<PAGE>

                                                                     Exhibit 4.1
                                                                  EXECUTION COPY

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                                    Depositor

                             WELLS FARGO BANK, N.A.
                                     Trustee

                                       and

                          WILSHIRE CREDIT CORPORATION,
                                    Servicer

                                   ----------

                         POOLING AND SERVICING AGREEMENT
                          Dated as of September 1, 2005

                                   ----------

                     MERRILL LYNCH MORTGAGE INVESTORS TRUST,
            MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2005-SD1

<PAGE>

                                TABLE OF CONTENTS

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

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES..     36
   SECTION 2.01.    Conveyance of Mortgage Loans.........................     36
   SECTION 2.02.    Acceptance by the Trustee of the Mortgage Loans......     40
   SECTION 2.03.    Representations, Warranties and Covenants of the
                    Depositor............................................     41
   SECTION 2.04.    Representations and Warranties of the Servicer.......     45
   SECTION 2.05.    Substitutions and Repurchases of Mortgage Loans which
                    are not "Qualified Mortgages.".......................     46
   SECTION 2.06.    Authentication and Delivery of Certificates..........     46
   SECTION 2.07.    REMIC Elections......................................     46
   SECTION 2.08.    [RESERVED]...........................................     49
   SECTION 2.09.    Covenants of the Servicer............................     50
   SECTION 2.10.    [RESERVED]...........................................     50
   SECTION 2.11.    Permitted Activities of the Trust....................     50
   SECTION 2.12.    Qualifying Special Purpose Entity....................     50

ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...............     50
   SECTION 3.01.    Servicer to Service Mortgage Loans...................     50
   SECTION 3.02.    Servicing and Subservicing; Enforcement of the
                    Obligations of Servicer..............................     52
   SECTION 3.03.    Rights of the Depositor and the Trustee in Respect of
                    the Servicer.........................................     53
   SECTION 3.04.    Trustee to Act as Servicer...........................     53
   SECTION 3.05.    Collection of Mortgage Loan Payments; Collection
                    Account; Certificate Account.........................     53
   SECTION 3.06.    Collection of Taxes, Assessments and Similar Items;
                    Escrow Accounts......................................     57
   SECTION 3.07.    Access to Certain Documentation and Information
                    Regarding the Mortgage Loans.........................     57
   SECTION 3.08.    Permitted Withdrawals from the Collection Account and
                    Certificate Account..................................     58
   SECTION 3.09.    Advance Reserve Account..............................     60
   SECTION 3.10.    Maintenance of Hazard Insurance......................     61
   SECTION 3.11.    Enforcement of Due-On-Sale Clauses; Assumption
                    Agreements...........................................     62
   SECTION 3.12.    Realization Upon Defaulted Mortgage Loans;
                    Determination of Excess Proceeds.....................     63
   SECTION 3.13.    Trustee to Cooperate; Release of Mortgage Files......     66
   SECTION 3.14.    Documents, Records and Funds in Possession of
                    Servicer to be Held for the Trustee..................     67
   SECTION 3.15.    Servicing Compensation...............................     67
   SECTION 3.16.    Access to Certain Documentation......................     68
   SECTION 3.17.    Annual Statement as to Compliance....................     68
   SECTION 3.18.    Annual Independent Public Accountants' Servicing
                    Statement; Financial Statements......................     68
</TABLE>


i

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<S>                                                                         <C>
   SECTION 3.19.    Rights of the NIMs Insurer...........................     69
   SECTION 3.20.    Periodic Filings.....................................     69
   SECTION 3.21.    Annual Certificate by Trustee........................     70
   SECTION 3.22.    Annual Certificate by Servicer.......................     70
   SECTION 3.23.    Prepayment Charge Reporting Requirements.............     71
   SECTION 3.24.    Statements to Trustee................................     71
   SECTION 3.25.    Indemnification......................................     71
   SECTION 3.26.    Nonsolicitation......................................     72
   SECTION 3.27.    [Reserved]...........................................     72
   SECTION 3.28.    High Cost Mortgage Loans.............................     72

ARTICLE IV DISTRIBUTIONS.................................................     72
   SECTION 4.01.    Advances.............................................     72
   SECTION 4.02.    Reduction of Servicing Compensation in Connection
                    with Prepayment Interest Shortfalls..................     74
   SECTION 4.03.    Distributions on the REMIC Interests.................     74
   SECTION 4.04.    Distributions........................................     74
   SECTION 4.05.    Monthly Statements to Certificateholders.............     79

ARTICLE V THE CERTIFICATES...............................................     82
   SECTION 5.01.    The Certificates.....................................     82
   SECTION 5.02.    Certificate Register; Registration of Transfer and
                    Exchange of Certificates.............................     83
   SECTION 5.03.    Mutilated, Destroyed, Lost or Stolen Certificates...      90
   SECTION 5.04.    Persons Deemed Owners...............................      91
   SECTION 5.05.    Access to List of Certificateholders' Names and
                    Addresses............................................     91
   SECTION 5.06.    Book-Entry Certificates..............................     91
   SECTION 5.07.    Notices to Depository................................     92
   SECTION 5.08.    Definitive Certificates..............................     92
   SECTION 5.09.    Maintenance of Office or Agency......................     93

ARTICLE VI THE DEPOSITOR AND THE SERVICER................................     93
   SECTION 6.01.    Respective Liabilities of the Depositor and the
                    Servicer.............................................     93
   SECTION 6.02.    Merger or Consolidation of the Depositor or the
                    Servicer.............................................     93
   SECTION 6.03.    Limitation on Liability of the Depositor, the
                    Servicer and Others..................................     93
   SECTION 6.04.    Limitation on Resignation of Servicer................     94
   SECTION 6.05.    Errors and Omissions Insurance; Fidelity Bonds.......     94

ARTICLE VII DEFAULT; TERMINATION OF SERVICER.............................     95
   SECTION 7.01.    Events of Default....................................     95
   SECTION 7.02.    Trustee to Act; Appointment of Successor.............     96
   SECTION 7.03.    Notification to Certificateholders...................     97

ARTICLE VIII CONCERNING THE TRUSTEE .....................................     97
   SECTION 8.01.    Duties of the Trustee................................     97
   SECTION 8.02.    Certain Matters Affecting the Trustee................     98
   SECTION 8.03.    Trustee Not Liable for Mortgage Loans................    100
   SECTION 8.04.    Trustee May Own Certificates.........................    100
</TABLE>


ii

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<S>                                                                         <C>
   SECTION 8.05.    Trustee's Fees and Expenses..........................    100
   SECTION 8.06.    Indemnification of Trustee...........................    100
   SECTION 8.07.    Eligibility Requirements for Trustee.................    101
   SECTION 8.08.    Resignation and Removal of Trustee...................    101
   SECTION 8.09.    Successor Trustee....................................    102
   SECTION 8.10.    Merger or Consolidation of Trustee...................    102
   SECTION 8.11.    Appointment of Co-Trustee or Separate Trustee........    103
   SECTION 8.12.    Tax Matters..........................................    104

ARTICLE IX TERMINATION...................................................    106
   SECTION 9.01.    Termination upon Liquidation or Repurchase of all
                    Mortgage Loans.......................................    106
   SECTION 9.02.    Final Distribution on the Certificates...............    107
   SECTION 9.03.    Additional Termination Requirements..................    108

ARTICLE X MISCELLANEOUS PROVISIONS.......................................    109
   SECTION 10.01.   Amendment............................................    109
   SECTION 10.02.   Counterparts.........................................    111
   SECTION 10.03.   Governing Law........................................    111
   SECTION 10.04.   Intention of Parties.................................    111
   SECTION 10.05.   Notices..............................................    111
   SECTION 10.06.   Severability of Provisions...........................    112
   SECTION 10.07.   Assignment...........................................    113
   SECTION 10.08.   Limitation on Rights of Certificateholders...........    114
   SECTION 10.09.   Inspection and Audit Rights..........................    114
   SECTION 10.10.   Certificates Nonassessable and Fully Paid............    115
   SECTION 10.11.   Third Party Rights...................................    115
   SECTION 10.12.   Additional Rights of the NIMs Insurer................    115
</TABLE>


iii

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<S>           <C>
EXHIBIT A     FORMS OF CERTIFICATES
EXHIBIT B     MORTGAGE LOAN SCHEDULE
EXHIBIT C     [RESERVED]
EXHIBIT D     FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1   FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2   FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F     FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G     FORM OF INVESTMENT LETTER (ACCREDITED INVESTOR)
EXHIBIT H     FORM OF RULE 144A LETTER (QUALIFIED INSTITUTIONAL BUYER)
EXHIBIT I     FORM OF REQUEST FOR RELEASE
EXHIBIT J     [RESERVED]
EXHIBIT K     FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L     FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M     [RESERVED]
EXHIBIT N-1   FORM OF CLASS A-1 CAP CONTRACT
EXHIBIT N-2   FORM OF SUBORDINATED CERTIFICATE CAP CONTRACT
EXHIBIT O-1   ONE-MONTH LIBOR CAP TABLE - CLASS A-1 CAP CONTRACT
EXHIBIT O-2   ONE MONTH LIBOR CAP TABLE - SUBORDINATED CERTIFICATE CAP CONTRACT
EXHIBIT P     FORM OF TRANSFEROR REPRESENTATION LETTER
              FOR TRANSFER TO REGULATION S BOOK-ENTRY CERTIFICATE
              FROM A HOLDER OF A RULE 144A BOOK-ENTRY CERTIFICATE OR
              DEFINITIVE CERTIFICATE
EXHIBIT Q     FORM OF TRANSFEROR REPRESENTATION LETTER
              FOR TRANSFER PURSUANT TO RULE 144A FROM A HOLDER OF
              A REGULATION S BOOK-ENTRY CERTIFICATE OR DEFINITIVE CERTIFICATE
</TABLE>


iv

<PAGE>

     POOLING AND SERVICING AGREEMENT (the "Agreement"), dated as of September 1,
2005, among MERRILL LYNCH MORTGAGE INVESTORS, INC., a Delaware corporation, as
depositor (the "Depositor"), WELLS FARGO BANK, N.A, a national banking
association, as trustee (the "Trustee") and WILSHIRE CREDIT CORPORATION, a
Nevada corporation, as servicer (the "Servicer").

