositor, the
Servicer, the Trustee or any such Person from any liability which would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
(or with respect to the Depositor, gross negligence) in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
The Depositor and any director, officer, employee or agent of the Depositor may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Depositor,
the Servicer, the Trustee and any director, officer, employee or agent of the
Depositor, the Servicer or the Trustee shall be indemnified by the Trust Fund
and held harmless against any loss, liability or expense incurred in connection
with any audit, controversy or judicial proceeding relating to a governmental
taxing authority or any legal action relating to this Agreement or the
Certificates (including, as to the Trustee, the undertaking of actions as
directed by the Unaffiliated Seller or the Certificate Insurer pursuant to
Section 2.03), other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence (or with respect to the Depositor,
gross negligence) in the performance of their respective duties hereunder or by
reason of reckless disregard of their respective obligations and duties
hereunder. The Depositor shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its respective
duties hereunder and which in its opinion may involve it in any expense or
liability; provided, however, that the Depositor may in its discretion undertake
any such action (or direct the Trustee to undertake any such actions pursuant to
Section 2.03 hereof for the benefit of the Certificateholders) that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto and interests of the Trustee and the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Fund, and the Depositor shall be entitled to be reimbursed therefor out of
the Collection Account.

         Neither the Servicer nor any of the officers, employees or agents of
the Servicer shall be under any liability to the Trustee or the Depositor for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement; provided, however, that this provision shall not
protect the Servicer or any such person against any breach of warranties or
representations made herein, or failure to perform its obligations in compliance
with the terms of this Agreement, or any liability which would otherwise be
imposed by reason of any breach of the terms and conditions of this Agreement.
The Servicer and any officer, employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to

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its duties to service the Mortgage Loans in accordance with this Agreement and
which in its opinion may involve it in any expenses or liability; provided,
however, that the Servicer may undertake any such action which it may deem
necessary or desirable in respect to this Agreement and the rights and duties of
the parties hereto. In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
of the Trust Fund, and the Servicer shall be entitled to be reimbursed therefor
out of the Collection Account. In the event the Servicer agrees, at the request
of the Depositor, to act on behalf of the Depositor in any litigation relating
to the origination of a Mortgage Loan, the Depositor shall pay all expenses
associated with the defense and management of such claim (without reimbursement
from the Trust Fund).

         Section 6.04 Limitation on Resignation of the Servicer.

         The Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Certificate Insurer, the Depositor and the Trustee or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Depositor and the Trustee
which Opinion of Counsel shall be in form and substance acceptable to the
Depositor and the Trustee. No such resignation shall become effective until a
successor shall have assumed the Servicer's responsibilities and obligations
hereunder. Notwithstanding anything to the contrary herein, the Servicer may
pledge or assign as collateral all its rights, title and interest under this
Agreement to a lender (the "Lender"); provided that the Lender may only
terminate the Servicer under this Agreement if there has been an Event of
Default under this Agreement, in which event the Lender may replace the Servicer
in the same manner and subject to the same conditions applicable in the event
the Servicer is appointing a successor Servicer upon a servicer termination
pursuant to Section 7.02.

         Section 6.05 Additional Indemnification by the Servicer; Third Party
Claims.

         The Servicer shall indemnify the Depositor (and its Affiliate, Morgan
Stanley Mortgage Capital Inc.), the Unaffiliated Seller and the Trustee and any
director, officer, employee, or agent of the Depositor (or its Affiliate, Morgan
Stanley Mortgage Capital Inc.), the Unaffiliated Seller and the Trustee and hold
them harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and any other costs, fees and expenses that any of them may sustain in any way
related to any breach by the Servicer, of any of its representations and
warranties referred to in Section 2.03(a)(i) or the failure of the Servicer to
perform its duties and service the Mortgage Loans in compliance with the terms
of this Agreement. The Servicer shall indemnify the Unaffiliated Seller and any
director, officer, employee, or agent of the Unaffiliated Seller and the Trust
Fund and hold it harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that it may sustain in
any way related to any breach by the Servicer, of any of its representations and
warranties referred to in Section 2.03(a)(ii). The Servicer immediately shall
notify the Depositor, the Unaffiliated Seller and the Trustee if a claim is made
by a third party with respect to any such breach or failure by the Servicer
under this Agreement, assume (with the prior written consent of the Depositor,
the Unaffiliated Seller and the Trustee) the

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defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or the Depositor, the
Unaffiliated Seller or the Trustee in respect of such claim; provided, that if
it is determined that the Servicer is not obligated to indemnify such parties in
accordance with this Section 6.05, each such party (or the Trust Fund, if
applicable) shall promptly reimburse the Servicer in connection with each of the
foregoing payments made to such party by the Servicer.

                                  ARTICLE VII

                                     DEFAULT

         Section 7.01 Events of Default.

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

         (a) any failure by the Servicer to remit to the Trustee any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of one Business Day after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Depositor, by the Certificate Insurer or by the Trustee or to
the Trustee by Certificateholders entitled to at least 25% of the Voting Rights
in the Certificates; or

         (b) failure on the part of the Servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the part of the
Servicer set forth in this Agreement which continues unremedied for a period of
forty-five days (except that such number of days shall be fifteen in the case of
a failure to pay any premium for any insurance policy required to be maintained
under this Agreement) after the earlier of (i) the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Depositor, by the Certificate Insurer, or by the Trustee, or to
the Trustee by Certificateholders entitled to at least 25% of the Voting Rights
in the Certificates and (ii) actual knowledge of such failure by a Servicing
Officer of the Servicer; or

         (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 days; or

         (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 of or relating to all or substantially all of its property; or

         (e) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization

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statute, make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations; or

         (f) Fitch reduces its servicer rating of the Servicer to "RPS2-" or
lower, Moody's reduces its servicer rating of the Servicer to "SQ3" or lower, or
Standard & Poor's reduces its servicer rating of the Servicer to "Average" or
lower; or

         (g) any failure of the Servicer to make any P&I Advance on any
Remittance Date required to be made from its own funds pursuant to Section 4.01
which continues unremedied for one Business Day immediately following the
Remittance Date; or

         (h) a breach of any representation and warranty of the Servicer
referred to in Section 2.03(a), which materially and adversely affects the
interests of the Certificateholders or the Certificate Insurer and which
continues unremedied for a period of thirty days after the earlier of (i) the
date upon which written notice of such breach is given to the Servicer by the
Trustee or the Depositor, or to the Servicer, the Depositor, the Certificate
Insurer and the Trustee by any Certificateholders entitled to at least 25% of
the Voting Rights in the Certificates or by the Certificate Insurer and (ii)
actual knowledge of such breach by a Servicing Officer of the Servicer; or

         (i) any reduction, withdrawal or qualification of the Servicer's
servicer rating by any Rating Agency which results in the Servicer being deemed
unacceptable by any Rating Agency to act as a primary servicer for this
transaction or a primary servicer or a special servicer for any other
mortgage-backed or asset-backed transaction rated or to be rated by any such
Rating Agency; or

         (j) the Certificate Insurer notifies the Trustee in writing of any
uncured "event of default" (as such term is used in the Insurance and Indemnity
Agreement) by the Servicer under the Insurance and Indemnity Agreement.

         If an Event of Default shall occur, then, and in each and every such
case, so long as such Event of Default shall not have been remedied, the Trustee
may, subject to Section 5.08(a), or at the direction of the Certificate Insurer,
or of Holders holding at least 51% of the Voting Rights, the Trustee shall, by
notice in writing to the Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Servicer under this Agreement and in
and to the Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder; provided, however, that the Trustee shall not be
required to give written notice to the Servicer of the occurrence of an Event of
Default described in clauses (b) through (i) of this Section 7.01 unless and
until a Responsible Officer of the Trustee has actual knowledge of the
occurrence of such an Event of Default. On and after the receipt by the Servicer
of such written notice, all authority and power of the Servicer hereunder,
whether with respect to the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee. The Trustee shall make any P&I Advance which the Servicer
failed to make subject to Section 4.01, whether or not the obligations of the
Servicer have been terminated pursuant to this Section. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to

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complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. Unless expressly provided in such written
notice, no such termination shall affect any obligation of the Servicer to pay
amounts owed pursuant to Article VIII. The Servicer agrees to cooperate with the
Trustee in effecting the termination of the Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to the Trustee of
all cash amounts which shall at the time be credited to the Collection Account,
or thereafter be received with respect to the Mortgage Loans.

         Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan which was due prior to the notice
terminating such Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which such Servicer would
have been entitled pursuant to Section 3.11, and any other amounts payable to
such Servicer hereunder the entitlement to which arose prior to the termination
of its activities hereunder in accordance with Section 3.11 and in the time
period specified in Section 3.11. The Servicer shall continue to be entitled to
the benefits of Section 6.03, notwithstanding any termination hereunder, with
respect to events occurring prior to such termination.

         Section 7.02 Trustee to Act; Appointment of Successor.

         On and after the time the Servicer receives a notice of termination
pursuant to Section 3.24 or Section 7.01, subject to the third paragraph of this
Section 7.02, the Trustee shall, unless the Certificate Insurer shall have named
an alternative successor Servicer and given written notice thereof to the
Trustee of at least 30 days prior to the effective date of the transfer of
servicing to such successor, subject to and to the extent provided in Section
3.05, be the successor to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make P&I Advances and Servicing Advances pursuant to
Section 4.01. As compensation therefor, the Trustee shall be entitled to all
funds relating to the Mortgage Loans that the Servicer would have been entitled
to charge to the Collection Account or Distribution Account if the Servicer had
continued to act hereunder including, if the Servicer was receiving the
Servicing Fee, the Servicing Fee and the income on investments or gain related
to the Collection Account and Distribution Account.

         Notwithstanding the foregoing, if the Trustee has become the successor
to the Servicer in accordance with Section 7.01, the Trustee may, if it shall be
unwilling to so act, or shall, if it is prohibited by applicable law from making
P&I Advances and Servicing Advances pursuant to Section 4.01 or if it is
otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current rating of the
Certificates by each Rating Agency, as the successor to the Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder. Any successor to the Servicer shall be an
institution which is a Fannie Mae and FHLMC approved seller/servicer in good
standing, which has a net worth of at least $30,000,000, which is willing to
service the Mortgage Loans and which executes and delivers to the Depositor and
the Trustee an agreement accepting such delegation and assignment, containing an
assumption by such Person of the rights, powers,

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duties, responsibilities, obligations and liabilities of the Servicer (other
than liabilities of the Servicer under Section 6.03 incurred prior to
termination of the Servicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; provided that each Rating Agency
acknowledges that its rating of the Certificates in effect immediately prior to
such assignment and delegation will not be qualified or reduced, as a result of
such assignment and delegation. Pending appointment of a successor to the
Servicer hereunder, the Trustee, unless the Trustee is prohibited by law from so
acting, shall, subject to Section 3.05, act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of the Servicing Fee Rate and amounts paid
to the Servicer from investments. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. Neither the Trustee nor any other successor servicer shall be
deemed to be in default hereunder by reason of any failure to make, or any delay
in making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Servicer to deliver or provide, or
any delay in delivering or providing, any cash, information, documents or
records to it.

         Notwithstanding any provision in this Agreement to the contrary, prior
to the 20th day following the notice of termination of the Servicer and with the
consent of the Certificate Insurer (such consent not to be unreasonably
withheld, delayed or conditioned), the terminated Servicer may appoint a
successor Servicer that satisfies the eligibility criteria of a successor
Servicer set forth in this Section 7.02; provided such successor Servicer agrees
to fully effect the servicing transfer within 90 days following the termination
of the Servicer and to make all P&I Advances and Servicing Advances that would
otherwise be made by the Trustee under this Section 7.02 as of the date of such
appointment and prior thereto, the terminated Servicer makes all P&I Advances
and Servicing Advances; otherwise the Trustee shall appoint a successor Servicer
as otherwise set forth in this Section 7.02. Any proceeds received in connection
with the appointment of such successor Servicer shall be the property of the
terminated Servicer or its designee.

         Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer, maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 3.13.

         Section 7.03 Notification to Certificateholders.

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

         (b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders, the Certificate
Insurer, the Unaffiliated Seller and each Rating Agency notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.

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                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

         Section 8.01 Duties of the Trustee.

         The Trustee, before the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.

         The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they are in the form
required by this Agreement. The Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order, or other instrument.

         No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct.

         Unless an Event of Default known to the Trustee has occurred and is
continuing,

         (a) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of the duties and obligations specifically set
forth in this Agreement, no implied covenants or obligations shall be read into
this Agreement against the Trustee, and the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement which it believed in good faith
to be genuine and to have been duly executed by the proper authorities
respecting any matters arising hereunder;

         (b) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it is finally proven that the Trustee was negligent in ascertaining the
pertinent facts; and

         (c) the Trustee shall not be liable with respect to any action taken,
suffered, or omitted to be taken by it in good faith in accordance with the
direction of the Certificate Insurer, or of Holders of Certificates evidencing
not less than 25% of the Voting Rights of Certificates relating to the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee under this
Agreement.

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         Section 8.02 Certain Matters Affecting the Trustee.

         Except as otherwise provided in Section 8.01:

         (a) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties and the Trustee shall have no responsibility to
ascertain or confirm the genuineness of any signature of any such party or
parties;

         (b) the Trustee may consult with counsel, financial advisers or
accountants and the advice of any such counsel, financial advisers or
accountants and any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel;

         (c) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement;

         (d) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by the Certificate Insurer, or
by Holders of Certificates evidencing not less than 25% of the Voting Rights
allocated to each Class of Certificates;

         (e) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agents, accountants or attorneys
appointed with due care by it hereunder;

         (f) the Trustee shall not be required to risk or expend its own funds
or otherwise incur any financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers hereunder if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not assured to it;

         (g) the Trustee shall not be liable for any loss on any investment of
funds pursuant to this Agreement (other than as issuer of the investment
security);

         (h) the Trustee shall not be deemed to have knowledge of an Event of
Default until a Responsible Officer of the Trustee shall have received written
notice thereof; and

         (i) the Trustee shall be under no obligation to exercise any of the
trusts, rights or powers vested in it by this Agreement or to institute, conduct
or defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to this Agreement,
unless such Certificateholders shall have offered to the Trustee

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reasonable security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred therein or thereby.

         Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.