     The Depositor is the owner of the Trust Fund that is hereby conveyed to the
Trustee in return for the Certificates. The Trust Fund for federal income tax
purposes will consist of (i) two real estate mortgage investment conduits, (ii)
the right to receive payments distributable to the Class P Certificates pursuant
to Section 4.04(b)(i) hereof, (iii) each Cap Contract and the Cap Contract
Account, (iv) the right to receive payments in respect of P&I Arrearages (v) the
Advance Reserve Account and (vi) the grantor trusts described in Section 2.07
hereof. The Lower Tier REMIC will consist of all of the assets constituting the
Trust Fund (other than the assets described in clauses (ii), (iii), (iv) and (v)
above and the Lower Tier REMIC Regular Interests) and will be evidenced by the
Lower Tier REMIC Regular Interests (which will be uncertificated and will
represent the "regular interests" in the Lower Tier REMIC) and the Class LTR
Interest as the single "residual interest" in the Lower Tier REMIC. The Trustee
will hold the Lower Tier REMIC Regular Interests. The Upper Tier REMIC will
consist of the Lower Tier REMIC Regular Interests and will be evidenced by the
REMIC Regular Interests (which will represent the "regular interests" in the
Upper Tier REMIC) and the Residual Interest as the single "residual interest" in
the Upper Tier REMIC. The Class R Certificate will represent beneficial
ownership of the Class LTR Interest and the Residual Interest. The "latest
possible maturity date" for federal income tax purposes of all interests created
hereby will be the Latest Possible Maturity Date.

     All covenants and agreements made by the Seller in the Sale Agreement and
by the Depositor and the Trustee herein with respect to the Mortgage Loans and
the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates and, to the extent provided
herein, the NIMs Insurer.

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

                                    ARTICLE I

                                   DEFINITIONS

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

     Accepted Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions that service for their own account mortgage loans of the
same type as the Mortgages Loans in the jurisdictions in which the related
Mortgaged Properties (or Underlying Mortgaged Properties in the case of Co-op
Loans) are located.

     Accrual Period: With respect to each Class of LIBOR Certificates and the
Lower Tier REMIC Interests and any Distribution Date, the period commencing on
the immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately preceding
such Distribution Date and with respect to each Class of Class A-2 and Class B-2
Certificates and any Distribution Date, the calendar month immediately preceding
the month in which such Distribution Date occurs. All calculations of interest
on each Class of LIBOR Certificates and the Lower Tier REMIC Interests will be
made on the basis of the actual number of days elapsed in the related

<PAGE>

Accrual Period and a 360 day year and all calculations of interest on each Class
of Class A-2 and Class B-2 Certificates will be made on a the basis of a 360 day
year consisting of twelve 30-day months.

     Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate which is adjustable.

     Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.

     Advance: The aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date pursuant to Section 4.01, the amount of
any such advances being equal to the sum of the aggregate amount of all payments
of principal and interest (net of the Servicing Fee) on the Mortgage Loans that
were due during the applicable Due Period and not received as of the close of
business on the related Determination Date (other than the principal portion of
any Balloon Amount), less the aggregate amount of any such Delinquent payments
that the Servicer has determined would constitute a Non-Recoverable Advance were
an advance to be made with respect thereto; provided, however, that with respect
to any Mortgage Loan which is not a first lien Mortgage Loan that is 150 days
delinquent or more (whether or not the Mortgage Loan has been converted to an
REO Property), there will be no obligation to make advances and, provided
further, however, that with respect to any Mortgage Loan that has been converted
to an REO Property which is less than 150 days delinquent, the obligation to
make Advances shall only be to payments of interest. There shall be no
obligation of the Servicer to make any advances with respect to payments due,
but not received, on or prior to the Cut-off Date.

     Advance Facility: A financing or other facility as described in Section
10.07.

     Advance Reserve Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.09(a) in the name of the Trustee
and designated "Wells Fargo Bank, N.A., as trustee, in trust for the Servicer of
Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates,
Series 2005-SD1." Funds in the Advance Reserve Account shall be held in trust
for the uses and purposes set forth in this Agreement.

     Advancing Person: The Person to whom the Servicer's rights under this
Agreement to be reimbursed for any Advances or Servicing Advances have been
assigned pursuant to Section 10.07.

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

     Aggregate Certificate Principal Balance: For any date of determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2 Certificate
Principal Balance, the Class R Certificate Principal Balance, the Class M-1
Certificate Principal Balance, the Class M-2 Certificate Principal Balance, the
Class B-1 Certificate Principal Balance and the Class B-2 Certificate Principal
Balance, in each case as of such date of determination.

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


                                      -2-

<PAGE>

     Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which, the sum of (i) the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date.

     Appraised Value: With respect to a Mortgage Loan the proceeds of which were
used to purchase the related Mortgaged Property (or the related residential
dwelling unit in the Underlying Mortgaged Property in the case of a Co-op Loan),
the "Appraised Value" of a Mortgaged Property (or the related residential
dwelling unit in the Underlying Mortgaged Property in the case of a Co-op Loan)
is the lesser of (1) the appraised value based on an appraisal made for the
Seller by an independent fee appraiser at the time of the origination of the
related Mortgage Loan, and (2) the sales price of such Mortgaged Property (or
the related residential dwelling unit in the Underlying Mortgaged Property in
the case of a Co-op Loan) at such time of origination. With respect to a
Mortgage Loan the proceeds of which were used to refinance an existing mortgage
loan, the "Appraised Value" is the appraised value of the Mortgaged Property (or
the related residential dwelling unit in the Underlying Mortgaged Property in
the case of a Co-op Loan) based upon the appraisal obtained at the time of
refinancing.

     Arrearages: P&I Arrearages and Servicing Arrearages. For the avoidance of
doubt, amounts collected from any Mortgagor shall be applied to principal and
interest prior to being applied to Servicing Arrearages, amounts collected in
respect of P&I Arrearages shall be paid to the Trust Fund and amounts collected
in respect of Servicing Arrearages shall be paid to the Depositor by the
Servicer.

     Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
(or UCC-3 assignment (or equivalent instrument) with respect to each Co-op Loan)
or equivalent instrument, in recordable form (except in the case of a Co-op
Loan) (except for the name of the assignee if such Mortgage Loan is endorsed in
blank), sufficient under the laws of the jurisdiction where the related
Mortgaged Property (or Underlying Mortgaged Property, in the case of a Co-op
Loan) is located to reflect of record the sale and assignment of the Mortgage
Loan to the Trustee, which assignment, notice of transfer or equivalent
instrument may, if permitted by law, be in the form of one or more blanket
assignments covering Mortgages secured by Mortgaged Properties located in the
same county.

     Auction: The one-time auction conducted by the Trustee, as described in
Section 9.01(b) hereof.

     Auction Date: The date on which the Auction occurs.

     Available Funds Cap: With respect to any Distribution Date and the LIBOR
Certificates, the per annum rate equal to 12 times the quotient of (x) the total
scheduled interest on the Mortgage Loans based on the Net Mortgage Rates in
effect on the related Due Date, divided by (y) the Aggregate Certificate
Principal Balance for such Distribution Date, multiplied by 30 and divided by
the actual number of days in the related Accrual Period; and with respect to any
Distribution Date and the Class A-2 and Class B-2 Certificates, the per annum
rate equal to 12 times the quotient of (x) the total scheduled interest on the
Mortgage Loans based on the Net Mortgage Rates in effect on the related Due
Date, divided by (y) the Aggregate Certificate Principal Balance for such
Distribution Date.

     Balloon Loan: A Mortgage Loan having an original term to stated maturity of
approximately 15 years which provides for level monthly payments of principal
and interest based on a 30-year amortization schedule, with a balloon payment of
the remaining outstanding principal balance due on such Mortgage Loan at its
stated maturity.

     Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the


                                      -3-

<PAGE>

books of a Person maintaining an account with the Depository (directly, as a
"Depository Participant," or indirectly, as an indirect participant in
accordance with the rules of the Depository and as described in Section 5.06).
As of the Closing Date, each of the Class A (other than the Class R
Certificate), Class M and Class B Certificates constitutes a Class of Book-Entry
Certificates.

     Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State of California, State of Maryland,
State of Minnesota, State of Oregon and in the City of New York, New York are
authorized or obligated by law or executive order to be closed.

     Cap Contract: Either of the Class A-1 Cap Contract or the Subordinated
Certificate Cap Contract.

     Cap Contract Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.04(k)(i) in the name of the Trustee for the
benefit of the Trust Fund and designated "Wells Fargo Bank, N.A., as Trustee, as
trustee, in trust for registered holders of Merrill Lynch Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-SD1." Funds in the
Cap Contract Account shall be held in trust for the Trust Fund for the uses and
purposes set forth in this Agreement.

     Cap Contract Counterparty: The Royal Bank of Scotland plc.

     Cap Contract Notional Balance: Either of the Class A-1 Cap Contract
Notional Balance or the Subordinated Certificate Cap Contract Notional Balance.

     Cap Contract Termination Date: Either of the Class A-1 Cap Contract
Termination Date or the Subordinated Certificate Cap Contract Termination Date.

     Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in substantially the forms attached
hereto as Exhibits A.

     Certificate Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(e) in the name of the Trustee for the
benefit of the Certificateholders and designated "Wells Fargo Bank, N.A., as
trustee, in trust for registered holders of Merrill Lynch Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-SD1." Funds in the
Certificate Account shall be held in trust for the Certificateholders for the
uses and purposes set forth in this Agreement.