         The recitals contained herein and in the Certificates shall be taken as
the statements of the Depositor and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document other than with respect to the Trustee's execution and
countersignature of the Certificates. The Trustee shall not be accountable for
the use or application by the Depositor or the Servicer of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Depositor or the Servicer.

         The Trustee shall have no responsibility for filing or recording any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder (unless the Trustee shall have become the successor
Servicer).

         The Trustee executes the Certificates not in its individual capacity
but solely as Trustee of the Trust Fund created by this Agreement, in the
exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee on behalf of the Trust Fund in the Certificates is made and intended not
as a personal undertaking or agreement by the Trustee but is made and intended
for the purpose of binding only the Trust Fund.

         Section 8.04 Trustee May Own Certificates.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.

         Section 8.05 Trustee's Fees and Expenses.

         (a) As compensation for its activities under this Agreement, the
Trustee may withdraw from the Distribution Account on each Distribution Date the
Trustee Fee for the Distribution Date. The Trustee and any director, officer,
employee, or agent of the Trustee shall be indemnified by the Servicer against
any loss, liability, or expense (including reasonable attorney's fees) resulting
from any failure by the Servicer to perform its obligations under this
Agreement. This indemnity shall survive the termination of this Agreement or the
resignation or removal of the Trustee under this Agreement.

         The Trustee shall not be entitled to payment or reimbursement from the
Unaffiliated Seller for any routine ongoing expenses incurred by the Trustee in
the ordinary course of its duties as Trustee, Registrar, or paying agent under
this Agreement or for any other expenses, including indemnification payments,
except as set forth herein.

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         Section 8.06 Eligibility Requirements for the Trustee.

         The Trustee hereunder shall at all times be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit
rating which would not cause any of the Rating Agencies to reduce their
respective then current ratings of the Certificates (or having provided such
security from time to time as is sufficient to avoid such reduction) as
evidenced in writing by each Rating Agency. If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.06 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with this
Section 8.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07. The entity serving as Trustee may have normal
banking and trust relationships with the Depositor and its affiliates or the
Servicer and its affiliates; provided, however, that such entity cannot be an
affiliate of the Depositor, the Unaffiliated Seller or the Servicer other than
the Trustee in its role as successor to the Servicer.

         Section 8.07 Resignation and Removal of the Trustee.

         The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice of resignation to the Depositor, the
Servicer, the Certificate Insurer, the Unaffiliated Seller, each Rating Agency
not less than 60 days before the date specified in such notice, when, subject to
Section 8.08, such resignation is to take effect, and acceptance by a successor
trustee in accordance with Section 8.08 meeting the qualifications set forth in
Section 8.06. If no successor trustee meeting such qualifications shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice or resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.

         If at any time the Trustee shall cease to be eligible in accordance
with Section 8.06 and shall fail to resign after written request thereto by the
Depositor, or if at any time the Trustee shall become incapable of acting, or
shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or a tax is imposed with respect to
the Trust Fund by any state in which the Trustee or the Trust Fund is located
and the imposition of such tax would be avoided by the appointment of a
different trustee, then the Depositor or the Servicer may remove the Trustee and
appoint a successor trustee reasonably acceptable to the Certificate Insurer by
written instrument, in triplicate, one copy of which shall be delivered to the
Trustee, one copy to the Servicer and one copy to the successor trustee.

         The Certificate Insurer or the Holders of Certificates entitled to at
least a majority of the Voting Rights may at any time remove the Trustee and
appoint a successor trustee by written instrument or instruments, in triplicate,
signed by such Holders or their attorneys-in-fact

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duly authorized, one complete set of which shall be delivered by the successor
Trustee to the Servicer, one complete set to the Trustee so removed and one
complete set to the successor so appointed. The successor trustee shall notify
each Rating Agency of any removal of the Trustee.

         Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to this Section 8.07 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section 8.08.

         Section 8.08 Successor Trustee.

         Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
and the Servicer an instrument accepting such appointment hereunder and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The Depositor, the Certificate Insurer, the Servicer
and the predecessor trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers, duties,
and obligations.

         No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of its acceptance, the successor trustee is
eligible under Section 8.06 and its appointment does not adversely affect the
then current rating of the Certificates.

         Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.

         Section 8.09 Merger or Consolidation of the Trustee.

         Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder; provided that such corporation shall be eligible under
Section 8.06 without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.

         Section 8.10 Appointment of Co-Trustee or Separate Trustee.

         Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Servicer and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and

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to vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust Fund or any part thereof, whichever
is applicable, and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider appropriate. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request to do so, or in
the case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 8.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 8.08.

         Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

         (a) To the extent necessary to effectuate the purposes of this Section
8.10, all rights, powers, duties and obligations conferred or imposed upon the
Trustee, except for the obligation of the Trustee under this Agreement to
advance funds on behalf of the Servicer, shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular act or
acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the applicable Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction of the Trustee;

         (b) No trustee hereunder shall be held personally liable because of any
act or omission of any other trustee hereunder and such appointment shall not,
and shall not be deemed to, constitute any such separate trustee or co-trustee
as agent of the Trustee;

         (c) The Trustee may at any time accept the resignation of or remove any
separate trustee or co-trustee; and

         (d) The Trustee, and not the Servicer, shall be liable for the payment
of reasonable compensation and expenses to any such separate trustee or
co-trustee from the Trustee Fee payable to the Trustee on each Distribution
Date.

         Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the separate trustees and co-trustees, when
and as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection and indemnity to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer and the Depositor.

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         Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

         Section 8.11 Tax Matters.

         As set forth in the Preliminary Statement, the assets within the Trust
Fund for which any REMIC election is to be made shall constitute, and the
conduct of matters relating to such assets shall be consistent with the
treatment of such assets as, a REMIC. To this end, the Trustee covenants and
agrees to act as agent (and the Trustee is hereby appointed to act as agent) on
behalf of any REMIC created hereunder, and that in such capacity it shall:

         (a) prepare and file in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066 or any successor form adopted by
the Internal Revenue Service) and prepare and file with the Internal Revenue
Service and applicable state or local tax authorities income tax or information
returns for each taxable year with respect to any REMIC described in the
Preliminary Statement containing such information and at the times and in the
manner as may be required by the Code or state or local tax laws, regulations,
or rules, and furnish to Certificateholders the schedules, statements or
information at such times and in such manner as may be required thereby;

         (b) within thirty days of the Closing Date, furnish to the Internal
Revenue Service on Form 8811 or as otherwise may be required by the Code, the
name, title, address, and telephone number of the person that the Holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code;

         (c) make an election that each of the Lower Tier REMIC, the Middle Tier
REMIC and the Upper Tier REMIC be treated as a REMIC on the federal tax return
for its first taxable year (and, if necessary, under applicable state law);

         (d) prepare and forward to the Certificateholders and to the Internal
Revenue Service and, if necessary, state tax authorities, all information
returns and reports as and when required to be provided to them in accordance
with the REMIC Provisions, including the calculation of any original issue
discount using the Prepayment Assumption (as defined in the Prospectus
Supplement);

         (e) provide information necessary for the computation of tax imposed on
the transfer of a Residual Certificate to a Person that is a Non-Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax);

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         (f) to the extent that they are under its control, conduct matters
relating to such assets at all times that any Certificates are outstanding so as
to maintain the status as a REMIC under the REMIC Provisions;

         (g) not knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of any REMIC created
hereunder;

         (h) pay, from the sources specified in the last paragraph of this
Section 8.11, the amount of any federal or state tax, including prohibited
transaction taxes as described below, imposed on any REMIC created hereunder
before its termination when and as the same shall be due and payable (but such
obligation shall not prevent the Trustee or any other appropriate Person from
contesting any such tax in appropriate proceedings and shall not prevent the
Trustee from withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings);

         (i) cause federal, state or local income tax or information returns to
be signed by the Trustee or such other person as may be required to sign such
returns by the Code or state or local laws, regulations or rules;

         (j) maintain records relating to each REMIC created hereunder,
including the income, expenses, assets, and liabilities thereof on a calendar
year basis and on the accrual method of accounting and the fair market value and
adjusted basis of the assets determined at such intervals as may be required by
the Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information; and

         (k) as and when necessary and appropriate, represent each REMIC created
hereunder in any administrative or judicial proceedings relating to an
examination or audit by any governmental taxing authority, request an
administrative adjustment as to any taxable year of each REMIC created
hereunder, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax item of any REMIC created
hereunder, and otherwise act on behalf of the REMIC in relation to any tax
matter or controversy involving it.

         The Trustee shall treat the rights of the Class P Certificateholders to
Prepayment Charges as the beneficial ownership of interests in a grantor trust,
and not as an obligation of any REMIC created hereunder, for federal income tax
purposes.

         To enable the Trustee to perform its duties under this Agreement, the
Depositor shall provide to the Trustee within ten days after the Closing Date
all information or data that the Trustee requests in writing and determines to
be relevant for tax purposes to the valuations and offering prices of the
Certificates, including the price, yield, prepayment assumption, and projected
cash flows of the Certificates and the Mortgage Loans. Moreover, the Depositor
shall provide information to the Trustee concerning the value to each Class of
Certificates of the right to receive Basis Risk Carry Forward Amounts from the
Excess Reserve Fund Account. Thereafter, the Depositor shall provide to the
Trustee promptly upon written request therefor any additional information or
data that the Trustee may, from time to time, reasonably request to enable the
Trustee to perform its duties under this Agreement. The Depositor hereby

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indemnifies the Trustee for any losses, liabilities, damages, claims, or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee that result from any failure of the Depositor to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis.

         If any tax is imposed on "prohibited transactions" of any REMIC created
hereunder as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of such REMIC as defined in Section 860G(c) of the Code,
on any contribution to the REMIC after the Startup Day pursuant to Section
860G(d) of the Code, or any other tax is imposed, including any minimum tax
imposed on the REMIC pursuant to Sections 23153 and 24874 of the California
Revenue and Taxation Code, if not paid as otherwise provided for herein, the tax
shall be paid by (i) the Trustee if such tax arises out of or results from
negligence of the Trustee in the performance of any of its obligations under
this Agreement, (ii) the Servicer if such tax arises out of or results from a
breach by the Servicer of any of its obligations under this Agreement, (iii) the
Unaffiliated Seller shall pay if such tax arises out of or results from the
Unaffiliated Seller's obligation to repurchase a Mortgage Loan pursuant to
Section 2.03, or (iv) in all other cases, or if the Trustee, the Servicer or the
Unaffiliated Seller fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid with amounts otherwise to be distributed
to the Certificateholders, as provided in Section 4.02(a).

         Section 8.12 Periodic Filings.

         (a) The Trustee and the Servicer shall reasonably cooperate with the
Depositor in connection with the Trust's satisfying the reporting requirements
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Trustee shall prepare on behalf of the Trust any Forms 8-K and 10-K customary
for similar securities as required by the Exchange Act and the Rules and
Regulations of the Securities and Exchange Commission (the "SEC") thereunder,
and the Trustee shall file (via the SEC's Electronic Data Gathering and
Retrieval System) such Forms with the SEC on behalf of the Depositor. The
Depositor hereby grants to the Trustee a limited power of attorney to execute
and file each such Form 8-K but only to the extent no accompanying certification
is required to be filed on behalf of the Depositor. Such power of attorney shall
continue until either the earlier of (i) receipt by the Trustee from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust. The Depositor shall execute the Form 10-K. The Trustee
shall have no liability with respect to any failure to properly prepare or file
such periodic reports resulting from or relating to the Trustee's inability or
failure to obtain any information not resulting from its own negligence or
willful misconduct.

         (b) Each Form 8-K shall be filed by the Trustee with the SEC within 15
days after each Distribution Date, including a Form 8-K with a copy of the
statement to the Certificateholders for such Distribution Date as an exhibit
thereto. Prior to March 30th of each year (or such earlier date as may be
required by the Exchange Act and the Rules and Regulations of the SEC), the
Trustee shall file a Form 10-K, in substance as required by applicable law or
the SEC's staff interpretations. Such Form 10-K shall include as exhibits the
Servicer's annual statement of compliance described under Section 3.22 (upon
which the Trustee may rely) and the accountant's report described under Section
3.23, in each case to the extent they have been timely delivered to the Trustee.
If they are not so timely delivered, the Trustee shall file an

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amended Form 10-K including such documents as exhibits reasonably promptly after
they are delivered to the Trustee. The Form 10-K shall also include a
certification in the form attached hereto as Exhibit M (the "Certification"),
which shall be signed by the senior officer of the Depositor in charge of
securitization. The Trustee shall prepare and deliver each Form 10-K to the
Depositor for execution no later than March 20th (or if such day is not a
Business Day, the immediately preceding Business Day) of each year. The
Depositor shall return the executed Form 10-K to the Trustee for filing no later
than March 25th (or if such day is not a Business Day, the immediately preceding
Business Day) of each year.

         (c) Notwithstanding that the Certification is to be signed by an
officer of the Depositor, a Responsible Officer of the Trustee shall sign a
certification, in the form attached hereto as Exhibit N for the benefit of the
Depositor and its officers, directors and Affiliates in respect of items 1
through 3 thereof of the Certification (provided, however, that the Trustee
shall not undertake an analysis of the accountant's report attached as an
exhibit to the Form 10-K), and a Servicing Officer of the Servicer who is
responsible for the servicing and administration of the Mortgage Loans shall
sign a certification in the form attached hereto as Exhibit N for the benefit of
the Depositor, the Trustee and their respective officers, directors and
Affiliates in respect of items 4 and 5 of the Certification. Each such
certification shall be delivered to the Depositor and the Trustee (as
applicable), no later than March 15th of each year (or if such day is not a
Business Day, the immediately preceding Business Day) and the Depositor shall
deliver the Certification to be filed to the Trustee no later than March 20th of
each year (or if such day is not a Business Day, the immediately preceding
Business Day). In the event that prior to the filing date of the Form 10-K in
March of each year, the Trustee or the Servicer has actual knowledge of
information material to the Certification, that party shall promptly notify the
Depositor and each of the other parties signing the certifications. In addition,
(i) the Trustee shall indemnify and hold harmless the Depositor and its
officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of or based upon any
breach of the Trustee's obligations under this Section 8.12(c) or the Trustee's
negligence, bad faith or willful misconduct in connection therewith and (ii) the
Servicer shall indemnify and hold harmless the Depositor, the Trustee and their
respective officers, directors and Affiliates from and against any losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon any breach of the Servicer's obligations under this Section 8.12(c) or the
Servicer's negligence, bad faith or willful misconduct in connection therewith.
If the indemnification provided for herein is unavailable or insufficient to
hold harmless the indemnified party then (i) the Trustee agrees in connection
with a breach of the Trustee's obligations under this Section 8.12(c) or the
Trustee's negligence, bad faith or willful misconduct in connection therewith
that it shall contribute to the amount paid or payable by the Depositor as a
result of the losses, claims, damages or liabilities of the Depositor in such
proportion as is appropriate to reflect the relative fault of the Depositor on
the one hand and the Trustee on the other and (ii) the Servicer agrees that it
shall contribute to the amount paid or payable by the Depositor and/or the
Trustee as a result of the losses, claims, damages or liabilities of the
Depositor and/or the Trustee in such proportion as is appropriate to reflect the
relative fault of the Depositor and the Trustee, as the case may be, on the one
hand and the Servicer on the other in connection with a breach of the Servicer's
obligations under this Section 8.12(c) or the Servicer's negligence, bad faith
or willful misconduct in connection therewith.

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         (d) Upon any filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any such executed
report, statement or information.

         (e) Prior to January 30 of the first year in which the Trustee is able
to do so under applicable law, the Trustee shall, in accordance with applicable
law, file a Form 15D Suspension Notification with respect to the Trust Fund in a
timely manner.

         Section 8.13 Tax Classification of the Excess Reserve Fund Account.

         For federal income tax purposes, the Trustee shall treat the Excess
Reserve Fund Account as an outside reserve fund, within the meaning of Treasury
Regulation ss. 1.860G-2(h), that is beneficially owned by the holder of the
Class X Certificate. The Trustee shall treat the rights that each Class of
Certificates has to receive payments of Basis Risk Carry Forward Amounts from
the Excess Reserve Fund Account as rights to receive payments under an interest
rate cap contract written by the Class X Certificateholder in favor of each
Class. Accordingly, each Class of Certificates (excluding the Class X, Class P
and Class R Certificates) will be comprised of two components - an Upper Tier
Regular Interest and an interest in a notional principal contract. The Trustee
shall allocate the issue price for a Class of Certificates between such two
components for purposes of determining the issue price of the Upper Tier Regular
Interest component based on information received from the Depositor.

         Section 8.14 Cap Agreements.

         The Trustee is hereby authorized and directed to execute and deliver
the Cap Agreements and to acknowledge the provisions thereof.

                                   ARTICLE IX

                                   TERMINATION

         Section 9.01 Termination upon Liquidation or Purchase of the Mortgage
Loans.

         Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the purchase, on or after the
applicable Optional Termination Date, by the Servicer or the Class X
Certificateholders of all Mortgage Loans (and REO Properties) at the price equal
to the sum of (i) 100% of the unpaid principal balance of each Mortgage Loan
(other than in respect of REO Property) plus accrued and unpaid interest thereon
at the applicable Mortgage Rate, (ii) the lesser of (x) the appraised value of
any REO Property as determined by the higher of two appraisals completed by two
independent appraisers selected by the party exercising the optimal termination
at the expense of the party exercising the optimal termination plus, accrued and
unpaid interest on each Mortgage Loan at the applicable Mortgage Rate and (y)
the unpaid principal balance of each Mortgage Loan related to any REO Property,
in each case plus accrued and unpaid interest thereon at the applicable Mortgage
Rate and (iii) all costs and expenses incurred by, or on behalf of, the Trust
Fund, of which the Trustee has actual knowledge, in connection with any
violation by such Mortgage Loan of any predatory or abusive-lending law (the
"Termination Price") and (b) the later of (i) the maturity or other liquidation
(or any

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Advance with respect thereto) of the last Mortgage Loan remaining in the Trust
Fund and the disposition of all REO Property and (ii) the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
this Agreement. In no event shall the trusts created hereby continue beyond the
expiration of 21 years from the death of the survivor of the descendants of
Joseph P. Kennedy, the late Ambassador of the United States to the Court of St.
James's, living on the date hereof.

         Notwithstanding the foregoing, if Standard & Poor's has rated a class
of debt securities ("Net Interest Margin Securities") that are backed by the
Class X Certificates and Class P Certificates and that are outstanding on any
date on which the Servicer intends to exercise its option to purchase the
Mortgage Loans, the Servicer will be permitted to exercise such option only if
one of the following additional conditions is met: (i) after distribution of the
Termination Price to the Certificateholders (other than the Holders of the Class
X Certificates, Class P Certificates and Class R Certificates) to redeem the
related Certificates, the remainder of the Termination Price (the "Remainder
Amount") is distributed to the Holders of the Class X Certificates and Class P
Certificates and is sufficient to pay the outstanding principal amount of and
accrued and unpaid interest on the Net Interest Margin Securities to the extent
the Net Interest Margin Securities are then outstanding; or (ii) (A) at the same
time that the Servicer remits the Termination Price to the Trustee, it also
remits to the Trustee an additional amount which, in combination with the
Remainder Amount, is sufficient to pay the outstanding principal amount of and
accrued and unpaid interest on the Net Interest Margin Securities, and (B) the
Trustee remits the Remainder Amount to the Holders of the Class X Certificates
and Class P Certificates and remits that additional amount directly to the
indenture trustee (plus any outstanding fees and expenses due and owing to the
indenture trustee) under the indenture creating the Net Interest Margin
Securities.

         No purchase under this Section 9.01 will be permitted without the
consent of the Certificate Insurer, unless no draw on the Certificate Insurance
Policy would be made and no amounts due to the Certificate Insurer would remain
unreimbursed on the final Distribution Date.

         Section 9.02 Final Distribution on the Certificates.

         If on any Determination Date, the Servicer determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Servicer shall direct the Trustee
promptly to send a Notice of Final Distribution to each Certificateholder. If
the Servicer or the Class X Certificateholder elects to terminate the Trust Fund
pursuant to clause (a) of Section 9.01, at least 20 days prior to the date the
Notice of Final Distribution is to be mailed to the affected Certificateholders
such electing party shall notify the Depositor and the Trustee of the date the
Servicer or the Class X Certificateholder intends to terminate the Trust Fund
and of the applicable repurchase price of the Mortgage Loans and REO Properties.

         A Notice of Final Distribution, specifying the Distribution Date on
which Certificateholders may surrender their Certificates for payment of the
final distribution and cancellation, shall be given promptly by the Trustee by
letter to Certificateholders mailed not earlier than the 10th day and not later
than the 15th day of the month next preceding the month of such final
distribution. Any such Notice of Final Distribution shall specify (a) the
Distribution

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<PAGE>

Date upon which final distribution on the Certificates will be made
upon presentation and surrender of Certificates at the office therein
designated, (b) the amount of such final distribution, (c) the location of the
office or agency at which such presentation and surrender must be made, and (d)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Trustee will give such Notice
of Final Distribution to each Rating Agency at the time such Notice of Final
Distribution is given to Certificateholders.

         In the event such Notice of Final Distribution is given, the Servicer
shall cause all funds in the Collection Account to be remitted to the Trustee
for deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit with respect to the Trust
Fund and the receipt by the Trustee of a Request for Release therefor, the
Trustee shall promptly release to the Servicer the Custodial Files for the
Mortgage Loans.

         Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Certificateholders of each Class (after
reimbursement of all amounts due to the Servicer, the Certificate Insurer, the
Depositor and the Trustee hereunder), in each case on the final Distribution
Date and in the order set forth in Section 4.02, in proportion to their
respective Percentage Interests, with respect to Certificateholders of the same
Class, up to an amount equal to (i) as to each Class of Regular Certificates
(except the Class X Certificate), the Certificate Balance thereof plus for each
such Class and the Class X Certificate accrued interest thereon in the case of
an interest-bearing Certificate and all other amounts to which such Classes are
entitled pursuant to Section 4.02 and (ii) as to the Residual Certificates, the
amount, if any, which remains on deposit in the Distribution Account (other than
the amounts retained to meet claims) after application pursuant to clause (i)
above.

         In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund
which remain subject hereto.

         Section 9.03 Additional Termination Requirements.

         In the event the Servicer or the Class X Certificateholder, as
applicable, exercises its purchase option with respect to the Mortgage Loans as
provided in Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless the Trustee has been supplied with
an Opinion of Counsel, at the expense of the Servicer or the Class X
Certificateholder, as applicable, to the effect that the failure to comply with
the requirements of this Section 9.03 will not (i) result in the imposition of
taxes on "prohibited transactions" on

                                      125
<PAGE>

either REMIC as defined in Section 860F of the Code, or (ii) cause either the
Lower Tier REMIC, the Middle Tier REMIC or the Upper Tier REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding:

         (a) The Trustee shall sell all of the assets of the Trust Fund to the
Servicer or the Class X Certificateholder, as applicable, and, within 90 days of
such sale, shall distribute to the Certificateholders the proceeds of such sale
in complete liquidation of each of the Lower Tier REMIC, the Middle Tier REMIC
and the Upper Tier REMIC.

         (b) The Trustee shall attach a statement to the final federal income
tax return for each of the Lower Tier REMIC, the Middle Tier REMIC and the Upper
Tier REMIC stating that pursuant to Treasury Regulations Section 1.860F-1, the
first day of the 90-day liquidation period for each such REMIC was the date on
which the Trustee sold the assets of the Trust Fund to the Servicer or the Class
X Certificateholder, as applicable.

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

         Section 10.01 Amendment.

         This Agreement may be amended from time to time (x) by the Depositor,
the Servicer and the Trustee, with the prior written consent of the Certificate
Insurer, (y) with the consent of the Unaffiliated Seller unless the Trustee
receives an Opinion of Counsel (which Opinion of Counsel shall not be an expense
of the Trustee or the Trust Fund) stating that the amendment will not adversely
affect the Unaffiliated Seller, but (z) without the consent of any of the
Certificateholders (i) to cure any ambiguity or mistake, (ii) to correct any
defective provision herein or to supplement any provision herein which may be
inconsistent with any other provision herein, (iii) to add to the duties of the
Depositor or the Servicer, (iv) to add any other provisions with respect to
matters or questions arising hereunder or (v) to modify, alter, amend, add to or
rescind any of the terms or provisions contained in this Agreement; provided,
that any action pursuant to clauses (iv) or (v) above shall not, as evidenced by
an Opinion of Counsel (which Opinion of Counsel shall not be an expense of the
Trustee or the Trust Fund), adversely affect in any material respect the
interests of any Certificateholder; and provided, further, that the amendment
shall not be deemed to adversely affect in any material respect the interests of
the Certificateholders if the Person requesting the amendment obtains a letter
from each Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the
Certificates; it being understood and agreed that any such letter in and of
itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating.

         In addition, this Agreement may also be amended from time to time (x)
by the Trustee, the Depositor and the Servicer, with the prior written consent
of the Certificate Insurer, and (y) with the consent of the Unaffiliated Seller
unless the Trustee receives an Opinion of Counsel (which Opinion of Counsel
shall not be an expense of the Trustee or the Trust Fund) stating that the
amendment will not adversely affect the Unaffiliated Seller, but (z) without the

                                      126
<PAGE>

consent of the Certificateholders, to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or helpful to (i) maintain the
qualification of the Lower Tier REMIC, the Middle Tier REMIC and the Upper Tier
REMIC under the Code, (ii) avoid or minimize the risk of the imposition of any
tax on the Lower Tier REMIC, the Middle Tier REMIC or the Upper Tier REMIC
pursuant to the Code that would be a claim at any time prior to the final
redemption of the Certificates or (iii) comply with any other requirements of
the Code; provided, that the Trustee has been provided an Opinion of Counsel,
which opinion shall be an expense of the party requesting such opinion but in
any case shall not be an expense of the Trustee or the Trust Fund, to the effect
that such action is necessary or helpful to, as applicable, (i) maintain such
qualification, (ii) avoid or minimize the risk of the imposition of such a tax
or (iii) comply with any such requirements of the Code.

         This Agreement may also be amended from time to time (x) by the
Depositor, the Servicer and the Trustee, with the prior written consent of the
Certificate Insurer, (y) with the consent of the Unaffiliated Seller unless the
Trustee receives an Opinion of Counsel (which Opinion of Counsel shall not be an
expense of the Trustee or the Trust Fund) stating that the amendment will not
adversely affect the Unaffiliated Seller, and (z), except as set forth in
Section 3.27, with the consent of the Holders of Certificates evidencing
Percentage Interests aggregating not less than 66-2/3% of each Class of
Certificates (based on the aggregate outstanding principal balance of such class
at such time) affected thereby, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) adversely affect in
any material respect the interests of the Holders of any Class of Certificates
in a manner other than as described in (i), without the consent of the Holders
of Certificates of such Class evidencing, as to such Class, Percentage Interests
aggregating not less than 66-2/3%, or (iii) reduce the aforesaid percentages of
Certificates the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all such Certificates then outstanding.

         Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall not be an expense of the
Trustee or the Trust Fund, to the effect that such amendment will not cause the
imposition of any tax on any REMIC or the Certificateholders or cause any REMIC
to fail to qualify as a REMIC at any time that any Certificates are outstanding.

         Notwithstanding the foregoing provisions of this Section 10.01, with
respect to any amendment that significantly modifies the permitted activities of
the Trustee or the Servicer, any Certificate beneficially owned by the
Depositor, the Unaffiliated Seller or any of their respective Affiliates shall
be deemed not to be outstanding (and shall not be considered when determining
the percentage of Certificateholders consenting or when calculating the total
number of Certificates entitled to consent) for purposes of determining if the
requisite consents of Certificateholders under this Section 10.01 have been
obtained.

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<PAGE>

         Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each
Certificateholder and each Rating Agency.

         It shall not be necessary for the consent of Certificateholders under
this Section 10.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.

         Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Trust Fund), satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with; and (ii)
either (A) the amendment does not adversely affect in any material respect the
interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.

         Section 10.02 Recordation of Agreement; Counterparts.

         This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer at its expense, but only upon receipt of an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders.

         For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.

         Section 10.03 Governing Law.

         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

         Section 10.04 Intention of Parties.