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

     Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
4.04(i). On each Distribution Date, after all distributions of principal on such
Distribution Date, a portion of the Class C Interest Carry Forward Amount in an
amount equal to the excess of the Overcollateralization Amount on such
Distribution Date over the Overcollateralization Amount as of the preceding
Distribution Date (or, in the case of the first Distribution Date, the initial
Overcollateralization Amount (based on the Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date)) will be added to the aggregate
Certificate Principal Balance of the Class C Certificates (on a pro rata basis).
Notwithstanding the immediately preceding sentence, however, to the extent any
excess referred to in the immediately preceding sentence is attributable to
distributions of P&I Arrearages, such sentence shall be applied by substituting
"Class C Unpaid Realized


                                      -4-

<PAGE>

Loss Amount" for "Class C Interest Carry Forward Amount". Notwithstanding the
foregoing on any Distribution Date relating to a Due Period in which a
Subsequent Recovery has been received by the Servicer, the Certificate Principal
Balance of any Class of Certificates then outstanding for which any Applied
Realized Loss Amount has been allocated will be increased, in order of
seniority, by an amount equal to the lesser of (i) the Unpaid Realized Loss
Amount for such Class of Certificates and (ii) the total of any Subsequent
Recovery distributed on such date to the Certificateholders (reduced by the
amount of the increase in the Certificate Principal Balance of any more senior
Class of Certificates pursuant to this sentence on such Distribution Date).

     Certificate Register: The register maintained pursuant to Section 5.02
hereof.

     Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, 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 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 NIMs Insurer and the Trustee are 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.

     Class: All Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.

     Class A Certificate Principal Balance: For any date of determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2 Certificate
Principal Balance and the Class R Certificate Principal Balance.

     Class A Certificates: Any of the Class A-1 Certificates, the Class A-2
Certificates and the Class R Certificates.

     Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Stepdown
Trigger Event exists, 100% of the Principal Distribution Amount for such
Distribution Date and (2) on or after the Stepdown Date where a Stepdown Trigger
Event does not exist, the excess of (A) the Class A Certificate Principal
Balance immediately prior to such Distribution Date over (B) the lesser of (i)
57.20% of the Stated Principal Balance of the Mortgage Loans as of the end of
the immediately preceding Due Period and (ii) the excess of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount; provided,
however, that in no event will the Class A Principal Distribution Amount with
respect to any Distribution Date exceed the aggregate Certificate Principal
Balance of the Class A Certificates.

     Class A-1 Cap Contract: The amended confirmation and agreement and any
related confirmation thereto, between the Trust Fund or Trustee and the Cap
Contract Counterparty (in the form of Exhibit N-1 hereto) for the benefit of the
Class A-1 Certificates.


                                      -5-

<PAGE>

     Class A-1 Cap Contract Notional Balance: With respect to any Distribution
Date, the Class A-1 Cap Contract Notional Balance set forth for such
Distribution Date in the Class A-1 One-Month LIBOR Cap Table attached hereto as
Exhibit O-1.

     Class A-1 Cap Contract Termination Date: The Distribution Date in January
2008.

     Class A-1 Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

     Class A-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1 Certificates.

     Class A-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1 Pass-Through Rate on
the Class A-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-1 Certificates.

     Class A-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-1 Pass-Through Rate for the related Accrual Period.

     Class A-1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.1800% per annum and, as of any Distribution
Date after the Optional Termination Date, 0.3600% per annum.

     Class A-1 Pass-Through Rate: For the first Distribution Date, 4.1600% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-1 Margin, (2) the Maximum Rate Cap and (3) the Available Funds
Cap for such Distribution Date.

     Class A-1 Upper Collar: With respect to each Distribution Date with respect
to which payments are received on the Class A-1 Cap Contract, a rate equal to
the lesser of One-Month LIBOR and 9.800% per annum.

     Class A-2 Certificate: Any Certificate designated as a "Class A-2A
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

     Class A-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2 Certificates.

     Class A-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2 Pass-Through Rate on
the Class A-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2 Certificates.


                                      -6-

<PAGE>

     Class A-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-2 Pass-Through Rate for the related Accrual Period.

     Class A-2 Pass-Through Rate: As of any Distribution Date, the least of (1)
5.6658%, (2) the Maximum Rate Cap and (3) the Available Funds Cap for such
Distribution Date.

     Class B Certificates: Any of the Class B-1 or Class B-2 Certificates.

     Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-1 Certificates.

     Class B-1 Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

     Class B-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1 Certificates.

     Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class B-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-1 Certificates.

     Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-1 Pass-Through Rate for the related Accrual Period.

     Class B-1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 2.7500% per annum and,
as of any Distribution Date after the Initial Optional Termination Date, 4.1250%
per annum.

     Class B-1 Pass-Through Rate: For the first Distribution Date, 6.7300% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-1 Margin, (2) the Maximum Rate Cap and (3) the Available Funds
Cap for such Distribution Date.

     Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance and the
Class M Certificate Principal Balance have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Class A Certificate Principal Balance (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Class M-2 Certificate Principal
Balance (after taking into account distributions of the Class M-2 Principal
Distribution Amount on such Distribution Date) and (D) the Class B-1


                                      -7-

<PAGE>

Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 86.70% of the Stated Principal Balance of the Mortgage
Loans as of the end of the immediately preceding Due Period and (B) the excess
of the Stated Principal Balance of the Mortgage Loans as of the end of the
immediately preceding Due Period over the Minimum Required Overcollateralization
Amount. Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of Class
A Certificates and Class M Certificates has been reduced to zero, the Class B-1
Principal Distribution Amount will equal the lesser of (x) the outstanding
Certificate Principal Balance of the Class B-1 Certificates and (y) 100% of the
Principal Distribution Amount remaining after any distributions on such Class A
Certificates and Class M Certificates and (II) in no event will the Class B-1
Principal Distribution Amount with respect to any Distribution Date exceed the
Class B-1 Certificate Principal Balance.

     Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

     Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-2 Certificates.

     Class B-2 Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

     Class B-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2 Certificates.

     Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class B-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-2 Certificates.

     Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-2 Pass-Through Rate for the related Accrual Period.

     Class B-2 Pass-Through Rate: As of any Distribution Date, the least of (1)
5.5000%, (2) the Maximum Rate Cap and (3) the Available Funds Cap for such
Distribution Date.

     Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M Certificate Principal Balance and the Class B-1 Certificate Principal
Balance have been reduced to zero and a Stepdown Trigger Event exists, or as
long as a Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the Class A Certificate Principal Balance (after taking into account
distributions


                                      -8-

<PAGE>

of the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date), (D) the Class B-1 Certificate Principal Balance (after
taking into account distributions of the Class B-1 Principal Distribution Amount
on such Distribution Date) and (E) the Class B-2 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 94.20% of
the Stated Principal Balance of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of Class A, Class M and Class
B-1 Certificates has been reduced to zero, the Class B-2 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class B-2 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class M and Class B-1
Certificates and (II) in no event will the Class B-2 Principal Distribution
Amount with respect to any Distribution Date exceed the Class B-2 Certificate
Principal Balance.

     Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

     Class C Applied Realized Loss Amount: As of any Distribution Date, the sum
of all Applied Realized Loss Amounts with respect to the Mortgage Loans which
have been applied to the reduction of the Certificate Principal Balance of the
Class C Certificates.

     Class C Certificate: Any Certificate designated as a "Class C Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

     Class C Certificate Principal Balance: As of any date of determination, the
aggregate Certificate Principal Balance of the Class C Certificates.

     Class C Current Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the Class C Distributable Interest Rate on
a notional amount equal to the aggregate principal balance of the Lower Tier
REMIC Regular Interests immediately prior to such Distribution Date (such amount
of interest representing a "specified portion" (within the meaning of Treasury
Regulations Section 1.860G-1(a)(2)(i)(C)) of interest payments on the Lower Tier
REMIC Regular Interests), plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class C Certificates.

     Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC Regular Interests
over (b) two times the weighted average of the interest rates on the Lower Tier
REMIC Regular Interests (treating for purposes of this clause (b) the interest
rate on each of the Lower Tier REMIC Marker Classes as being capped at the
interest rate of the Related Certificates (as adjusted to reflect the length of
the Accrual Period) and treating the Class LTX Interest as being capped at
zero). The averages described in the preceding sentence shall be weighted on the
basis of the respective principal balances of the Lower Tier REMIC Regular
Interests immediately prior to any date of determination.


                                      -9-

<PAGE>

     Class C Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class C Certificates with
respect to interest on such prior Distribution Dates or added to the aggregate
Certificate Principal Balance of the Class C Certificates (other than amounts so
added attributable to Subsequent Recoveries or P&I Arrearages).

     Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class C Certificates (A) pursuant to the last sentence
of the definition of "Certificate Principal Balance" or (B) attributable to
distributions of P&I Arrearages.

     Class LTA-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificates and an interest rate equal to the Net Rate.

     Class LTA-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

     Class LTB-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

     Class LTB-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

     Class LTX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) the aggregate
Cut-off Date Principal Balance of the Mortgage Loans over (ii) the aggregate
initial principal balance of the Lower Tier REMIC Marker Classes and an interest
rate equal to the Net Rate.

     Class LTM-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

     Class LTM-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/2 of the initial principal
balance of its Related Certificate and an interest rate equal to the Net Rate.

     Class LTR Interest: The sole class of "residual interest" in the Lower Tier
REMIC.

     Class M Certificates: Any of the Class M-1 and Class M-2 Certificates.

     Class M Certificate Principal Balance: For any date of determination, the
sum of the Class M-1 Certificate Principal Balance and Class M-2 Certificate
Principal Balance.

     Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.


                                      -10-

<PAGE>

     Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

     Class M-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-1 Certificates.

     Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class M-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-1 Certificates.

     Class M-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-1 Pass-Through Rate for the related Accrual Period.

     Class M-1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 0.6500% per annum and,
as of any Distribution Date after the Initial Optional Termination Date, 0.9750%
per annum.

     Class M-1 Pass-Through Rate: For the first Distribution Date, 4.6300% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the Maximum Rate Cap and (3) the Available Funds
Cap for such Distribution Date.

     Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance has been
reduced to zero and a Stepdown Trigger Event exists, or as long as a Stepdown
Trigger Event does not exist, the excess of (1) the sum of (A) the Class A
Certificate Principal Balance (after taking into account distributions of the
Class A Principal Distribution Amount on such Distribution Date) and (B) the
Class M-1 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 69.60% of the Stated Principal Balances of the
Mortgage Loans as of the end of the immediately preceding Due Period and (B) the
excess of the Stated Principal Balances for the Mortgage Loans as of the end of
the immediately preceding Due Period over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A Certificates has been reduced to zero, the
Class M-1 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class M-1 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A Certificates and (II) in no event will the Class M-1 Principal
Distribution Amount with respect to any Distribution Date exceed the Class M-1
Certificate Principal Balance.

     Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."


                                      -11-

<PAGE>

     Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.

     Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

     Class M-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-2 Certificates.

     Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class M-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-2 Certificates.

     Class M-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-2 Pass-Through Rate for the related Accrual Period.

     Class M-2 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date for the Certificates, 1.3000% per annum and,
as of any Distribution Date after the Initial Optional Termination Date, 1.9500%
per annum.

     Class M-2 Pass-Through Rate: For the first Distribution Date, 5.2800% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Maximum Rate Cap and (3) the Available Funds
Cap for such Distribution Date.

     Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance and the
Class M-1 Certificate Principal Balance have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Class A Certificate Principal Balance (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date) and (C) the Class M-2 Certificate Principal
Balance immediately prior to such Distribution Date over (2) the lesser of (A)
78.70% of the Stated Principal Balances of the Mortgage Loans as of the end of
the immediately preceding Due Period and (B) the excess of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of Class A Certificates and the
Class M-1 Certificates has been reduced to zero, the Class M-2 Principal
Distribution Amount will equal the lesser of (x) the outstanding Certificate
Principal Balance of the Class M-2 Certificates and (y) 100% of the Principal
Distribution Amount remaining after any distributions on such Class A
Certificates and Class M-1 Certificates and (II) in no event will the Class M-2
Principal Distribution Amount with respect to any Distribution Date exceed the
Class M-2 Certificate Principal Balance.


                                      -12-

<PAGE>

     Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

     Class P Certificate: Any Certificate designated as a "Class P Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

     Class R Certificate: Any Certificate designated as a "Class R Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.

     Class R Certificate Principal Balance: As of any date of determination, the
aggregate Certificate Principal Balance of the Class R Certificate.

     Class R Current Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the Class R Pass-Through Rate on the Class
R Certificate Principal Balance as of such Distribution Date plus the portion of
any previous distributions on such Class in respect of Current Interest or a
Class R Interest Carry Forward Amount that is recovered as a voidable preference
by a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated
on such Distribution Date to the Class R Certificate.

     Class R Interest Carry Forward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class R
Certificate with respect to interest on such prior Distribution Dates and (2)
interest on such excess (to the extent permitted by applicable law) at the Class
R Pass-Through Rate for the related Accrual Period.

     Class R Margin: As of any Distribution Date up to and including the Initial
Optional Termination Date for the Certificates, 0.1800% per annum and, as of any
Distribution Date after the Initial Optional Termination Date, 0.3600% per
annum.

     Class R Pass-Through Rate: For the first Distribution Date, 4.1600% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Maximum Rate Cap and (3) the Available Funds
Cap for such Distribution Date.

     Closing Date: October 18, 2005.

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

     Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders and designated "Wilshire
Credit Corporation, as servicer for Wells Fargo Bank, N.A., as Trustee, in trust
for registered holders of Merrill Lynch Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2005-SD1." Funds in the Collection Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.

     Combined Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a percentage, the numerator of which is the
sum of (1) the original principal balance of the related Mortgage Loan and (2)
any outstanding principal balances of Mortgage Loans the liens on which are
senior to the lien on such related Mortgage Loan (such sum calculated at the
date of origination of


                                      -13-

<PAGE>

such related Mortgage Loan) and the denominator of which is the lesser of (A)
the Appraised Value of the related Mortgaged Property (or applicable dwelling
unit, in the case of a Co-op Loan) and (B) the sales price of the related
Mortgaged Property (or applicable dwelling unit, in the case of a Co-op Loan) at
time of origination.

     Compensating Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the portion of any Prepayment Interest
Shortfalls required to be deposited in the Collection Account by the Servicer
pursuant to Section 4.02 hereof.

     Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property (or Underlying Mortgaged Property, in the case of a Co-op Loan),
whether permanent or temporary, partial or entire, by exercise of the power of
eminent domain or condemnation, to the extent not required to be released either
to a Mortgagor in accordance with the terms of the related mortgage loan
documents or to the holder of a senior lien on the Mortgaged Property (or
Underlying Mortgaged Property, in the case of a Co-op Loan).

     Co-op Lease: With respect to a Co-op Loan, the lease with respect to a
dwelling unit occupied by the Mortgagor and relating to the stock allocated to
the related dwelling unit.

     Co-op Loan: A Mortgage Loan secured by the pledge of stock allocated to a
dwelling unit in a residential cooperative housing corporation and a collateral
assignment of the related Co-op Lease.

     Current Interest: Any of the Class A-1 Current Interest, the Class A-2
Current Interest, the Class R Current Interest, the Class M-1 Current Interest,
the Class M-2 Current Interest, the Class B-1 Current Interest, the Class B-2
Current Interest and the Class C Current Interest.

     Cut-off Date: September 1, 2005.

     Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates after
the Cut-off Date.

     Definitive Certificates: As defined in Section 5.06.

     Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.

     Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such Mortgage Loan by the close of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.

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


                                      -14-

<PAGE>

     Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,
or any successor in interest.

     Depository: The initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.

     Depository Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the initial Depository.

     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.

     Designated Transaction: A transaction in which the assets underlying the
Certificates consist of single-family residential, multi-family residential,
home equity, manufactured housing and/or commercial mortgage obligations that
are secured by single-family residential, multi-family residential, commercial
real property or leasehold interests therein.

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

     Disqualified Organization: (1) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (2) any organization
(other than a cooperative described in Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such organization is
subject to the tax imposed by Section 511 of the Code and (3) any organization
described in Section 1381(a)(2)(C) of the Code.

     Distribution Date: The 25th day of each calendar month, or if such 25th day
is not a Business Day, the next succeeding Business Day, commencing in October
2005.

     Due Date: With respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which a Scheduled Payment is due.

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

     Eligible Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (ii) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating of any Class
of Certificates, as evidenced in writing, by a depository institution in which
such accounts are insured by the FDIC (to the limit established by the FDIC),
the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee,
the


                                      -15-

<PAGE>

NIMs Insurer and each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account and a perfected first security interest
against any collateral (which shall be limited to Permitted Investments)
securing such funds that is superior to claims of any other depositors or
creditors of the depository institution with which such account is maintained,
or (v) maintained at an eligible institution whose commercial paper, short-term
debt or other short-term deposits are rated at least A-1+ by S&P and F-1+ by
Fitch, or (vi) maintained with a federal or state chartered depository
institution the deposits in which are insured by the FDIC to the applicable
limits and the short-term unsecured debt obligations of which (or, in the case
of a depository institution that is a subsidiary of a holding company, the
short-term unsecured debt obligations of such holding company) are rated A-1 by
S&P or Prime-1 by Moody's at the time any deposits are held on deposit therein,
(vii) a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity, that is acceptable to the Rating Agencies or (viii) otherwise
acceptable to each Rating Agency, as evidenced by a letter from each Rating
Agency to the Trustee and the NIMs Insurer.

     ERISA: The Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.

     ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements of
Prohibited Transaction Exemption 90-29, Exemption Application No. D-8012, 55
Fed. Reg. 21459 (1990), as amended, granted to the Underwriter by the United
States Department of Labor (or any other applicable underwriter's exemption
granted by the United States Department of Labor), except, in relevant part, for
the requirement that the certificates have received a rating at the time of
acquisition that is in one of the three (or four, in the case of a "designated
transaction") highest generic rating categories by at least one of the Rating
Agencies.

     ERISA Restricted Certificates: The Class M, Class B, Class C, Class P and
Class R Certificates and any other Certificate, unless the acquisition and
holding of such other Certificate is covered by and exempt under the
Underwriter's exemption.

     Event of Default: As defined in Section 7.01 hereof.

     Excess Interest: On any Distribution Date, for each Class of the Class A,
Class M and Class B Certificates, the excess, if any, of (1) the amount of
interest such Class of Certificates is entitled to receive on such Distribution
Date at its Pass-Through Rate over (2) the amount of interest such Class of
Certificates would have been entitled to receive on such Distribution Date had
the Pass-Through Rate for such Class been the REMIC Pass-Through Rate.

     Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.

     Exchange Act: The Securities Exchange Act of 1934, as amended.

     Extra Principal Distribution Amount: With respect to any Distribution Date,
(1) prior to the Stepdown Date, the excess of (A) the sum of (i) the Aggregate
Certificate Principal Balance immediately preceding such Distribution Date
reduced by the Principal Funds with respect to such Distribution Date and (ii)
$3,345,545 over (B) the aggregate Stated Principal Balance of the Mortgage Loans
as of such Distribution Date and (2) on and after the Stepdown Date, (A) the sum
of (x) the Aggregate Certificate


                                      -16-

<PAGE>

Principal Balance immediately preceding such Distribution Date, reduced by the
Principal Funds with respect to such Distribution Date and (y) the greater of
(a) 5.80% of the aggregate Stated Principal Balance of the Mortgage Loans and
(b) the Minimum Required Overcollateralization Amount less (B) the aggregate
Stated Principal Balance of the Mortgage Loans as of such Distribution Date;
provided, however, that if on any Distribution Date a Stepdown Trigger Event is
in effect, the Extra Principal Distribution Amount will not be reduced to the
applicable percentage of the then-current aggregate Stated Principal Balance of
the Mortgage Loans (and will remain fixed at the applicable percentage of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Due Date
immediately prior to the Stepdown Trigger Event) until the next Distribution
Date on which the Stepdown Trigger Event is not in effect.

     Fannie Mae: A federally chartered and privately owned corporation organized
and existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.

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

     Fitch: Fitch, Inc., or any successor in interest.

     Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan
Schedule as having a Mortgage Rate which is fixed.

     Floating Rate Certificate Carryover: With respect to a Distribution Date,
in the event that the Pass-Through Rate for a Class of Class A, Class M or Class
B Certificates is based upon the Available Funds Cap, the excess of (1) the
amount of interest that such Class would have been entitled to receive on such
Distribution Date had the Pass-Through Rate for that Class not been calculated
based on the Available Funds Cap, up to but not exceeding greater of (x) the
Maximum Rate Cap or (y) the sum of (i) the Available Funds Cap and (ii) the
product of (A) a fraction, the numerator of which is 360 and the denominator of
which is the actual number of days in the related Accrual Period and (B) the
quotient obtained by dividing (I) an amount equal to the proceeds, if any,
payable under the related Cap Contract with respect to such Distribution Date by
(II) the aggregate Certificate Principal Balance of each of the Classes of
Certificates to which such Cap Contract relates for such Distribution Date over
(2) the amount of interest such Class was entitled to receive on such
Distribution Date based on the Available Funds Cap, together with (i) the unpaid
portion of any such excess from prior Distribution Dates (and interest accrued
thereon at the then applicable Pass-Through Rate for such Class, without giving
effect to the Available Funds Cap) and (ii) any amount previously distributed
with respect to Floating Rate Certificate Carryover for such Class that is
recovered as a voidable preference by a trustee in bankruptcy.