         It is the express intent of the parties hereto that the conveyance (i)
of the Mortgage Loans by the Depositor and (ii) of the Trust Fund by the
Depositor to the Trustee each be, and be construed as, an absolute sale thereof.
It is, further, 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 Depositor, as the case
may be,

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<PAGE>

or if for any other reason this Agreement is held or deemed to create a security
interest in either such assets, then (i) 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 (ii) the conveyances provided for in this Agreement shall
be deemed to be an assignment and a grant by the Depositor to the Trustee, for
the benefit of the Certificateholders, of a security interest in all of the
assets transferred, whether now owned or hereafter acquired.

         The Depositor for the benefit of the Certificateholders and of the
Certificate Insurer shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement were deemed
to create a security interest in the Trust Fund, such security interest would be
deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of the Agreement. The
Depositor shall arrange for filing any Uniform Commercial Code continuation
statements in connection with any security interest granted or assigned to the
Trustee for the benefit of the Certificateholders.

         Section 10.05 Notices.

         (a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency with respect to each of the following of which it has
actual knowledge:

         1. Any material change or amendment to this Agreement;

         2. The occurrence of any Event of Default that has not been cured;

         3. The resignation or termination of the Servicer or the Trustee and
the appointment of any successor;

         4. The repurchase or substitution of Mortgage Loans pursuant to Section
2.03; and

         5. The final payment to Certificateholders.

         (b) In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:

         1. Each report to Certificateholders described in Section 4.03; and

         2. Any notice of a purchase of a Mortgage Loan pursuant to Section
2.02, 2.03 or 3.11.

         All directions, demands, consents and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered to (a) in the
case of the Depositor or the Representative, Morgan Stanley ABS Capital I Inc.
or Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036,
Attention: Valerie Kay, with a copy to Morgan Stanley & Co. Incorporated, 1221
Avenue of the Americas, New York, New York, 10020, Attention: Michelle Wilke,
(b) in the case of the Servicer, Countrywide Home Loans Servicing LP, 450 Park
Granada, Calabasas, California, 91302, Attention: Secretary, or such other
address

                                      129
<PAGE>

as may be hereafter furnished to the parties hereto in writing, (c) in the case
of the Trustee to the Corporate Trust Office, Deutsche Bank National Trust
Company, 1761 East St. Andrew Place, Santa Ana, California 92705-4934,
Attention: Trust Administration DC04M1, or such other address as the Trustee may
hereafter furnish to the parties hereto, (d) in the case of the Unaffiliated
Seller, CDC Mortgage Capital, Inc., 9 West 57th Street, New York, New York
10019, Attention: General Counsel, or such other address as the Unaffiliated
Seller may hereafter furnish to the parties hereto, (e) in the case of each of
the Rating Agencies, the address specified therefor in the definition
corresponding to the name of such Rating Agency and (f) in the case of any
Originator, the address specified therefor in the applicable Mortgage Loan
Purchase Agreement. Notices to Certificateholders shall be deemed given when
mailed, first class postage prepaid, to their respective addresses appearing in
the Certificate Register.

         Section 10.06 Severability of Provisions.

         If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.

         Section 10.07 Assignment.

         Notwithstanding anything to the contrary contained herein, except as
provided in Section 6.02, this Agreement may not be assigned by the Servicer
without the prior written consent of the Trustee, the Certificate Insurer and
Depositor; provided, however, that, subject to Section 3.27, the Servicer may
pledge or sell its interest in any reimbursements for P&I Advances or Servicing
Advances hereunder.

         Section 10.08 Limitation on Rights of Certificateholders.

         The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the trust created hereby, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.

         No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.

         No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as herein

                                      130
<PAGE>

provided, and unless the Holders of Certificates evidencing not less than 25% of
the Voting Rights evidenced by the Certificates, and the Certificate Insurer,
shall also have made written request to the Trustee to institute such action,
suit or proceeding in its own name as Trustee hereunder and shall have offered
to the Trustee such reasonable indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee,
for 60 days after its receipt of such notice, request and offer of indemnity
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all Certificateholders.
For the protection and enforcement of the provisions of this Section 10.08, each
and every Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.

         Section 10.09 Inspection and Audit Rights.

         The Servicer agrees that, on reasonable prior notice, it will permit
any representative of the Depositor, the Unaffiliated Seller, the Certificate
Insurer or the Trustee during the Servicer's normal business hours, to examine
all the books of account, records, reports and other papers of the Servicer
relating to the Mortgage Loans, to make copies and extracts therefrom, to cause
such books to be audited by independent certified public accountants selected by
the party conducting the inspection and to discuss its affairs, finances and
accounts relating to the Mortgage Loans with its officers, employees and
independent public accountants (and by this provision the Servicer hereby
authorizes said accountants to discuss with such representative such affairs,
finances and accounts), all at such reasonable times and as often as may be
reasonably requested. Any customary out-of-pocket expense of the Servicer
incident to the exercise by the Depositor, the Unaffiliated Seller, the
Certificate Insurer or the Trustee of any right under this Section 10.09 shall
be borne by the Servicer.

         Section 10.10 Certificates Nonassessable and Fully Paid.

         It is the intention of the Depositor that Certificateholders shall not
be personally liable for obligations of the Trust Fund, that the interests in
the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.

         Section 10.11 The Certificate Insurer Default.

         Any right conferred to the Certificate Insurer shall be suspended
during any period in which a Certificate Insurer Default exists. At such time as
the Class A-1 Certificates are no longer outstanding hereunder, and no amounts
owed to the Certificate Insurer hereunder remain unpaid, the Certificate
Insurer's rights hereunder shall terminate.

                                      131
<PAGE>

         Section 10.12 Third Party Beneficiary.

         The parties agree that the Certificate Insurer is intended and shall
have all rights of a third-party beneficiary of this Agreement.

         Section 10.13 Waiver of Jury Trial.

         EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, WAIVES (TO
THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY
SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

         IN WITNESS WHEREOF, the Depositor, the Trustee, the Unaffiliated Seller
and the Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.

                         MORGAN STANLEY ABS CAPITAL I INC.,
                              as Depositor


                         By:____________________________________________________
                              Name:
                              Title:


                         DEUTSCHE BANK NATIONAL TRUST
                            COMPANY, solely as Trustee and
                              not in its individual capacity


                         By:____________________________________________________
                              Name:
                              Title:



                         By:____________________________________________________
                              Name:
                              Title:


                         COUNTRYWIDE HOME LOANS SERVICING
                              LP, as Servicer
                              By:  COUNTRYWIDE GP, INC.



                         By:____________________________________________________
                              Name:
                              Title:

                                      132
<PAGE>


                         CDC MORTGAGE CAPITAL INC.,
                             as Unaffiliated Seller


                         By:____________________________________________________
                              Name:
                              Title:



                         By:____________________________________________________
                              Name:
                              Title:


                                      133

<PAGE>

                                   SCHEDULE I

                             Mortgage Loan Schedule


                                     I-A-1
<PAGE>

                                   SCHEDULE IA

                     Schedule of Countrywide Serviced Loans


                                      IA-1
<PAGE>

                                   SCHEDULE II

                       CDC MORTGAGE CAPITAL TRUST 2004-HE1

                       Mortgage Pass-Through Certificates,
                                 Series 2004-HE1

                 Representations and Warranties of the Servicer
                 ----------------------------------------------

                  (1) The Servicer is duly organized as a limited partnership
         and is validly existing and in good standing under the laws of the
         state of Texas and is licensed and qualified to transact any and all
         business contemplated by this Pooling and Servicing Agreement to be
         conducted by the Servicer in any state in which a Mortgaged Property is
         located or is otherwise not required under applicable law to effect
         such qualification and, in any event, is in compliance with the doing
         business laws of any such State, to the extent necessary to ensure its
         ability to enforce each Mortgage Loan and to service the Mortgage Loans
         in accordance with the terms of this Pooling and Servicing Agreement;

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

                  (3) The execution and delivery of this Pooling and Servicing
         Agreement by the Servicer, the servicing of the Mortgage Loans by the
         Servicer hereunder, the consummation by the Servicer of any other of
         the transactions herein contemplated, and the fulfillment of or
         compliance with the terms hereof are in the ordinary course of business
         of the Servicer and will not (A) result in a breach of any term or
         provision of the organizational documents of the Servicer or (B)
         conflict with, result in a breach, violation or acceleration of, or
         result in a default under, the terms of any other material agreement or
         instrument to which the Servicer is a party or by which it may be
         bound, or any statute, order or regulation applicable to the Servicer
         of any court, regulatory body, administrative agency or governmental
         body having jurisdiction over the Servicer; and the Servicer is not a
         party to, bound by, or in breach or violation of any indenture or other
         agreement or instrument, or subject to or in violation of any statute,
         order or regulation of any court, regulatory body, administrative
         agency or governmental body having


                                      II-1

<PAGE>

         jurisdiction over it, which materially and adversely affects or, to
         the Servicer's knowledge, would in the future materially and adversely
         affect, (x) the ability of the Servicer to perform its obligations
         under this Pooling and Servicing Agreement or (y) the business,
         operations, financial condition, properties or assets of the Servicer
         taken as a whole;

                  (4) The Servicer is an approved seller/servicer for Fannie Mae
         or Freddie  Mac in good standing;

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

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

                  (7) The Servicer represents that its computer and other
         systems used in servicing the Mortgage Loans operate in a manner such
         that the Servicer can service the Mortgage Loans in accordance with the
         terms of this Pooling and Servicing Agreement.



                                      II-2

<PAGE>

                                  SCHEDULE IIA

             Further Representations and Warranties of the Servicer

                  (1) Mortgage Loan Schedule. With respect to each Mortgage
Loan, as of the applicable Cut-off Date, each of (1) the last Due Date on which
a payment was actually applied to the outstanding principal balance of each
Mortgage Loan; (2) the Stated Principal Balance of each Mortgage Loan, after
deduction of payments of principal due and collected on or before the applicable
Cut-off Date; and (3) the Servicing Transfer Date for each Mortgage Loan, in
each case, as listed on the Mortgage Loan Schedule, is true and correct;

                  (2) Payments Current. Unless otherwise indicated on the
related Mortgage Loan Schedule, with respect to each Mortgage Loan, no Scheduled
Payment is 30 days or more Delinquent as of the Cut-off Date nor has any Payment
been 30 days or more Delinquent at any time from and after the Servicing
Transfer Date through the Cut-off Date;

                  (3) Original Terms Unmodified. With respect to each Mortgage
Loan, the terms of the Mortgage Note and Mortgage have not been impaired,
waived, altered or modified by or on behalf of the Servicer from and after the
Servicing Transfer Date;

                  (4) No Satisfaction of Mortgage. With respect to each Mortgage
Loan, since the related Servicing Transfer Date and except for prepayments in
full, the Mortgage has not been satisfied, cancelled, subordinated or rescinded,
in whole or in part, and the Mortgaged Property has not been released from the
lien of the Mortgage, in whole or in part, nor has any instrument been executed
that would effect any such release, cancellation, subordination or rescission.
From and after the Servicing Transfer Date, the Servicer has not 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, nor has the
Servicer waived any default resulting from any action or inaction by the
Mortgagor;

                  (5) No Defaults. With respect to each Mortgage Loan, to the
best knowledge of the Servicer, other than payments due but not yet 30 days
Delinquent, there is no material default, breach, violation or event which would
permit acceleration existing under the Mortgage or the Mortgage Note;

                  (6) Mortgaged Property Undamaged; No Condemnation Proceedings.
With respect to each Mortgage Loan, to the best knowledge of the Servicer and
except as the Servicer has previously notified the Unaffiliated Seller in
writing, there is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property, the related Mortgaged Property is
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect adversely the value of the related
Mortgaged Property as security for the Mortgage Loan or the use for which the
premises were intended and each related Mortgaged Property is in good repair;

                  (7) Escrow Payments/Interest Rate Adjustments. With respect to
each Mortgage Loan, since the Servicing Transfer Date, the servicing and
collection practices used by the Servicer with respect to such Mortgage Loan
have been in all material respects in compliance with Accepted Servicing
Practices, applicable laws and regulations, and have been in all material


                                     II-A-1
<PAGE>

respects legal and proper. With respect to escrow deposits and Escrow Payments,
if any, all such deposits and payments received by the Servicer 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 (to the extent not otherwise prohibited by law). From
and after the Servicing Transfer Date, all Mortgage Rate adjustments (if any)
have been made in strict compliance with state and federal law and the terms of
the related Mortgage Note;

                  (8) Other Insurance Policies. The improvements upon each
Mortgaged Property are covered by a valid and existing hazard insurance policy
with a generally acceptable carrier that provides for fire and extended coverage
and coverage for such other hazards as are customary in the area where the
Mortgaged Property is located;

                  (9) No Violation of Environmental Laws. With respect to each
Mortgage Loan, to the best knowledge of the Servicer and except as the Servicer
has previously notified the Unaffiliated Seller in writing, there is no pending
action or proceeding directly involving the related Mortgaged Property in which
compliance with any environmental law, rule or regulation is an issue and there
is no violation of any environmental law, rule or regulation with respect to the
related Mortgaged Property; and

                  (10) Servicemembers Civil Relief Act. With respect to each
Mortgage Loan, from and after the Servicing Transfer Date, no Mortgagor has
notified the Servicer, and the Servicer has no knowledge, of any relief
requested or allowed to the Mortgagor under the Servicemembers Civil Relief Act
or any similar state or local law.

                                     II-A-2

<PAGE>
                                 SCHEDULE III

(a)  Due Organization and Authority. The Unaffiliated Seller is a corporation
     duly organized, validly existing and in good standing under the laws of the
     state of New York and has all licenses necessary to carry on its business
     as now being conducted and is licensed, qualified and in good standing in
     each state wherein it owns or leases any material properties or where a
     Mortgaged Property is located, if the laws of such state require licensing
     or qualification in order to conduct business of the type conducted by the
     Unaffiliated Seller, and in any event the Unaffiliated Seller is in
     compliance with the laws of any such state to the extent necessary; the
     Unaffiliated Seller has the full corporate power, authority and legal right
     to execute and deliver this Agreement and to perform its obligations
     hereunder; the execution, delivery and performance of this Agreement by the
     Unaffiliated Seller and the consummation of the transactions contemplated
     hereby have been duly and validly authorized; this Agreement and all
     agreements contemplated hereby have been duly executed and delivered and
     constitute the valid, legal, binding and enforceable obligations of the
     Unaffiliated Seller, regardless of whether such enforcement is sought in a
     proceeding in equity or at law; and all requisite corporate action has been
     taken by the Unaffiliated Seller to make this Agreement and all agreements
     contemplated hereby valid and binding upon the Unaffiliated Seller in
     accordance with their terms;

(b)  No Conflicts. Neither the execution and delivery of this Agreement, the
     consummation of the transactions contemplated hereby, nor the fulfillment
     of or compliance with the terms and conditions of this Agreement, will
     conflict with or result in a breach of any of the terms, conditions or
     provisions of the Unaffiliated Seller's charter or by-laws or any legal
     restriction or any agreement or instrument to which the Unaffiliated Seller
     is now a party or by which it is bound, or constitute a default or result
     in an acceleration under any of the foregoing, except such unfulfillment,
     non-compliance or default or acceleration does not in the aggregate have a
     material adverse effect on the operation, business, condition (business or
     otherwise) of the Unaffiliated Seller or result in the violation of any
     law, rule, regulation, order, judgment or decree to which the Unaffiliated
     Seller or its property is subject, except such violation does not in the
     aggregate have a material adverse effect on the operation, business,
     condition (business or otherwise) of the Unaffiliated Seller or result in
     the creation or imposition of any lien, charge or encumbrance that would
     have an adverse effect upon any of its properties pursuant to the terms of
     any mortgage, contract, deed of trust or other instrument;

(c)  No Litigation Pending. There is no action, suit, proceeding or
     investigation pending nor, to the Unaffiliated Seller's knowledge,
     threatened against the Unaffiliated Seller, before any court,
     administrative agency or other tribunal asserting the invalidity of this
     Agreement, seeking to prevent the consummation of any of the transactions
     contemplated by this Agreement or which, either in any one instance or in
     the aggregate, may result in any material adverse change in the business,
     operations, financial condition, properties or assets of the Unaffiliated
     Seller, or in any material impairment of the right or ability of the
     Unaffiliated Seller to carry on its business substantially as now
     conducted, or which would draw into question the validity of this Agreement
     or of any action taken or to be taken in connection with the obligations of
     the Unaffiliated Seller contemplated herein, or

                                     III-1
<PAGE>

     which would be likely to impair materially the ability of the Unaffiliated
     Seller to perform under the terms of this Agreement;

(d)  No Consent Required. 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 Unaffiliated Seller of or compliance by the
     Unaffiliated Seller with this Agreement or the consummation of the
     transactions contemplated by this Agreement, or if required, such approval
     has been obtained prior to the Closing Date;


                                     III-2
<PAGE>

                                   EXHIBIT A

Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
ASSETS.

Certificate No.                              :  [A-1-1/A-2-1/A-3-1/A-4-1/M-1-1/
                                                M-2-1/M-3-1/B-1-1/B-2-1/B-3-1]

Cut-off Date                                 :  February 1, 2004

First Distribution Date                      :  March 25, 2004

Initial Certificate Balance of this
Certificate ("Denomination")                 :

Initial Certificate Balances of all
Certificates of this Class                   :



                                      A-1
<PAGE>

CUSIP                                        :  A-1 12506YCG2

                                                A-2 12506YCH0

                                                A-3 12506YCJ6

                                                A-4  12506YCK3

                                                M-1 12506YCL1

                                                M-2 12506YCM9

                                                M-3 12506YCN7

                                                B-1 12506YCP2

                                                B-2 12506YCQ0

                                                B-3 12506YCR8



                                      A-2

<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.

                       CDC Mortgage Capital Trust 2004-HE1
                   Mortgage Pass-Through Certificates, Series
             2004-HE1 [Class A-1] [Class A-2] [Class A-3][Class A-4]
                             [Class M-1] [Class M-2]
                 [Class M-3] [Class B-1] [Class B-2] [Class B-3]

                  evidencing a percentage interest in the distributions
                  allocable to the Certificates of the above-referenced Class.

                  Principal in respect of this Certificate is distributable
monthly as set forth herein. Accordingly, the Certificate Balance at any time
may be less than the Certificate Balance as set forth herein. This Certificate
does not evidence an obligation of, or an interest in, and is not guaranteed by
the Depositor, the Unaffiliated Seller, any Originator, the Servicer or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.

                  This certifies that CEDE & CO., is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement") among Morgan Stanley ABS Capital
I Inc., as depositor (the "Depositor"), Countrywide Home Loans Servicing LP, as
servicer (the "Servicer"), CDC Mortgage Capital Inc., as unaffiliated seller
(the "Unaffiliated Seller") and Deutsche Bank National Trust Company, as trustee
(the "Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      * * *

                                       A-3
<PAGE>


                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:

                                    DEUTSCHE BANK NATIONAL TRUST
                                      COMPANY,
                                      not in its individual capacity, but solely
                                      as Trustee



                                    By:_________________________________________



Countersigned:



By:_____________________________________
     Authorized Signatory of
     DEUTSCHE BANK NATIONAL TRUST COMPANY,
     not in its individual capacity,
     but solely as Trustee

                                      A-4
<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2004-HE1
               Mortgage Pass-Through Certificates, Series 2004-HE1

                  This Certificate is one of a duly authorized issue of
Certificates designated as CDC Mortgage Capital Trust 2004-HE1 Mortgage
Pass-Through Certificates, Series 2004-HE1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.

                  The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds on deposit in the Distribution
Account for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.

                  This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the Business Date immediately preceding such Distribution
Date; provided, however, that for any Definitive Certificates, the Record Date
shall be the last Business Day of the month next preceding the month of such
Distribution Date.

                  Distributions on this Certificate shall be made by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder shall
satisfy the conditions to receive such form of payment set forth in the
Agreement, or, if not, by check mailed by first class mail to the address of
such Certificateholder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the offices designated by the
Trustee for such purposes, or such other location specified in the notice to
Certificateholders of such final distribution.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trustee and the rights of the Certificateholders under the
Agreement at any time by the parties thereto, and Financial Security Assurance
Inc., as Certificate Insurer, with the consent of the Holders of Certificates
affected by such amendment evidencing the requisite Percentage Interest, as
provided in the Agreement.

                                      A-5
<PAGE>

Any such consent by the Holder of this Certificate shall be conclusive and
binding on such Holder and upon all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange therefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trustee upon surrender of this Certificate
for registration of transfer at the offices designated by the Trustee for such
purposes, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.

                  The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

                  No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor, the Servicer, the Unaffiliated Seller, the
Certificate Insurer and the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and no such party shall be affected by any notice to the contrary.

                  On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans, as of the last day of the related Due
Period, is less than or equal to 10% of the Maximum Pool Principal Balance, the
Servicer and/or the Class X Certificateholders will have the option to
repurchase, in whole, from the Trust Fund all remaining Mortgage Loans and all
property acquired in respect of the Mortgage Loans at a purchase price
determined as provided in the Agreement. The obligations and responsibilities
created by the Agreement will terminate as provided in Section 9.01 of the
Agreement.

                  Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.


                                      A-6
<PAGE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto____________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further direct the Trustee to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________.

Dated:

                                  ______________________________________________
                                     Signature by or on behalf of assignor

                                      A-7
<PAGE>


                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,

_______________________________________________________________________________,

for the account of_____________________________________________________________,

account number _______, or, if mailed by check, to_____________________________,

Applicable statements should be mailed to______________________________________,

_______________________________________________________________________________.

                  This information is provided by _____________________________,

the assignee named above, or___________________________________________________,

as its agent.


                                      A-8
<PAGE>
                                   EXHIBIT B

                                   [Reserved]


                                      B-1
<PAGE>
                                    EXHIBIT C

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

EXCEPT AS PROVIDED IN THE AGREEMENT, NEITHER THIS CERTIFICATE NOR ANY INTEREST
HEREIN MAY BE TRANSFERRED UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE A
REPRESENTATION LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), OR ANY FEDERAL, STATE OR LOCAL LAW
("SIMILAR LAW") MATERIALLY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE
CODE, OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR USING THE
ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO EFFECT SUCH TRANSFER. ANY PURPORTED
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE TRANSFER RESTRICTIONS SET FORTH
IN THE AGREEMENT SHALL BE VOID AND OF NO EFFECT.

Certificate No.                              :              1

Cut-off Date                                 :              February 1, 2004

First Distribution Date                      :              March 25, 2004
Percentage Interest of this
Certificate ("Denomination")                 :              100%

Principal Balance                            :              $100

CUSIP                                        :              N/A


                                      C-1
<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2004-HE1
               Mortgage Pass-Through Certificates, Series 2004-HE1

                                     Class P

                  evidencing a percentage interest in the distributions
                  allocable to the Certificates of the above-referenced Class.

                  Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Unaffiliated
Seller, the Servicer or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.

                  This certifies that __________________, is the registered
owner of the Percentage Interest evidenced by this Certificate (obtained by
dividing the denomination of this Certificate by the aggregate of the
denominations of all Certificates of the Class to which this Certificate
belongs) in certain monthly distributions pursuant to a Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement") among
Morgan Stanley ABS Capital I Inc., as depositor (the "Depositor"), Countrywide
Home Loans Servicing LP, as servicer (the "Servicer"), CDC Mortgage Capital
Inc., as unaffiliated seller (the "Unaffiliated Seller") and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  This Certificate does not have a Pass-Through Rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
offices designated by the Trustee for such purposes, or such other location
specified in the notice to Certificateholders of such final distribution.

                  No transfer of a Certificate of this Class shall be made
unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and such laws. In the
event of any such transfer, the Trustee shall require the transferor to execute
a transferor certificate (in substantially the form attached to the Agreement)
and deliver either (i) a Rule 144A Letter, in either case substantially in the
form attached to the Agreement, or (ii) a written Opinion of Counsel to the
Trustee that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from the 1933 Act or is being made
pursuant to the 1933 Act, which Opinion of Counsel shall be an expense of the
transferor.

                  Except as provided in the Agreement, no transfer of a
Certificate of this Class shall be made unless the Trustee shall have received a
representation letter from the transferee of


                                      C-2
<PAGE>

this Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan or
arrangement subject to Title I of ERISA, Section 4975 of the Code or any Similar
Law, and is not acting on behalf of any such plan or arrangement or using the
assets of any such plan or arrangement to effect such transfer. Any purported
transfer of a Certificate of this Class in violation of the transfer
restrictions set forth in the Agreement shall be void and of no effect.

                  Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      * * *

                                      C-3
<PAGE>


                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:

                                DEUTSCHE BANK NATIONAL TRUST
                                  COMPANY,
                                  not in its individual capacity, but solely as
                                  Trustee



                                By:_____________________________________________



Countersigned:



By:_______________________________________________________
     Authorized Signatory of
     DEUTSCHE BANK NATIONAL TRUST COMPANY,
     not in its individual capacity,
     but solely as Trustee

                                      C-4
<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2004-HE1
               Mortgage Pass-Through Certificates, Series 2004-HE1

                  This Certificate is one of a duly authorized issue of
Certificates designated as CDC Mortgage Capital Trust 2004-HE1 Mortgage
Pass-Through Certificates, Series 2004-HE1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.

                  The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds on deposit in the Distribution
Account for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.

                  This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
the first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

                  Distributions on this Certificate shall be made by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder shall
satisfy the conditions to receive such form of payment set forth in the
Agreement, or, if not, by check mailed by first class mail to the address of
such Certificateholder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the offices designated by the
Trustee for such purposes or such other location specified in the notice to
Certificateholders of such final distribution.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trustee and the rights of the Certificateholders under the
Agreement at any time by the parties thereto, and Financial Security Assurance
Inc., Certificate Insurer with the consent of the Holders of Certificates
affected by such amendment evidencing the requisite Percentage Interest, as
provided in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the


                                      C-5
<PAGE>


transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trustee upon surrender of this Certificate
for registration of transfer at the offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.

                  The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

                  No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor, the Servicer, the Unaffiliated Seller, the
Certificate Insurer and the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and no such party shall be affected by any notice to the contrary.

                  On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans, as of the last day of the related Due
Period, is less than or equal to 10% of the Maximum Pool Principal Balance, the
Servicer and/or the Class X Certificateholders will have the option to
repurchase, in whole, from the Trust Fund all remaining Mortgage Loans and all
property acquired in respect of the Mortgage Loans at a purchase price
determined as provided in the Agreement. The obligations and responsibilities
created by the Agreement will terminate as provided in Section 9.01 of the
Agreement.

                  Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.


                                      C-6
<PAGE>


                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto____________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further direct the Trustee to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:

_______________________________________________________________________________.

Dated:

                             ____________________________________________
                                 Signature by or on behalf of assignor


                                    C-7

<PAGE>


                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in

immediately available funds to_________________________________________________,

_______________________________________________________________________________,

for the account of_____________________________________________________________,

account number _______, or, if mailed by check, to_____________________________,

Applicable statements should be mailed to______________________________________,

_______________________________________________________________________________.

                  This information is provided by______________________________,

the assignee named above, or___________________________________________________,

as its agent.


                                      C-8
<PAGE>
                                   EXHIBIT D

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THREE
"RESIDUAL INTERESTS" IN THREE "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE A REPRESENTATION LETTER TO THE EFFECT THAT
SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR ARRANGEMENT SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR
ANY FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") MATERIALLY SIMILAR TO THE
FOREGOING PROVISIONS OF ERISA OR THE CODE, OR A PERSON ACTING ON BEHALF OF ANY
SUCH PLAN OR ARRANGEMENT OR USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO
EFFECT SUCH TRANSFER. ANY PURPORTED TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE TRANSFER RESTRICTIONS SET FORTH IN THE AGREEMENT SHALL BE VOID AND OF NO
EFFECT.

Certificate No.                              :      1

Cut-off Date                                 :      February 1, 2004

First Distribution Date                      :      March 25, 2004

Percentage Interest of this
Certificate ("Denomination")                 :      100%

CUSIP                                        :      N/A


                                      D-1
<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2004-HE1
               Mortgage Pass-Through Certificates, Series 2004-HE1

                                     Class R

                  evidencing a percentage interest in the distributions
                  allocable to the Certificates of the above-referenced Class.

                  Distributions in respect of this Certificate is distributable
monthly as set forth herein. This Class R Certificate has no Certificate Balance
and is not entitled to distributions in respect of principal or interest. This
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Unaffiliated Seller or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.