     Freddie Mac: 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.

     Grantor Trusts: The grantor trusts described in Section 2.07 hereof.

     Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.

     Indenture: An indenture relating to the issuance of notes guaranteed by the
NIMs Insurer.

     Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the first
Adjustment Date following the origination of such Mortgage Loan.


                                      -17-

<PAGE>

     Initial Certificate Principal Balance: With respect to any Certificate, the
Certificate Principal Balance of such Certificate or any predecessor Certificate
on the Closing Date as set forth in Section 5.01 hereof.

     Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.

     Initial Optional Termination Date: The first Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans is equal to or less
than 10% of the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date.

     Insurance Policy: With respect to any Mortgage Loan or the related
Mortgaged Property (or the related Underlying Mortgaged Property, in the case of
a Co-op Loan) included in the Trust Fund, any insurance policy, including all
riders and endorsements thereto in effect with respect to such Mortgage Loan or
Mortgaged Property (or related Underlying Mortgage Property, in the case of a
Co-op Loan), including any replacement policy or policies for any insurance
policies.

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

     Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to a Mortgage Loan or the related Mortgaged
Property (or the related Underlying Mortgaged Property, in the case of a Co-op
Loan).

     Interest Carry Forward Amount: Any of the Class A-1 Interest Carry Forward
Amount, the Class A-2 Interest Carry Forward Amount, the Class R Interest Carry
Forward Amount, the Class M-1 Interest Carry Forward Amount, the Class M-2
Interest Carry Forward Amount, the Class B-1 Interest Carry Forward Amount, the
Class B-2 Interest Carry Forward Amount or the Class C Interest Carry Forward
Amount, as the case may be.

     Interest Determination Date: With respect to the LIBOR Certificates, (i)
for any Accrual Period other than the first Accrual Period, the second LIBOR
Business Day preceding the commencement of such Accrual Period and (ii) for the
first Accrual Period, October 14, 2005.

     Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee and the Trustee Fee,
(2) all Advances relating to interest with respect to the Mortgage Loans and
such Distribution Date, (3) all Compensating Interest with respect to the
Mortgage Loans and such Distribution Date, (4) Liquidation Proceeds with respect
to the Mortgage Loans (to the extent such Liquidation Proceeds relate to
interest) collected during the related Prepayment Period, (5) all proceeds of
any purchase pursuant to Section 2.02 or 2.03 during the related Prepayment
Period or pursuant to Section 9.01 not later than the


                                      -18-

<PAGE>

related Determination Date (to the extent that such proceeds relate to interest)
less the Servicing Fee and (6) all Prepayment Charges received with respect to
the Mortgage Loans during the related Prepayment Period, less (A) all
Non-Recoverable Advances relating to interest and (B) other amounts reimbursable
to the Servicer and the Trustee pursuant to this Agreement.

     Latest Possible Maturity Date: The latest maturity date for any Mortgage
Loan in the Trust Fund plus one year.

     LIBOR Business Day: Any day on which banks in the City of London, England
and New York City, U.S.A. are open and conducting transactions in foreign
currency and exchange.

     LIBOR Certificates: Any of the Class A-1, Class R, Class M or Class B-1
Certificates.

     Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) pursuant to Section 3.12 has been realized upon or
liquidated through deed-in-lieu of foreclosure, foreclosure sale, trustee's sale
or other realization as provided by applicable law governing the real property
subject to the related Mortgage and any security agreements and as to which the
Servicer has certified (in accordance with Section 3.12) in the related
Prepayment Period that it has received all amounts it expects to receive in
connection with such liquidation or (b) as to which is not a first lien Mortgage
Loan and is delinquent 180 days or longer, the Servicer has certified in a
certificate of an officer of the Servicer delivered to the Depositor and the
Trustee that it does not believe that there is a reasonable likelihood that any
further net proceeds will be received or recovered with respect to such Mortgage
Loan.

     Liquidation Proceeds: Amounts, including Condemnation Proceeds, Insurance
Proceeds, received in connection with the partial or complete liquidation of a
Mortgage Loan, whether through trustee's sale, foreclosure sale, sale by the
Servicer pursuant to this Agreement or otherwise or amounts received in
connection with any condemnation or partial release of a Mortgaged Property and
any other proceeds received in connection with the final sale of a related REO
Property, less the sum of (i) related unreimbursed Advances, Servicing Fees,
Servicing Advances and any other expenses (other than Servicing Arrearages)
related to such Mortgage Loan and (ii) any Servicing Arrearages with respect to
such Mortgage Loan, to the extent that subtracting such amounts pursuant to this
clause (ii) from Liquidation Proceeds would not cause the Trust to incur any
loss on such Mortgage Loan.

     Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (X) the Appraised Value of the related Mortgaged Property (or applicable
dwelling unit, in the case of a Co-op Loan) and (Y) the sales price of the
related Mortgaged Property (or applicable dwelling unit, in the case of a Co-op
Loan) at the time of origination.

     Losses: Any losses, claims, damages, liabilities or expenses collectively.

     Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.

     Lower Tier REMIC Interests: Each of the Class LTA-1 Interest, the Class
LTA-2 Interest, the Class LTM-1 Interest, the Class LTM-2 Interest, the Class
LTB-1 Interest, the Class LTB-2 Interest, the Class LTX Interest and the Class
LTR Interest.

     Lower Tier REMIC Marker Classes: Each of the classes of Lower Tier REMIC
Regular Interests other than the Class LTX Interest.


                                      -19-

<PAGE>

     Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.

     Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the maximum rate of interest set forth as such in the related Mortgage Note and
with respect to each Fixed Rate Mortgage Loan, the rate of interest set forth in
the related Mortgage Note.

     Maximum Rate Cap: With respect to any Distribution Date and the LIBOR
Certificates, 12 times the quotient of (x) the aggregate scheduled interest that
would have been due on the Mortgage Loans during the related Due Period had the
Adjustable Rate Mortgage Loans provided for interest at their maximum lifetime
Net Mortgage Rates and the Fixed Rate Mortgage Loans provided for interest at
their Net Mortgage Rates, divided by (y) the aggregage Stated Principal Balance
of the Mortgage Loans as of the preceding Distribution Date multiplied by 30 and
divided by the actual number of days in the related Accrual Period; and with
respect any Distribution Date and the Class A-2 and Class B-2 Certificates, 12
times the quotient of (x) the aggregate scheduled interest that would have been
due on the Mortgage Loans during the related Due Period had the Adjustable Rate
Mortgage Loans provided for interest at their maximum lifetime Net Mortgage
Rates and the Fixed Rate Mortgage Loans provided for interest at their Net
Mortgage Rates, divided by (y) the aggregage Stated Principal Balance of the
Mortgage Loans as of the preceding Distribution Date.

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

     MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.

     MERS System: The system of recording transfers of mortgage electronically
maintained by MERS.

     MIN: The loan number for any MERS Loan.

     Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the minimum rate of interest set forth as such in the related Mortgage Note.

     Minimum Required Overcollateralization Amount: An amount equal to the
product of (x) 0.50% and (y) the Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.

     MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee, solely
as nominee for the originator of such Mortgage Loan and its successors and
assigns.

     Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.

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

     Mortgage: With respect to a Mortgage Loan that is not a Co-op Loan, the
mortgage, deed of trust or other instrument with all riders attached thereto
creating a first or second lien or a first or second priority ownership interest
in an estate in fee simple in real property securing a Mortgage Note. With
respect to a Co-op Loan, the security agreement with all riders attached thereto
creating a security interest in the stock allocated to a dwelling unit in a
residential cooperative housing corporation and pledged to secure such Co-op
Loan and the related Co-op Lease.


                                      -20-

<PAGE>

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

     Mortgage Loans: Such of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Properties), the mortgage loans so
held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure
or other acquisition of title of the related Mortgaged Property. Any mortgage
loan that was intended by the parties hereto to be transferred to the Trust Fund
as indicated by such Mortgage Loan Schedule which is in fact not so transferred
for any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.

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

          (i)  the loan number;

          (ii) the borrower name and address;

          (iii) the unpaid principal balance of the Mortgage Loans;

          (iv) the Initial Mortgage Rate;

          (v)  the original maturity date and the months remaining before
               maturity date;

          (vi) the original principal balance;

          (vii) the Cut-off Date Principal Balance;

          (viii) the first payment due date of the Mortgage Loan;

          (ix) the Loan-to-Value Ratio at origination with respect to a first
               lien Mortgage Loan, or the Combined Loan-to-Value Ratio with
               respect to a second lien Mortgage Loan;

          (x)  a code indicating whether the residential dwelling at the time of
               origination was represented to be owner-occupied;

          (xi) a code indicating the property type;

          (xii) with respect to each Adjustable Rate Mortgage Loan;

               (A)  the frequency of each Adjustment Date;

               (B)  the next Adjustment Date;

               (C)  the Maximum Mortgage Rate;

               (D)  the Minimum Mortgage Rate;


                                      -21-

<PAGE>

               (E)  the Mortgage Rate as of the Cut-off Date;

               (F)  the related Periodic Rate Cap;

               (G)  the Gross Margin;

               (H)  the lifetime rate cap;

          (xiii) location of the related Mortgaged Property (or Underlying
     Mortgaged Property, in the case of a Co-op Loan);

          (xiv) a code indicating whether a Prepayment Charge is applicable and,
     if so the term of such Prepayment Charge;

          (xv) the Credit Score and date obtained; and

          (xvi) the MIN;

     Mortgage Note: The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan and all
amendments, modifications and attachments thereto with all riders attached
thereto.

     Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.