                  This certifies that ____________________ is the registered
owner of the Percentage Interest specified above of any monthly distributions
due to the Class R Certificates pursuant to a Pooling and Servicing Agreement
dated as of the Cut-off Date specified above (the "Agreement") among Morgan
Stanley ABS Capital I Inc., as depositor (the "Depositor"), Countrywide Home
Loans Servicing LP, as servicer (the "Servicer"), CDC Mortgage Capital Inc., as
unaffiliated seller (the "Unaffiliated Seller") and Deutsche Bank National Trust
Company, as trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Any distribution of the proceeds of any remaining assets of
the Trust Fund will be made only upon presentment and surrender of this Class R
Certificate at the offices designated by the Trustee for such purposes or such
other location specified in the notice to Certificateholders of such final
distribution.

                  No transfer of a Class R Certificate shall be made unless the
Trustee shall have received a representation letter from the transferee of this
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan or
arrangement subject to Title I of ERISA, Section 4975 of the Code or any Similar
Law, and is not acting on behalf of any such plan or arrangement or using the
assets of any such plan or arrangement to effect such transfer. Any purported
transfer of a Class R Certificate in violation of the transfer restrictions set
forth in the Agreement shall be void and of no effect.

                  Each Holder of this Class R Certificate shall be deemed by the
acceptance or acquisition an Ownership Interest in this Class R Certificate to
have agreed to be bound by the following provisions, and the rights of each
Person acquiring any Ownership Interest in this Class R Certificate are
expressly subject to the following provisions: (i) each Person holding or
acquiring any Ownership Interest in this Class R Certificate shall be a
Permitted Transferee and shall promptly notify the Trustee of any change or
impending change in its status as a Permitted Transferee, (ii) no Ownership
Interest in this Class R Certificate may be registered on the



                                      D-2

<PAGE>

Closing Date or thereafter transferred, and the Trustee shall not register the
Transfer of this Certificate unless, in addition to the certificates required to
be delivered to the Trustee under Section 5.02(b) of the Agreement, the Trustee
shall have been furnished with a Transfer Affidavit of the initial owner or the
proposed transferee in the form attached as Exhibit H to the Agreement, (iii)
each Person holding or acquiring any Ownership Interest in this Class R
Certificate shall agree (A) to obtain a Transfer Affidavit from any other Person
to whom such Person attempts to Transfer its Ownership Interest this Class R
Certificate, (B) to obtain a Transfer Affidavit from any Person for whom such
Person is acting as nominee, trustee or agent in connection with any Transfer of
this Class R Certificate and (C) not to Transfer the Ownership Interest in this
Class R Certificate or to cause the Transfer of the Ownership Interest in this
Class R Certificate to any other Person if it has actual knowledge that such
Person is not a Permitted Transferee and (iv) any attempted or purported
Transfer of the Ownership Interest in this Class R Certificate in violation of
the provisions herein shall be absolutely null and void and shall vest no rights
in the purported Transferee.

                  Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.


                                      D-3
<PAGE>


                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:

                          DEUTSCHE BANK NATIONAL TRUST COMPANY,
                               not in its individual capacity, but solely as
                               Trustee



                          By:___________________________________________________



Countersigned:



By:_______________________________________________
     Authorized Signatory of
     DEUTSCHE BANK NATIONAL TRUST COMPANY,
     not in its individual capacity,
     but solely as Trustee

                                      D-4
<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2004-HE1
               Mortgage Pass-Through Certificates, Series 2004-HE1

                  This Certificate is one of a duly authorized issue of
Certificates designated as CDC Mortgage Capital Trust 2004-HE1 Mortgage
Pass-Through Certificates, Series 2004-HE1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.

                  The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds on deposit in the Distribution
Account for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.

                  This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

                  Distributions on this Certificate shall be made by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder shall
satisfy the conditions to receive such form of payment set forth in the
Agreement, or, if not, by check mailed by first class mail to the address of
such Certificateholder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the offices designated by the
Trustee for such purposes or such other location specified in the notice to
Certificateholders of such final distribution.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trustee and the rights of the Certificateholders under the
Agreement at any time by the parties thereto, and Financial Security Assurance
Inc., as Certificate Insurer with the consent of the Holders of Certificates
affected by such amendment evidencing the requisite Percentage Interest, as
provided in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the


                                      D-5
<PAGE>


transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trustee upon surrender of this Certificate
for registration of transfer at the offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in California,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.

                  The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

                  No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor, the Servicer, the Unaffiliated Seller, the
Certificate Insurer and the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and no such party shall be affected by any notice to the contrary.

                  On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans, as of the last day of the related Due
Period, is less than or equal to 10% of the Maximum Pool Principal Balance, the
Servicer and/or the Class X Certificateholder will have the option to
repurchase, in whole, from the Trust Fund all remaining Mortgage Loans and all
property acquired in respect of the Mortgage Loans at a purchase price
determined as provided in the Agreement. The obligations and responsibilities
created by the Agreement will terminate as provided in Section 9.01 of the
Agreement.

                  Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.


                                      D-6
<PAGE>


                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)

and transfer(s) unto____________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further direct the Trustee to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:

_______________________________________________________________________________.

Dated:

                            _____________________________________________
                                Signature by or on behalf of assignor


                                      D-7
<PAGE>


                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,

_______________________________________________________________________________,

for the account of_____________________________________________________________,

account number _______, or, if mailed by check, to_____________________________,

Applicable statements should be mailed to______________________________________,

_______________________________________________________________________________.

                  This information is provided by______________________________,

the assignee named above, or___________________________________________________,

as its agent.


                                      D-8
<PAGE>
                                   EXHIBIT E

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
OWNERSHIP OF TWO "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

EXCEPT AS PROVIDED IN THE AGREEMENT, NEITHER THIS CERTIFICATE NOR ANY INTEREST
HEREIN MAY BE TRANSFERRED UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE A
REPRESENTATION LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), OR ANY FEDERAL, STATE OR LOCAL LAW
("SIMILAR LAW") MATERIALLY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE
CODE, OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR USING THE
ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO EFFECT SUCH TRANSFER. ANY PURPORTED
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE TRANSFER RESTRICTIONS SET FORTH
IN THE AGREEMENT SHALL BE VOID AND OF NO EFFECT.

Certificate No.                              :           1

Cut-off Date                                 :           February 1, 2004

First Distribution Date                      :           March 25, 2004

Percentage Interest of this
Certificate ("Denomination")                 :           100%

CUSIP                                        :           N/A


                                      E-1
<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.

                       CDC Mortgage Capital Trust 2004-HE1
               Mortgage Pass-Through Certificates, Series 2004-HE1

                                     Class X

                  evidencing a percentage interest in the distributions
                  allocable to the Certificates of the above-referenced Class.

                  Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Servicer, the
Unaffiliated Seller or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.

                  This certifies that _____________________, is the registered
owner of the Percentage Interest evidenced by this Certificate (obtained by
dividing the denomination of this Certificate by the aggregate of the
denominations of all Certificates of the Class to which this Certificate
belongs) in certain monthly distributions pursuant to a Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement") among
Morgan Stanley ABS Capital I Inc., as depositor (the "Depositor"), Countrywide
Home Loans Servicing LP, as servicer (the "Servicer"), CDC Mortgage Capital
Inc., as unaffiliated seller (the "Unaffiliated Seller") and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

                  This Certificate will be entitled to distributions only to the
extent set forth in the Agreement. In addition, any distribution of the proceeds
of any remaining assets of the Trust will be made only upon presentment and
surrender of this Certificate at the offices designated by the Trustee for such
purposes, or such other location specified in the notice to Certificateholders
of such final distribution.

                  No transfer of a Certificate of this Class shall be made
unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and such laws. In the
event of any such transfer, the Trustee shall require the transferor to execute
a transferor certificate (in substantially the form attached to the Agreement)
and deliver either (i) a Rule 144A Letter, in either case substantially in the
form attached to the Agreement, or (ii) a written Opinion of Counsel to the
Trustee that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from the 1933 Act or is being made
pursuant to the 1933 Act, which Opinion of Counsel shall be an expense of the
transferor.

                  Except as provided in the Agreement, no transfer of a
Certificate of this Class shall be made unless the Trustee shall have received a
representation letter from the transferee of

                                      E-2
<PAGE>


this Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan or
arrangement subject to Title I of ERISA, Section 4975 of the Code or any Similar
Law, and is not acting on behalf of any such plan or arrangement or using the
assets of any such plan or arrangement to effect such transfer. Any purported
transfer of a Certificate of this Class in violation of the transfer
restrictions set forth in the Agreement shall be void and of no effect.

                  Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  This Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      * * *

                                      E-3
<PAGE>


                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:

                               DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                   not in its individual capacity, but solely as
                                   Trustee



                               By:______________________________________________



Countersigned:



By:______________________________________________________
     Authorized Signatory of
     DEUTSCHE BANK NATIONAL TRUST COMPANY,
     not in its individual capacity,
     but solely as Trustee

                                      E-4
<PAGE>


                        MORGAN STANLEY ABS CAPITAL I INC.
                       CDC Mortgage Capital Trust 2004-HE1
               Mortgage Pass-Through Certificates, Series 2004-HE1

                  This Certificate is one of a duly authorized issue of
Certificates designated as CDC Mortgage Capital Trust 2004-HE1 Mortgage
Pass-Through Certificates, Series 2004-HE1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.

                  The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds on deposit in the Distribution
Account for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.

                  This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.

                  Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
the first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

                  Distributions on this Certificate shall be made by wire
transfer of immediately available funds to the account of the Holder hereof at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder shall
satisfy the conditions to receive such form of payment set forth in the
Agreement, or, if not, by check mailed by first class mail to the address of
such Certificateholder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the offices designated by the
Trustee for such purposes or such other location specified in the notice to
Certificateholders of such final distribution.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trustee and the rights of the Certificateholders under the
Agreement at any time by the parties thereto, and Financial Security Assurance
Inc., as Certificate Insurer with the consent of the Holders of Certificates
affected by such amendment evidencing the requisite Percentage Interest, as
provided in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the

                                      E-5

<PAGE>

transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trustee upon surrender of this Certificate
for registration of transfer at the offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.

                  The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

                  No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  The Depositor, the Servicer, the Unaffiliated Seller, the
Certificate Insurer and the Trustee and any agent of any of them may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and no such party shall be affected by any notice to the contrary.

                  On any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans, as of the last day of the related Due
Period, is less than or equal to 10% of the Maximum Principal Balance, the
Servicer and/or the Class X Certificateholders will have the option to
repurchase, in whole, from the Trust Fund all remaining Mortgage Loans and all
property acquired in respect of the Mortgage Loans at a purchase price
determined as provided in the Agreement. The obligations and responsibilities
created by the Agreement will terminate as provided in Section 9.01 of the
Agreement.

                  Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.


                                      E-6
<PAGE>


                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)

and transfer(s) unto____________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further direct the Trustee to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________.

Dated:

                                   _____________________________________________
                                       Signature by or on behalf of assignor

                                      E-7
<PAGE>


                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in

immediately available funds to_________________________________________________,

_______________________________________________________________________________,

for the account of_____________________________________________________________,

account number _______, or, if mailed by check, to_____________________________,

Applicable statements should be mailed to______________________________________,

_______________________________________________________________________________.

                  This information is provided by_____________________________ ,

the assignee named above, or___________________________________________________,
as its agent.

                                      E-8

<PAGE>
                                    EXHIBIT F

                    FORM OF INITIAL CERTIFICATION OF TRUSTEE

                                     [date]

Morgan Stanley ABS Capital I Inc.
1585 Broadway
New York, New York 10036

Countrywide Home Loans Servicing LP
450 Park Granada
Calabasas, California 91302

CDC Mortgage Capital Inc.
9 West 57th Street, 36th Floor
New York, New York 10019

Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022

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

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

               Re:  Pooling and Servicing Agreement dated as of February 1, 2004
                    among Morgan Stanley ABS Capital I Inc., as Depositor,
                    Countrywide Home Loans Servicing LP, as Servicer, CDC
                    Mortgage Capital Inc., as Unaffiliated Seller and Deutsche
                    Bank National Trust Company, as Trustee, CDC Mortgage
                    Capital Trust Series 2004-HE1

Gentlemen:

                  In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), for each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
listed in the attached schedule), it has received:

                  (i)      the original Mortgage Note, endorsed as provided in
         the following form: "Pay to the order of ________, without recourse";
         and

                  (ii)     a duly executed assignment of the Mortgage.

                  Based on its review and examination and only as to the
foregoing documents, such documents appear regular on their face and related to
such Mortgage Loan.


                                      F-1
<PAGE>

                  The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, perfection, priority, effectiveness or suitability
of any such Mortgage Loan. Notwithstanding anything herein to the contrary, the
Trustee has made no determination and makes no representations as to whether (i)
any endorsement is sufficient to transfer all right, title and interest of the
party so endorsing, as Noteholder or assignee thereof, in and to that Mortgage
Note or (ii) any assignment is in recordable form or sufficient to effect the
assignment of and transfer to the assignee thereof, under the Mortgage to which
the assignment relates.

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.

                           DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                as Trustee



                           By:__________________________________________________

                                Name:___________________________________________

                                Title:__________________________________________



                                      F-2
<PAGE>


                                    EXHIBIT G

                     FORM OF FINAL CERTIFICATION OF TRUSTEE

                                     [date]

Morgan Stanley ABS Capital I Inc.
1585 Broadway
New York, New York 10036

Countrywide Home Loans Servicing LP
450 Park Granada
Calabasas, California 91302

CDC Mortgage Capital Inc.
9 West 57th Street, 36th Floor
New York, New York 10019

Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022

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

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

               Re:  Pooling and Servicing Agreement dated as of February 1, 2004
                    among Morgan Stanley ABS Capital I Inc., as Depositor,
                    Countrywide Home Loans Servicing LP, as Servicer, CDC
                    Mortgage Capital Inc., as Unaffiliated Seller and Deutsche
                    Bank National Trust Company, as Trustee, CDC Mortgage
                    Capital Trust Series 2004-HE1

Gentlemen:

                  In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), the
undersigned, as Trustee, hereby certifies that as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on the attached Document Exception Report) it has received:

                  (i) The original Mortgage Note, endorsed in the form provided
         in Section 2.01 of the Pooling and Servicing Agreement, with all
         intervening endorsements showing a complete chain of endorsement from
         the originator to the last endorsee.

                  (ii)     The original recorded Mortgage.

                  (iii) A duly executed assignment of the Mortgage in the form
         provided in Section 2.01 of the Pooling and Servicing Agreement; or, if
         the Unaffiliated Seller has certified or the Trustee otherwise knows
         that the related Mortgage has not been returned


                                      G-1


<PAGE>

         from the applicable recording office, a copy of the assignment of the
         Mortgage (excluding information to be provided by the recording
         office).