     Mortgaged Property: The underlying property securing a Mortgage Loan.

     Mortgage Rate: The annual rate of interest borne by a Mortgage Note from
time to time.

     Mortgagor: The obligor on a Mortgage Note.

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

     Net Rate: With respect to any Distribution Date, the product of (x) the
weighted average Net Mortgage Rate for the Mortgage Loans calculated based on
the respective Net Mortgage Rates and the Stated Principal Balances of such
Mortgage Loans as of the preceding Distribution Date (or, in the case of the
first Distribution Date, as of the Cut-off Date) and (y) a fraction, the
numerator of which is 30 and the denominator of which is the actual number of
days in the related Accrual Period.

     Net WAC: With respect to any Distribution Date, a per annum rate equal to
12 times the quotient obtained by dividing (x) the total scheduled interest on
the Mortgage Loans based on the Net Mortgage Rates in effect on the related Due
Date by (y) the aggregate Stated Principal Balance of the Mortgage Loans as of
the preceding Distribution Date (or, in the case of the first Distribution Date,
as of the Cut-off Date).

     NIM Notes: The notes to be issued pursuant to the Indenture.

     NIMs Insurer: Any of the one or more insurers, if any, that is guaranteeing
certain payments under any NIM Notes; provided, that upon the payment in full of
the NIM Notes, all rights of the NIMs Insurer hereunder shall terminate.

     NIMs Insurer Default: As defined in Section 10.12.


                                      -22-

<PAGE>

     Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise with respect to the related Mortgage Loan.

     Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise with respect to the related
Mortgage Loan.

     Non-Supported Interest Shortfall: As defined in Section 4.02.

     Offered Certificates: The Class A and Class M Certificates.

     Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor or the
Servicer (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (2), if provided for
in this Agreement, signed by a Servicing Officer, as the case may be, and
delivered to the Depositor, the Servicer or the Trustee, as the case may be, as
required by this Agreement.

     One-Month LIBOR: With respect to any Accrual Period, the rate determined by
the Trustee on the related Interest Determination Date on the basis of (a) the
offered rates for one-month United States dollar deposits, as such rates appear
on Telerate page 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date or (b) if such rate does not appear on Telerate Page 3750 as
of 11:00 a.m. (London time), the offered rates of the Reference Banks for
one-month United States dollar deposits, as such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination
Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each
Interest Determination Date, One-Month LIBOR for the related Accrual Period will
be established by the Trustee as follows:

          (i)  If on such Interest Determination Date two or more Reference
               Banks provide such offered quotations, One-Month LIBOR for the
               related Accrual Period shall be the arithmetic mean of such
               offered quotations (rounded upwards if necessary to the nearest
               whole multiple of 0.03125%).

          (ii) If on such Interest Determination Date fewer than two Reference
               Banks provide such offered quotations, One-Month LIBOR for the
               related Accrual Period shall be the higher of (i) One-Month LIBOR
               as determined on the previous Interest Determination Date and
               (ii) the Reserve Interest Rate.

     Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, reasonably acceptable to each addressee of such
opinion; provided, however, that with respect to Section 6.04 or 10.01, or the
interpretation or application of the REMIC Provisions, such counsel must (1) in
fact be independent of the Depositor and the Servicer, (2) not have any direct
financial interest in the Depositor or the Servicer or in any affiliate of any
such party and (3) not be connected with the Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.


                                      -23-

<PAGE>

     Optional Termination: The termination of the Trust Fund hereunder pursuant
to Section 9.01(a) hereof.

     Optional Termination Amount: The amount received by the Trustee in
connection with any purchase of all of the Mortgage Loans and REO Properties
pursuant to Section 9.01(b) hereof.

     Optional Termination Price: On any date after the Initial Optional
Termination Date, an amount equal to the sum of (A) the aggregate Stated
Principal Balance of each Mortgage Loan (other than any Mortgage Loan that has
become an REO Property) as of the Distribution Date on which the proceeds of the
Optional Termination are distributed to the Certificateholders, plus accrued
interest thereon at the applicable Mortgage Rate as of the Due Date preceding
the Distribution Date on which the proceeds of the Optional Termination are
distributed to Certificateholders and the fair market value of any REO Property,
plus accrued interest thereon as of the Distribution Date on which the proceeds
of the Optional Termination are distributed to Certificateholders, (B) any
unreimbursed out-of-pocket costs and expenses owed to the Trustee (including any
reasonable fees and expenses incurred by the Trustee in connection with
conducting the Auction) or the Servicer and any unpaid or unreimbursed Trustee
Fees, Servicing Fees, Advances and Servicing Advances and (C) any unreimbursed
costs, penalties and/or damages incurred by the Trust Fund in connection with
any violation relating to any of the Mortgage Loans of any predatory or abusive
lending law.

     OTS: The Office of Thrift Supervision.

     Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.

     Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.

     Overcollateralization Amount: As of any date of determination, the excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class P
Certificates and the Class C Certificates).

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

     P&I Arrearages: With respect to any Mortgage Loan other than a Mortgage
Loan originated by Acoustic Home Loans, LLC, the total amount of scheduled
monthly payments in respect of principal and/or interest due on or prior to the
Cut-off Date thereon but not received on or prior to the Cut-off Date, exclusive
of any Servicing Arrearages. As of the Cut-off Date, the aggregate amount of P&I
Arrearages is $848,840.27. Notwithstanding any internal designation by the
Servicer with respect to collections on the Mortgage Loans, any payments or
Advances made on a Mortgage Loan (other than any Mortgage Loan originated by
Acoustic Home Loans, LLC) in the related Due Period shall first be applied as
the current Scheduled Payment and any payments or Advances in excess of one
Scheduled Payment shall be applied as follows: first, if an Advance has been
made with respect to such Due Period and, with respect to such Due Period and
such Mortgage Loan, the total amount received by the Trustee is in excess of one
Scheduled Payment, the excess, up to an amount equal to the lesser of (i) one
Scheduled Payment and (ii)


                                      -24-

<PAGE>

the amount of such Advance made during the related Due Period, shall be
deposited by the Trustee into the Advance Reserve Account and utilized in
accordance with Section 3.09 and second, any remaining amount (not to exceed the
total amount of P&I Arrearages with respect to such Mortgage Loan, as reduced
from time to time by payments received with respect to such Mortgage Loan and
distributed pursuant to Section 4.04(l)) to be distributed as a payment in
respect of P&I Arrearages pursuant to Section 4.04(l).

     Pass-Through Rate: With respect to any Class of Certificates, the
corresponding Pass-Through Rate for such Class of Certificates.

     Percentage Interest: With respect to:

          (i)  any Class, the percentage interest in the undivided beneficial
               ownership interest evidenced by such Class which shall be equal
               to the Certificate Principal Balance of such Class divided by the
               aggregate Certificate Principal Balance of all Classes; and

          (ii) any Certificate, the Percentage Interest evidenced thereby of the
               related Class shall equal the percentage obtained by dividing the
               Denomination of such Certificate by the aggregate of the
               Denominations of all Certificates of such Class; except that in
               the case of any Class P Certificates, the Percentage Interest
               with respect to such Certificate shown on the face of such
               Certificate.

     Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the related
Mortgage Note, the provision therein that limits permissible increases and
decreases in the Mortgage Rate on any Adjustment Date.

     Permitted Activities: The primary activities of the Trust Fund created
pursuant to this Agreement which shall be:

          (i)  holding Mortgage Loans transferred from the Depositor and other
               assets of the Trust Fund, including the Cap Contracts and any
               credit enhancement and passive derivative financial instruments
               that pertain to beneficial interests issued or sold to parties
               other than the Depositor, its Affiliates, or its agents;

          (ii) issuing Certificates and other interests in the assets of the
               Trust Fund;

          (iii) receiving collections on the Mortgage Loans and the Cap
               Contracts and making payments on such Certificates and interests
               in accordance with the terms of this Agreement; and

          (iv) engaging in other activities that are necessary or incidental to
               accomplish these limited purposes, which activities cannot be
               contrary to the status of the Trust Fund as a qualified special
               purpose entity under existing accounting literature.

     Permitted Investments: At any time, any one or more of the following
obligations and securities:

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


                                      -25-

<PAGE>

          (ii) general obligations of or obligations guaranteed by any state of
               the United States or the District of Columbia receiving the
               highest long-term debt rating of each Rating Agency rating the
               Certificates;

          (iii) commercial or finance company paper, other than commercial or
               finance company paper issued by the Depositor, the Trustee or any
               of its Affiliates, which is then receiving the highest commercial
               or finance company paper rating of each such Rating Agency;

          (iv) certificates of deposit, demand or time deposits, or bankers'
               acceptances (other than bankers' acceptances issued by the
               Trustee or any of its Affiliates) issued by any depository
               institution or trust company incorporated under the laws of the
               United States or of any state thereof and subject to supervision
               and examination by federal and/or state banking authorities,
               provided that the commercial paper and/or long term unsecured
               debt obligations of such depository institution or trust company
               are then rated one of the two highest long-term and the highest
               short-term ratings of each such Rating Agency for such
               securities;

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

          (vi) guaranteed reinvestment agreements issued by any bank, insurance
               company or other corporation rated in the two highest long-term
               or the highest short-term ratings of each Rating Agency
               containing, at the time of the issuance of such agreements, such
               terms and conditions as will not result in the downgrading or
               withdrawal of the rating then assigned to the Certificates by any
               such Rating Agency as evidenced by a letter from each Rating
               Agency;

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

          (viii) securities (other than stripped bonds, stripped coupons or
               instruments sold at a purchase price in excess of 115% of the
               face amount thereof) bearing interest or sold at a discount
               issued by any corporation, other than the Trustee or any of its
               Affiliates, incorporated under the laws of the United States or
               any state thereof which, at the time of such investment, have one
               of the two highest long term ratings of each Rating Agency;

          (ix) interests in any money market fund (including those managed or
               advised by the Trustee or its affiliates) which at the date of
               acquisition of the interests in such fund and throughout the time
               such interests are held in such fund has the highest applicable
               long term rating by each Rating Agency rating such fund; and

          (x)  short term investment funds sponsored by any trust company or
               national banking association incorporated under the laws of the
               United States or any state thereof, other than the Trustee or any
               of its Affiliates, which on the date of acquisition has been
               rated by each such Rating Agency in their respective highest
               applicable rating category;


                                      -26-

<PAGE>

provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer and/or the Trustee shall receive an Opinion of
Counsel acceptable to the Servicer and/or the Trustee, at the expense of the
party requesting that such investment be made, to the effect that such
investment will not adversely affect the status of the any REMIC provided for
herein as a REMIC under the Code or result in imposition of a tax on the Trust
Fund or any REMIC provided for herein and (II) each such investment must be a
"permitted investment" within the meaning of Section 860G(a)(5) of the Code.
Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.

     Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with respect to the
Class R Certificate, (iv) rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or
resident of the United States, a corporation or partnership (or other entity
treated as a corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United States or any
State thereof or the District of Columbia or an estate 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, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor and the Trustee with a duly completed
Internal Revenue Service Form W-8ECI or applicable successor form. The terms
"United States," "State" and "International Organization" shall have the
meanings set forth in Section 7701 of the Code. A corporation will not be
treated as an instrumentality of the United States or of any State 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, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.

     Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances, as of such Distribution Date, of the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.

     Preference Claim: The meaning set forth in Section 4.04(j) hereof.


                                      -27-

<PAGE>

     Prepayment Assumption: A rate or rates of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions," relating to
the Offered Certificates or as described in the Private Placement Memorandum
relating to the Class B Certificates.

     Prepayment Charges: Any prepayment premium, fee or charge payable by a
Mortgagor in connection with any Principal Prepayment on a Mortgage Loan
pursuant to the terms of the related Mortgage Note or Mortgage, as applicable,
as identified on the Mortgage Loan Schedule.

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

     Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment in full (other
than a Principal Prepayment in full resulting from the purchase of a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01 hereof), the amount, if any, by
which (i) one month's interest at the applicable Net Mortgage Rate on the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
exceeds (ii) the amount of interest paid or collected in connection with such
Principal Prepayment.

     Prepayment Period: As to any Distribution Date, the period beginning with
the opening of business on the 15th day of the calendar month preceding the
month in which such Distribution Date occurs (or in the case of the first
Distribution Date, beginning with the opening of business on the Cut-off Date)
and ending on the close of business on the 14th day of the month in which such
Distribution Date occurs.

     Principal Distribution Amount: With respect to each Distribution Date, the
sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.

     Principal Funds: With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1) all scheduled principal due during
the related Due Period and received before the related Servicer Remittance Date
or advanced on or before the related Servicer Remittance Date, (2) all Principal
Prepayments collected in the related Prepayment Period, (3) the Stated Principal
Balance of each Mortgage Loan that was purchased by the Depositor or the
Servicer during the related Prepayment Period or, in the case of a purchase
pursuant to Section 9.01, on any Business Day prior to such Distribution Date,
(4) the amount, if any, by which the aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the aggregate unpaid principal balance of
the related Deleted Mortgage Loans delivered by the Seller in connection with a
substitution of a Mortgage Loan pursuant to Section 2.03(c), (5) all Liquidation
Proceeds collected during the related Prepayment Period (to the extent such
Liquidation Proceeds related to principal), (6) all Subsequent Recoveries
received during the related Due Period and (7) all other collections and
recoveries in respect of principal (other than collections in respect of P&I
Arrearages) during the related Prepayment Period less (A) all Non-Recoverable
Advances relating to principal with respect to the Mortgage Loans and all
Non-Recoverable Servicing Advances reimbursed during the related Prepayment
Period and (B) all other amounts reimbursable to the Servicer and the Trustee
pursuant to this Agreement and allocable to principal.


                                      -28-

<PAGE>

     Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03 and 9.01 hereof) that is
received or recovered in advance of its scheduled Due Date and is not
accompanied by an amount as to interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of prepayment.
Partial Principal Prepayments shall be applied by the Servicer in accordance
with the terms of the related Mortgage Note.

     Private Placement Memorandum: The Private Placement Memorandum dated
October 18, 2005 relating to the private placement of the Class B Certificates.

     Prospectus Supplement: The Prospectus Supplement dated October 17, 2005
relating to the public offering of the Offered Certificates.

     PUD: A Planned Unit Development.

     Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof, an amount
equal to the sum of (i) 100% of the unpaid principal balance of the Mortgage
Loan as of the date of such purchase together with any related unreimbursed
Servicing Advances, (ii) accrued interest thereon at the applicable Mortgage
Rate from (a) the date through which interest was last paid by the Mortgagor to
(b) the Due Date in the month in which the Purchase Price is to be distributed
to Certificateholders and (iii) any unreimbursed costs, penalties and/or damages
incurred by the Trust Fund (or the Trustee on behalf of the Trust Fund) in
connection with any violation relating to such Mortgage Loan of any predatory or
abusive lending law.

     Qualification Defect: With respect to any Mortgage Loan, any of (i) the
inclusion of a materially defective document in the related Mortgage File, (ii)
the absence of a document from the related Mortgage File or (iii) the breach of
any representation, warranty or covenant regarding such Mortgage Loan which, in
any such case, causes such Mortgage Loan (A) not to be a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code or (B) to be a "defective
obligation" within the meaning of Treasury regulations relating to REMICs.

     QIB: A "qualified institutional buyer" within the meaning of Rule 144A.

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

     Realized Loss: With respect to (1) a Liquidated Loan, the amount, if any,
by which the Stated Principal Balance and accrued interest thereon at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer with respect
thereto (net of reimbursement of Advances and Servicing Advances) at the time
such Mortgage Loan became a Liquidated Loan or (2) a Mortgage Loan which is not
a Liquidated Loan, any amount of principal that the Mortgagor is no longer
legally required to pay (except for the extinguishment of debt that results from
the exercise of remedies due to default by the Mortgagor).

     Record Date: With respect to any Distribution Date, the close of business
on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs (or, in the case of the first Distribution
Date, the Closing Date).


                                      -29-

<PAGE>

     Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, N.A., Citibank,
N.A., Wells Fargo Bank, N.A. and NatWest, N.A.; provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee with the consent of the NIMs Insurer which are
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, England and (ii)
whose quotations appear on the Reuters Screen LIBO Page on the relevant Interest
Determination Date and (iii) which have been designated as such by the Servicer.

     Regular Certificate: Any one of the Class A-1, Class A-2, Class M, and
Class B Certificates.

     Regulation S: Regulation S promulgated under the Securities Act or any
successor provision thereto, in each case as the same may be amended from time
to time; and all references to any rule, section or subsection of, or definition
or term contained in, Regulation S means such rule, section, subsection,
definition or term, as the case may be, or any successor thereto, in each case
as the same may be amended from time to time.

     Regulation S Book-Entry Certificates: Certificates sold in offshore
transactions in reliance on Regulation S in the form of one or more permanent
global Certificates in definitive, fully registered form without interest
coupons, which shall be deposited on behalf of the subscribers for such
Certificates represented thereby with the Trustee, as custodian for DTC and
registered in the name of a nominee of DTC.

     Related Certificates: With respect to the Class LTA-1 Interest, the Class
A-1 and Class R Certificates. With respect to the Class LTA-2 Interest, the
Class A-2 Certificates. With respect to the Class LTM-1 Interest, the Class M-1
Certificates. With respect to the Class LTM-2 Interest, the Class M-2
Certificates. With respect to the Class LTB-1 Interest, the Class B-1
Certificates. With respect to the Class LTB-2 Interest, the Class B-2
Certificates.

     Relief Act: The Servicemembers Civil Relief Act or any similar state or
local law.

     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 calendar month as a result of
the application of the Relief Act.

     REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein to "the REMICs" or "a REMIC" shall
mean any of (or, as the context requires, all of) the Lower Tier REMIC and the
Upper Tier REMIC.

     REMIC Pass-Through Rate: The Pass-Through Rate for a Class of Related
Certificates calculated by replacing "Available Funds Cap" in such definition
with "Net Rate."

     REMIC Provisions: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at sections 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and proposed,
temporary and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time as
well as provisions of applicable state laws.

     REMIC Regular Interests: (i) any of the rights under any of the
Certificates (other than the Class P Certificates, the Class R Certificate and
the Class C Certificates) other than the rights in interest rate cap contracts
described in Section 2.07 and (ii) the Uncertificated Class C Interest.


                                      -30-

<PAGE>

     Remittance Report: As defined in Section 4.04(j) hereof.

     REO Property: A Mortgaged Property acquired by the Servicer, on behalf of
the Trustee for the benefit of the Certificateholders, through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.

     Re-Performing Loan: means a Mortgage Loan which had defaulted in the past
and which is currently at least 90 days delinquent with respect to certain
scheduled monthly payments in respect of principal and/or interest, but for
which the related mortgagor has made, in the aggregate, at least three scheduled
monthly payments in respect of principal and/or interest in the four calendar
months preceding the Cut-off Date (regardless of the timing of receipt of such
payments).

     Replacement Mortgage Loan: A Mortgage Loan substituted by the Seller for a
Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio (or
Combined Loan-to-Value Ratio, in the case of the Mortgage Loans in a second lien
position) no higher than that of the Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for a Prepayment Charge on terms
substantially similar to those of the Prepayment Charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan; and (9) comply
with each representation and warranty set forth in Section 2.03 hereof.

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

     Required Insurance Policy: With respect to any Mortgage Loan, any insurance
policy that is required to be maintained from time to time under this Agreement.

     Required Percentage: As of any Distribution Date, the quotient of (1) the
excess of (A) the Stated Principal Balances of the Mortgage Loans as of such
Distribution Date, over (B) the Certificate Principal Balance of the most senior
Class of Certificates outstanding as of such Distribution Date, prior to giving
effect to distributions to be made on such Distribution Date and (2) the Stated
Principal Balance of the Mortgage Loans as of such Distribution Date. As used
herein, on any Distribution Date when any of the Class A Certificates are
outstanding, the Certificate Principal Balance of the most senior Class of
Certificates will equal the aggregate Certificate Principal Balance of the Class
A Certificates as of such date of calculation.


                                      -31-
<PAGE>

     Reserve Interest Rate: With respect to any Interest Determination Date, the
rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.