                  (iv) The original or duplicate original recorded assignment or
         assignments of the Mortgage showing a complete chain of assignment from
         the originator to the last endorsee.

                  (v) The original or duplicate lender's title policy and all
         riders thereto or, if such original is unavailable, any one of an
         original title binder, either an original title binder or an original
         or copy of the title commitment, and if copies then certified to be
         true and complete by the title company.

                  Based on its review and examination and only as to the
foregoing documents, (a) such documents appear regular on their face and related
to such Mortgage Loan, and (b) the information set forth in items (1), (2) and
(18) of the Mortgage Loan Schedule and items (1), (9) and (17) of the Data Tape
Information accurately reflects information set forth in the Custodial File.

                  The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review of the Custodial
File specifically required in the Pooling and Servicing Agreement. The Trustee
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, or
(ii) the collectability, insurability, perfection, priority, effectiveness or
suitability of any such Mortgage Loan. Notwithstanding anything herein to the
contrary, the Trustee has made no determination and makes no representations as
to whether (i) any endorsement is sufficient to transfer all right, title and
interest of the party so endorsing, as Noteholder or assignee thereof, in and to
that Mortgage Note or (ii) any assignment is in recordable form or sufficient to
effect the assignment of and transfer to the assignee thereof, under the
Mortgage to which the assignment relates.

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.

                                DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                     as Trustee



                                By:_____________________________________________

                                     Name:______________________________________

                                     Title:_____________________________________



                                      G-2


<PAGE>
                                  EXHIBIT H

                               TRANSFER AFFIDAVIT

                MORGAN STANLEY ABS CAPITAL I INC. Trust 2004-HE1,
                       Mortgage Pass-Through Certificates,
                                 Series 2004-HE1

STATE OF                            )
                                    ) ss.:
COUNTY OF                           )

                  The undersigned, being first duly sworn, deposes and says as
follows:

                  1. The undersigned is an officer of ___________________, the
proposed Transferee of an Ownership Interest in a Class R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Series, by and among Morgan
Stanley ABS Capital I Inc., as depositor (the "Depositor"), Countrywide Home
Loans Servicing LP, as servicer, CDC Mortgage Capital Inc., as unaffiliated
seller (the "Unaffiliated Seller") and Deutsche Bank National Trust Company, as
Trustee. Capitalized terms used, but not defined herein or in Exhibit 1 hereto,
shall have the meanings ascribed to such terms in the Agreement. The Transferee
has authorized the undersigned to make this affidavit on behalf of the
Transferee for the benefit of the Depositor and the Trustee.

                  2. The Transferee is not, as of the date hereof, and will not
be, as of the date of the Transfer, a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986. The
Transferee will endeavor to remain other than a disqualified organization for so
long as it retains its Ownership Interest in the Certificate.

                  3. The Transferee has historically paid its debts as they came
due and will continue to pay its debts as they come due in the future.

                  4. The Transferee has no present knowledge or expectation that
it will be unable to pay any United States taxes owed by it or become insolvent
or subject to a bankruptcy proceeding for so long as the Certificate remains
outstanding.

                  5. The Transferee has been advised of, and understands that as
the holder of a noneconomic residual interest it may incur tax liabilities in
excess of any cash flows generated by the interest. The Transferee intends to
pay such taxes associated with holding the Certificate as they become due.

                  6. The Transferee will not cause income from the Certificate
to be attributable to a foreign permanent establishment or fixed base (within
the meaning of an applicable income tax treaty) of the Transferee or another
U.S. taxpayer.


                                       H-1



<PAGE>

                  (1)7. [A. Formula Test] The Transferee agrees that the present
value of the anticipated tax liabilities associated with holding the Certificate
does not exceed the sum of the present value of any consideration given to the
Transferee to acquire the Certificate, the present value of the expected future
distributions on the Certificate, and the present value of the anticipated tax
savings associated with holding the interest as the REMIC generates losses. The
Transferee agrees that it complied with U.S. Treasury Regulations Section
1.860E-1(c)(8) in making such representation.

                  The Transferee agrees that it is not a foreign permanent
establishment or fixed base (within the meaning of an applicable income tax
treaty) of the Transferor or another U.S. taxpayer.

                  [B. Asset Test] The Transferee, at the time of the transfer,
and at the close of the Transferee's two fiscal years preceding the year of the
transfer, had gross assets for financial reporting purposes in excess of $100
million and net assets in excess of $10 million (excluding any obligation of a
person related to the Transferee within the meaning of U.S. Treasury Regulations
Section 1.860E-1(c)(6)(ii) or any other asset if a principle purpose for holding
or acquiring the other asset was to permit the Transferee to satisfy the above
stated minimum asset requirements).

                  The Transferee is an "eligible corporation," as defined in
U.S. Treasury Regulations Section 1.860E-1(c)(6)(i). The Transferee agrees, in
connection with any subsequent transfer of its Ownership Interest in the
Certificate, to transfer its Ownership Interest only to another "eligible
corporation," as defined in U.S. Treasury Regulations Section 1.860E-1(c)(6)(i),
and to honor the restrictions on subsequent transfers of the Certificate by
transferring its Ownership Interest only in a transaction that satisfies the
requirements of U.S. Treasury Regulations Section 1.860E-1(c)(4)(i), (ii) (iii)
and U.S. Treasury Regulations Section 1.860E-1(c)(5).

                  The Transferee determined the consideration paid to it to
acquire the Certificate in good faith and based on reasonable market assumptions
(including, but not limited to, borrowing and investment rates, prepayment and
loss assumptions, expense and reinvestment assumptions, tax rates and other
factors specific to the Transferee).

                  8. The Transferee is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includable in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.

                  9. The Transferee's taxpayer identification number is _______.


____________________________________
(1) Insert either section 7A or 7B.



                                      H-2


                                       3
<PAGE>

                  10. The Transferee is not an employee benefit plan or
arrangement subject to Title I of ERISA, Section 4975 of the Code or any Similar
Law, and is not acting on behalf of any such plan or arrangement or using the
assets of any such plan or arrangement to effect the Transfer.

                  11. The Transferee has reviewed the provisions of Section
5.02(c) of the Agreement and understands the legal consequences of the
acquisition of an Ownership Interest in the Certificate, including, without
limitation, the restrictions on subsequent Transfers and the provisions
regarding voiding the Transfer and mandatory sales. The Transferee expressly
agrees to be bound by and to abide by the provisions of Section 5.02(c) of the
Agreement and the restrictions noted on the face of the Certificate. The
Transferee understands and agrees that any breach of any of the representations
included herein shall render the Transfer to the Transferee contemplated hereby
null and void.

                  12. The Transferee consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Certificate will only be owned,
directly or indirectly, by a Transferee that is not a disqualified organization.

                  13. The Transferee will not transfer its interest in the
Certificate for the purpose of impeding the assessment or collection of any tax.

                  14. The Transferee will not transfer such Certificate unless
(i) it has received from any subsequent transferee an affidavit in substantially
the same form as this affidavit containing the same representations set forth
herein, and (ii) as of the time of the transfer, it does not have actual
knowledge that such affidavit is false. The Transferee will deliver such
affidavit to the Trustee upon receipt.

                                      * * *

                                      H-3
<PAGE>


                  IN WITNESS WHEREOF, the Transferee has caused this instrument
to be executed on its behalf, pursuant to authority of its Board of Directors,
by its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this __ day of ________, 20__.




                                                     ___________________________
                                                     Print Name of Transferee



                                                     By:________________________
                                                          Name:
                                                          Title:
[Corporate Seal]

ATTEST:



___________________________________________
[Assistant] Secretary

                  Personally appeared before me the above-named __________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the ___________ of the Transferee, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Transferee.

                  Subscribed and sworn before me this __ day of ________, 20__.



                                               ______________________________
                                               NOTARY PUBLIC

                                               My Commission expires the __ day
                                               of _________, 20__

                                      H-4

<PAGE>
                                  EXHIBIT I

                         FORM OF TRANSFEROR CERTIFICATE





                                                             __________, 20_____




Morgan Stanley ABS Capital I Inc.
1585 Broadway
New York, New York 10036
Attention:  Michelle Wilke

Deutsche Bank National Trust Company,
as Trustee,
1761 East St. Andrew Place
Santa Ana, California 92705

                  Re:     CDC Mortgage Capital Trust, Series 2004-HE1, Mortgage
                          Pass-Through  Certificates, Series 2004-HE1, Class ___

Ladies and Gentlemen:

                  In connection with our disposition of the above Certificates
we certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act and
(c) to the extent we are disposing of a Residual Certificate, we have no
knowledge the Transferee is not a Permitted Transferee.

                                                     Very truly yours,



                                                     ___________________________
                                                     Print Name of Transferor



                                                     By:________________________
                                                            Authorized Officer

                                      I-1

<PAGE>
                                    EXHIBIT J

                            FORM OF RULE 144A LETTER





                                                            ______________, 20__




Morgan Stanley ABS Capital I Inc.
1585 Broadway
New York, New York 10036
Attention:  Michelle Wilke

Deutsche Bank National Trust Company,
as Trustee,
1761 East St. Andrew Place
Santa Ana, California 92705

                  Re:      CDC Mortgage Capital Trust, Series 2004-HE1, Mortgage
                           Pass-Through Certificates, Series 2004-HE1, Class____

Ladies and Gentlemen:

                  In connection with our acquisition of the above Certificates
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan or
arrangement that is subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), or any federal, state or local law
materially similar to the foregoing provisions of ERISA or the Code, and we are
not acting on behalf of any such plan or arrangement or using the assets of any
such plan or arrangement to effect our purchase of the Certificates or, with
respect to any Certificates other than Class P, Class R and Class X
Certificates, we are an insurance company and are purchasing the Certificates
with funds contained in an "insurance company general account" (as defined term
is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60
("PTCE 95-60")), and the purchase and holding of such Certificates are covered
under Sections I and III of PTCE 95-60, (e) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar


                                      J-1


<PAGE>

security to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Certificates, any interest in the Certificates or any other
similar security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, and (f) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that such Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.


                                      J-2
<PAGE>


                                                            ANNEX 1 TO EXHIBIT J

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

                  [For Transferees Other Than Registered Investment Companies]

                  The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.

                  2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $_________ in securities (except for
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.

                  _________   Corporation, etc. The Buyer is a corporation
                              (other than a bank, savings and loan association
                              or similar institution), Massachusetts or similar
                              business trust, partnership, or charitable
                              organization described in Section 501(c)(3) of the
                              Internal Revenue Code of 1986, as amended.

                 __________   Bank. The Buyer (a) is a national bank or banking
                              institution organized under the laws of any State,
                              territory or the District of Columbia, the
                              business of which is substantially confined to
                              banking and is supervised by the State or
                              territorial banking commission or similar official
                              or is a foreign bank or equivalent institution,
                              and (b) has an audited net worth of at least
                              $25,000,000 as demonstrated in its latest annual
                              financial statements, a copy of which is attached
                              hereto.

                 ___________  Savings and Loan. The Buyer (a) is a savings and
                              loan association, building and loan association,
                              cooperative bank, homestead association or similar
                              institution, which is supervised and examined by a
                              State or Federal authority having supervision over
                              any such institutions or is a foreign savings and
                              loan association or equivalent institution and (b)
                              has an audited net worth of at least $25,000,000
                              as demonstrated in its latest annual financial
                              statements, a copy of which is attached hereto.

                 ___________  Broker-dealer. The Buyer is a dealer registered
                              pursuant to Section 15 of the Securities Exchange
                              Act of 1934.

                                      J-3

<PAGE>


                ____________  Insurance Company. The Buyer is an insurance
                              company whose primary and predominant business
                              activity is the writing of insurance or the
                              reinsuring of risks underwritten by insurance
                              companies and which is subject to supervision by
                              the insurance commissioner or a similar official
                              or agency of a State, territory or the District of
                              Columbia.

                ____________  State or Local Plan. The Buyer is a plan
                              established and maintained by a State, its
                              political subdivisions, or any agency or
                              instrumentality of the State or its political
                              subdivisions, for the benefit of its employees.

                ____________  ERISA Plan. The Buyer is an employee benefit plan
                              within the meaning of Title I of the Employee
                              Retirement Income Security Act of 1974.


                ____________  Investment Advisor. The Buyer is an investment
                              advisor registered under the Investment Advisors
                              Act of 1940.

                ____________  Small Business Investment Company. Buyer is a
                              small business investment company licensed by the
                              U.S. Small Business Administration under Section
                              301(c) or (d) of the Small Business Investment Act
                              of 1958.

                ____________  Business Development Company. Buyer is a business
                              development company as defined in Section 202(a)
                              (22) of the Investment Advisors Act of 1940.

                  3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.

                  4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the basis
of their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market. Further, in determining such
aggregate amount, the Buyer may have included securities owned by subsidiaries
of the Buyer, but only if such subsidiaries are consolidated with the Buyer in
its financial statements prepared in accordance with generally accepted
accounting principles and if the investments of such subsidiaries are managed
under the Buyer's direction. However, such securities were not included if the
Buyer is a majority-owned, consolidated subsidiary of another enterprise and the
Buyer is not itself a reporting company under the Securities Exchange Act of
1934, as amended.

                                      J-4


                                       6
<PAGE>

                  5. The Buyer acknowledges that it is familiar with Rule 144A
and understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.

                  6. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.




                                                     ___________________________
                                                     Print Name of Transferor



                                                     By:________________________
                                                          Name:
                                                          Title:



                                                     Date:______________________


                                      J-5


<PAGE>


                                                            ANNEX 2 TO EXHIBIT J

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That are Registered Investment Companies]

                  The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.

                  2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year. For purposes of determining the amount of securities
owned by the Buyer or the Buyer's Family of Investment Companies, the cost of
such securities was used, except (i) where the Buyer or the Buyer's Family of
Investment Companies reports its securities holdings in its financial statements
on the basis of their market value, and (ii) no current information with respect
to the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market.

                   _________  The Buyer owned $______ in securities (other than
                              the excluded securities referred to below) as of
                              the end of the Buyer's most recent fiscal year
                              (such amount being calculated in accordance with
                              Rule 144A).

                   _________  The Buyer is part of a Family of Investment
                              Companies which owned in the aggregate $ ________
                              in securities (other than the excluded securities
                              referred to below) as of the end of the Buyer's
                              most recent fiscal year (such amount being
                              calculated in accordance with Rule 144A).

                  3. The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).

                  4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,


                                      J-6


<PAGE>

(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.

                  5. The Buyer is familiar with Rule 144A and understands that
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

                  6. Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.




                                                     ___________________________
                                                     Print Name of Transferor



                                                     By:________________________
                                                          Name:
                                                          Title:



                                                     IF AN ADVISER:



                                                     ___________________________
                                                         Print Name of Buyer



                                                    Date:_______________________

                                      J-7
<PAGE>
                                   EXHIBIT K

                               REQUEST FOR RELEASE
                                  (for Trustee)

To:      [Address]

                  Re:

                  In connection with the administration of the Mortgage Loans
held by you as the Trustee on behalf of the Certificateholders, we request the
release, and acknowledge receipt, of the (Custodial File/[specify documents])
for the Mortgage Loan described below, for the reason indicated.

Mortgagor's Name, Address & Zip Code:
------------------------------------


Mortgage Loan Number:
--------------------


Send Custodial File to:
----------------------


Reason for Requesting Documents (check one)
-------------------------------------------

         _________  1. Mortgage Loan Paid in Full. (The Company hereby certifies
                    that all amounts received in connection therewith have been
                    credited to the Collection Account as provided in the
                    Pooling and Servicing Agreement.)

         __________ 2. Mortgage Loan Repurchase Pursuant to Subsection 2.03 of
                    the Pooling and Servicing Agreement. (The Company hereby
                    certifies that the repurchase price has been credited to the
                    Collection Account as provided in the Pooling and Servicing
                    Agreement.)

         __________ 3. Mortgage Loan Liquidated By _________________. (The
                    Company hereby certifies that all proceeds of foreclosure,
                    insurance, condemnation or other liquidation have been
                    finally received and credited to the Collection Account
                    pursuant to the Pooling and Servicing Agreement.)

         __________ 4. Mortgage Loan in Foreclosure.

         __________ 5. Other (explain).

                  If box 1, 2 or 3 above is checked, and if all or part of the
Custodial File was previously released to us, please release to us our previous
request and receipt on file with you, as well as any additional documents in
your possession relating to the specified Mortgage Loan.

                                      K-1


<PAGE>

                  If box 4 or 5 above is checked, upon our return of all of the
above documents to you as the Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.

                                           COUNTRYWIDE HOME LOANS SERVICING LP



                                           By:__________________________________
                                                Name:
                                                Title:
                                                Date:

                                      K-2
<PAGE>
                                    EXHIBIT L

                      FORM OF SUBSEQUENT TRANSFER AGREEMENT

                       CDC MORTGAGE CAPITAL TRUST 2004-HE1

                  Pursuant to separate Mortgage Loan Purchase Agreements, Aames
Capital Corporation ("Aames"), Oakmont Mortgage Company, Inc. ("Oakmont"),
Encore Credit Corp. ("Encore"), People's Choice Home Loan, Inc., ("People's
Choice"), Accredited Home Lenders, Inc. ("Accredited"), The CIT Group/Consumer
Finance, Inc. (and its affiliates) (collectively, "CIT"), Master Financial
Corporation ("Master Financial"), Chapel Mortgage Corporation ("Chapel"), First
Guaranty Mortgage Corporation ("FGMC"), SIB Mortgage Corp. ("SIB"), IMPAC
Funding Corporation (and its affiliate, Novelle Financial Services, Inc.
("Novelle")), "IFC"), First Banc Mortgage, Inc. ("First Banc"), Ameriquest
Mortgage Company ("Ameriquest"), BNC Mortgage, Inc. ("BNC"), Aegis Mortgage
Corporation ("Aegis"), and Lenders Direct Capital Corporation ("Lenders Direct"
(and together with Aames, Oakmont, Encore, People's Choice, Accredited, CIT,
Master Financial, CIT, FGMC, SIB, IFC, First Banc, Ameriquest, BNC, and Aegis,
the "Originators") have agreed to sell to CDC Mortgage Capital Inc. (the
"Unaffiliated Seller") certain mortgage loans (each, a "Mortgage Loan"). These
Mortgage Loans may in turn be sold by the Unaffiliated Seller to MORGAN STANLEY
ABS CAPITAL I INC. (the "Depositor") and then sold by the Depositor to the CDC
Mortgage Capital Trust 2004-HE1 (the "Trust Fund"). The Trust Fund was
established pursuant to a Pooling and Servicing Agreement, dated as of February
1, 2004 (the "Pooling and Servicing Agreement") among the Unaffiliated Seller,
the Depositor, Countrywide Home Loans Servicing LP, as servicer (the "Servicer")
and Deutsche Bank National Trust Company, as trustee (the "Trustee"). The
Pooling and Servicing Agreement permits a Pre-Funding feature, allowing for the
acquisition by the Trust Fund of Subsequent Mortgage Loans during the
Pre-Funding Period. Representations and warranties with respect to the Mortgage
Loans have been made by the Originators pursuant to separate Assignment and
Recognition Agreements.

                  Capitalized terms used herein and not defined herein have
their respective meanings as set forth in the Pooling and Servicing Agreement.

                  Conveyance of Subsequent Mortgage Loans.
                  ---------------------------------------

                  The Unaffiliated Seller does hereby irrevocably sell,
transfer, assign, set over and otherwise convey to the Depositor, without
recourse (except as otherwise explicitly provided for herein) all of its right,
title and interest in and to the Subsequent Mortgage Loans, exclusive of the
obligations of the Unaffiliated Seller or any other Person with respect to the
Subsequent Mortgage Loans but including specifically, without limitation, the
Mortgages, the Custodial Files and all other documents, materials and properties
appurtenant thereto and the Mortgage Notes, including all interest and principal
collected by the Unaffiliated Seller on or with respect to the Subsequent
Mortgage Loans after the related Subsequent Cut-off Date, together with all of
its right, title and interest in and to the proceeds received after such
Subsequent Cut-off Date of any related insurance policies on behalf of the
Depositor.



                                      L-1



<PAGE>

                  The Depositor does hereby irrevocably sell, transfer, assign,
set over and otherwise convey to the Trust Fund, without recourse (except as
otherwise explicitly provided for herein) all of its right, title and interest
in and to the Subsequent Mortgage Loans, exclusive of the obligations of the
Depositor or any other Person with respect to the Subsequent Mortgage Loans but
including specifically, without limitation, the Mortgages, the Custodial Files
and all other documents, materials and properties appurtenant thereto and the
Mortgage Notes, including all interest and principal collected by the Depositor
on or with respect to the Subsequent Mortgage Loans after the related Subsequent
Cut-off Date, together with all of its right, title and interest in and to the
proceeds received after such Subsequent Cut-off Date of any related insurance
policies on behalf of the Trust Fund.

                  The expenses and costs relating to the delivery of the
Subsequent Mortgage Loans specified in this Subsequent Transfer Agreement and
the Pooling and Servicing Agreement shall be borne by the Unaffiliated Seller.

                  The Unaffiliated Seller hereby affirms the representation and
warranty set forth in Sections 3.01(f), 3.01(h), 3.01(n), 3.01(p) and 3.03 of
the Unaffiliated Seller's Agreement with respect to the Subsequent Mortgage
Loans as of the date hereof. The Unaffiliated Seller hereby delivers notice and
confirms that each of the conditions set forth in Section 2.01(c) of the Pooling
and Servicing Agreement are satisfied as of the date hereof.

                  The Servicer hereby affirms the representations and warranties
set forth in Schedule IIA to the Pooling and Servicing Agreement with respect to
the Subsequent Mortgage Loans as of the date hereof.

                  Additional terms of the sale are attached hereto as Attachment
A.

                  To the extent permitted by applicable law, this Subsequent
Transfer Agreement, or a memorandum thereof if permitted under applicable law,
is subject to recordation in all appropriate public offices for real property
records in all counties or other comparable jurisdictions in which any or all of
the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the Unaffiliated Seller's expense, but only when
accompanied by an opinion of counsel to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders or
is necessary for the administration or servicing of the Mortgage Loans.

                  This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to the principles of conflicts of laws.

                  This Agreement may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.

                  All terms and conditions of the Pooling and Servicing
Agreement are hereby ratified, confirmed and incorporated herein; provided, that
in the event of any conflict the provisions of this Subsequent Transfer
Agreement shall control over the conflicting provisions of the Pooling and
Servicing Agreement.


                                      L-2



<PAGE>

                  [Remainder of Page Intentionally Left Blank]

                                      L-3
<PAGE>


                                    CDC MORTGAGE CAPITAL INC., as Unaffiliated
                                       Seller


                                    By:_________________________________________
                                         Name:
                                         Title:




                                    By:_________________________________________
                                         Name:
                                         Title:


                                    MORGAN STANLEY ABS CAPITAL I INC.,
                                         as Depositor


                                    By:_________________________________________
                                         Name:
                                         Title:


                                    COUNTRYWIDE HOME LOANS SERVICING LP,
                                         as Servicer


                                    By:_________________________________________
                                         Name:
                                         Title:


                                    DEUTSCHE BANK NATIONAL TRUST COMPANY,
                                         as Trustee


                                    By:_________________________________________
                                         Name:
                                         Title:




                                    By:_________________________________________
                                         Name:
                                         Title:



                                      L-4
<PAGE>
                                    EXHIBIT M

                           FORM OF CERTIFICATION TO BE
                              PROVIDED TO DEPOSITOR


Re:      CDC Mortgage Capital Trust 2004-HE1 Mortgage Pass-Through Certificates,
         Series 2004-HE1, issued pursuant to the Pooling and Servicing
         Agreement, dated as of February 1, 2004 (the "Pooling and Servicing
         Agreement"), among Morgan Stanley ABS Capital I Inc., as depositor (the
         "Depositor", CDC Mortgage Capital Inc., as unaffiliated seller,
         Deutsche Bank National Trust Company, as trustee (the "Trustee"), and
         Countrywide Home Loans Servicing LP, as servicer (the "Servicer").

I, [identify the certifying individual], certify that:

         1.       I have reviewed this annual report on Form 10-K ("Annual
                  Report"), and all reports on Form 8-K containing distribution
                  or servicing reports (collectively with this Annual Report,
                  the "Reports") filed in respect of periods included in the
                  year covered by this Annual Report of the Depositor relating
                  to the above-referenced trust and series of certificates;

         2.       Based on my knowledge, the information in the Reports, taken
                  as a whole, does not contain any untrue statement of a
                  material fact or omit to state a material fact necessary to
                  make the statements made, in light of the circumstances under
                  which such statements were made, not misleading as of the last
                  day of the period covered by this Annual Report;

         3.       Based on my knowledge, the distribution or servicing
                  information required to be provided to the Trustee by the
                  Servicer under the Pooling and Servicing Agreement for
                  inclusion in the Reports is included in these Reports;

         4.       Based on my knowledge and upon the annual compliance statement
                  included in this Annual Report and required to be delivered to
                  the Trustee in accordance with the terms of the Pooling and
                  Servicing Agreement, and except as disclosed in the Reports,
                  the Servicer has fulfilled its obligations under the Pooling
                  and Servicing Agreement; and


                                      M-1
<PAGE>



         5.       The Reports disclose all significant deficiencies relating to
                  the Servicer's compliance with the minimum servicing standards
                  based upon the report provided by an independent public
                  accountant, after conducting a review in compliance with the
                  Uniform Single Attestation Program for Mortgage Bankers or
                  similar procedure, as set forth in the Pooling and Servicing
                  Agreement, that is included in the Reports.

In giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated parties: the Trustee and the
Servicer.



Date:    _________________________

__________________________________
[Signature]
[Title]


                                      M-2
<PAGE>
                                    EXHIBIT N

           Trustee/Servicer Certifications to be provided to Depositor

Re: CDC Mortgage Capital Trust 2004-HE1 Mortgage Pass-Through Certificates,
Series 2004-HE1, issued pursuant to the Pooling and Servicing Agreement, dated
as of February 1, 2004 (the "Pooling and Servicing Agreement"), among Morgan
Stanley ABS Capital I Inc., as depositor (the "Depositor," CDC Mortgage Capital
Inc., as unaffiliated seller (the "Unaffiliated Seller"), Deutsche Bank National
Trust Company, as trustee (the "Trustee"), and Countrywide Home Loans Servicing
LP, as servicer (the "Servicer").

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


         1.       [To be certified by the Trustee] I have reviewed the annual
                  report on Form 10-K for the fiscal year 20__ (the "Annual
                  Report"), and all reports on Form 8-K containing distribution
                  date reports filed in respect of periods included in the year
                  covered by the Annual Report (collectively with this Annual
                  Report, the "Reports"), of the Depositor relating to the
                  above-referenced trust;

         2.       [To be certified by the Trustee] Based on my knowledge, the
                  information in the Reports, taken as a whole, does not contain
                  any untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading as of the last day of the period covered by the
                  Annual Report;

         3.       [To be certified by the Trustee] Based on my knowledge, the
                  distribution or servicing information required to be provided
                  to the Trustee by the Servicer under the Pooling and
                  Servicing Agreement for inclusion in the Reports is included
                  in the Reports;

         4.       [To be certified by the Servicer] I am responsible for
                  reviewing the activities performed by the Servicer under the
                  Pooling and Servicing Agreement during the calendar year
                  immediately preceding the date of this certificate (the
                  "Relevant Year"). Based upon the review required by the
                  Pooling and Servicing Agreement and except as disclosed in the
                  annual compliance statement or the accountant's statement
                  provided pursuant to Section 3.23 of the Pooling and Servicing
                  Agreement, to the best of my knowledge, the Servicer has
                  fulfilled its obligations under the Pooling and Servicing
                  Agreement throughout the Relevant Year; and

         5.       [To be certified by the Servicer] All significant deficiencies
                  relating to the Servicer's compliance with the minimum
                  servicing standards for purposes of the report provided by an
                  independent public accountant, after conducting a review
                  conducted in compliance with the Uniform Single Attestation
                  Program for Mortgage Bankers or similar procedure, as set
                  forth in the Pooling and Servicing


                                      N-1



<PAGE>
                 Agreement, have been disclosed to such accountant and are
                 included in such reports.


Date:    _________________________

__________________________________
[Signature]
[Title]


                                      N-2