     Residual Interest: An interest in the Upper Tier REMIC that is entitled to
all distributions of principal and interest on the Class R Certificate other
than distributions in respect of the Class LTR Interest and distributions to the
extent attributable to an interest rate in excess of the Net Rate.

     Responsible Officer: When used with respect to the Trustee or the Servicer,
any officer of the Trustee or the Servicer with direct responsibility for the
administration of this Agreement and also means any other officer 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.

     Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.

     Rule 144A: Rule 144A under the Securities Act.

     Rule 144A Book-Entry Certificates: Certificates initially offered and sold
in reliance on the exemption from registration under Rule 144A in the form of
one or more permanent global Certificates in definitive, fully registered form
without interest coupons, which shall be deposited on behalf of the subscribers
for such Certificates represented thereby with the Trustee, as custodian for DTC
and registered in the name of a nominee of DTC.

     S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or
any successor in interest.

     Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated as of
September 1, 2005 between the Depositor and the Seller.

     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.

     Section 302 Requirements: Any rules or regulations promulgated pursuant to
the Sarbanes-Oxley Act of 2002 (as such may be amended from time to time).

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

     Seller: Merrill Lynch Mortgage Lending, Inc., a Delaware corporation, or
its successors in interest.

     Servicer: Wilshire Credit Corporation, a Nevada corporation, or its
successor in interest.

     Servicer Advance Date: As to any Distribution Date, the related Servicer
Remittance Date.


                                      -32-

<PAGE>

     Servicer Remittance Date: With respect to any Distribution Date, the later
of two Business Days after the 15th day of the month in which such Distribution
Date occurs and the 18th day (or if such day is not a Business Day, the next
succeeding Business Day) of the month in which such Distribution Date occurs.

     Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses incurred in the performance of the Servicer's servicing
obligations hereunder, including, but not limited to, the cost of (1) the
preservation, inspection, restoration and protection of a Mortgaged Property (or
Underlying Mortgaged Property, in the case of a Co-op Loan), including without
limitation advances in respect of real estate taxes and assessments, (2) any
collection, enforcement or judicial proceedings, including without limitation
foreclosures, collections and liquidations, (3) the conservation, management,
sale and liquidation of any REO Property, (4) executing and recording
instruments of satisfaction, deeds of reconveyance, substitutions of trustees on
deeds of trust or Assignments of Mortgage to the extent not otherwise recovered
from the related Mortgagors or payable under this Agreement, (5) correcting
errors of prior servicers; costs and expenses charged to the Servicer by the
Trustee; tax tracking; title research; flood certifications; lender paid
mortgage insurance, (6) obtaining or correcting any legal documentation required
to be included in the Mortgage Files and reasonably necessary for the Servicer
to perform its obligations under this Agreement and (7) compliance with the
obligations under Sections 3.01 and 3.10; provided that such amounts are
required to be advanced only to the extent such advances constitute
"unanticipated expenses" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii).

     Servicing Arrearages: With respect to any Mortgage Loan, the total amount
of any unreimbursed amounts that would have constituted Servicing Advances had
such amounts been advanced under this Agreement and that were advanced on or
prior to the Cut-off Date but not recovered on or prior to the Cut-off Date.

     Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to the product of (x) one-twelfth of the Servicing Fee Rate and (y)
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date or, in the event of any payment of interest that accompanies a
Principal Prepayment in full made by the Mortgagor, interest at the Servicing
Fee Rate on the Stated Principal Balance of such Mortgage Loan as of the
preceding Distribution Date for the period covered by such payment of interest.

     Servicing Fee Rate: 0.50%.

     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
lists may from time to time be amended.

     Servicing Transfer Costs: All costs associated with the transfer of
servicing from the predecessor Servicer, including, without limitation, any
costs or expenses associated with the termination of the predecessor Servicer,
the appointment of a successor servicer, the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee or any successor servicer to correct any errors
or insufficiencies in the servicing data or otherwise to enable the Trustee or
successor servicer to service the Mortgage Loans properly and effectively.

     SFAS 140: Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.


                                      -33-

<PAGE>

     Startup Day: As defined in Section 2.07 hereof.

     Stated Principal Balance: With respect to any Mortgage Loan or related REO
Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance thereof,
and (2) as of any Distribution Date, such Cut-off Date Principal Balance, minus
the sum of (A) the principal portion of the Scheduled Payments (x) due with
respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date and (y) that were received by the Servicer as of the close of
business on the Determination Date related to such Distribution Date or with
respect to which Advances were made on the Servicer Advance Date prior to such
Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.

     Stepdown Date: The later to occur of (1) the Distribution Date in October
2008 or (2) the first Distribution Date on which (A) the Class A Certificate
Principal Balance (reduced by the Principal Funds with respect to such
Distribution Date) is less than or equal to (B) 57.20% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date.

     Stepdown  Required  Loss  Percentage:   For  any  Distribution   Date,  the
applicable  percentage  for such  Distribution  Date set forth in the  following
table:

<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN   STEPDOWN REQUIRED LOSS PERCENTAGE
------------------------------   ---------------------------------
<S>                              <C>
October 2008 - September 2009    3.50% with respect to October 2008, plus an
                                 additional 1/12th of 1.50% for each month
                                 thereafter

October 2009 - September 2010    5.00% with respect to October 2009, plus an
                                 additional 1/12th of 1.25% for each month
                                 thereafter

October 2010 - September 2011    6.25% with respect to October 2010, plus an
                                 additional 1/12th of 0.75% for each month
                                 thereafter

October 2011 and thereafter      7.00%
</TABLE>

     Stepdown Trigger Event: With respect to the Certificates on or after the
Stepdown Date, a Distribution Date on which (1) the quotient of (A) the
aggregate Stated Principal Balance of all Mortgage Loans which are 60 or more
days Delinquent measured on a rolling three month basis (including, for the
purposes of this calculation, Mortgage Loans in foreclosure and REO Properties
and Mortgage Loans with respect to which the applicable Mortgagor is in
bankruptcy) and (B) the Stated Principal Balance of the Mortgage Loans as of the
preceding Servicer Remittance Date, equals or exceeds the product of (i) 37.00%
and (ii) the Required Percentage or (2) the quotient (expressed as a percentage)
of (A) the aggregate Realized Losses incurred from the Cut-off Date through the
last day of the calendar month preceding such Distribution Date and (B) the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date exceeds
the Stepdown Required Loss Percentage.

     Subordinated Certificate Cap Contract: The amended confirmation and
agreement and any related confirmation thereto, between the Trust Fund or
Trustee and the Cap Contract Counterparty (in the form of Exhibit N-2 hereto)
for the benefit of the Class M and Class B-1 Certificates.


                                      -34-

<PAGE>

     Subordinated Certificate Cap Contract Notional Balance: With respect to any
Distribution Date, the Subordinated Certificate Cap Contract Notional Balance
set forth for such Distribution Date in the Subordinated Certificate One-Month
LIBOR Cap Table attached hereto as Exhibit O-2.

     Subordinated Certificate Cap Contract Termination Date: The Distribution
Date in April 2008.

     Subordinated Certificate Upper Collar: With respect to each Distribution
Date with respect to which payments are received on the Subordinated Certificate
Cap Contract, a rate equal to the lesser of One-Month LIBOR and 8.550% per
annum.

     Subordinated Certificates: Each Class of the Class M and Class B
Certificates.

     Sub-Performing Loan: means a Mortgage Loan pursuant to which a scheduled
monthly payment in respect of principal and/or interest due prior to the Cut-off
Date under the terms of the related Mortgage Note (or any modification thereto),
is at least 30 but not more than 60 days delinquent.

     Subsequent Recovery: Any amount received on a Mortgage Loan (net of amounts
reimbursed to the Servicer related to such Mortgage Loan) subsequent to such
Mortgage Loan being determined to be a Liquidated Mortgage Loan.

     Subservicing Agreement: As defined in Section 3.02(a).

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

     Tax Matters Person: The Person designated as "tax matters person" in the
manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.

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

     Trust Fund: The corpus of the trust (the "Merrill Lynch Mortgage Investors
Trust, Series 2005-SD1") created hereunder consisting of (i) the Mortgage Loans
and all interest and principal received on or with respect thereto on and after
the Cut-off Date to the extent not applied in computing the Cut-off Date
Principal Balance thereof, exclusive of interest not required to be deposited in
the Collection Account; (ii) the Collection Account and the Certificate 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) the mortgagee's
rights under the Insurance Policies with respect to the Mortgage Loans; (v) the
right to receive payment in respect of P&I Arrearages; (vi) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid property; and (vii) the Cap Contract and Cap Contract Account.

     Trustee: Wells Fargo Bank, N.A., a national banking association, not in its
individual capacity, but solely in its capacity as trustee for the benefit of
the Certificateholders under this Agreement, and any successor thereto, and any
corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder; it being understood that certain duties of the Trustee under Sections
2.01 and 2.02 with respect to certain of the Mortgage Loans and certain duties
with respect to the possession and administration of the Mortgage Files
generally may be carried out by a custodian engaged by the Trustee.


                                      -35-

<PAGE>

     Trustee Fee: The monthly fee payable to the Trustee from interest collected
with respect to each Mortgage loan equal to the product of (x) one-twelfth of
the Trustee Fee Rate and (y) the Stated Principal Balance of such Mortgage Loan.
The Trustee is also entitled to investment income earned on the amounts on
deposit in the Certificate Account.

     Trustee Fee Rate: 0.0175%.

     Uncertificated Class C Interest: An uncertificated interest having (i) the
same rights to payments as the Class C Certificates, other than the rights to
payments of amounts with respect to the Cap Contracts and P&I Arrearages, and
(ii) the rights to the payments treated as distributed to the Class C
Certificates under Section 2.07(d), provided, however, that such interest shall
have no obligation to make any payments treated as paid by the Class C
Certificates pursuant to interest rate cap agreements under Section 2.07(d).

     Underlying Mortgaged Property: With respect to each Co-op Loan, the
underlying real property owned by the related residential cooperative housing
corporation.

     Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount and Class C Unpaid Realized Loss Amount,
collectively.

     Upper Collar: Either of the Class A-1 Upper Collar or the Subordinated
Certificate Upper Collar.

     Upper Tier REMIC: As described in the Preliminary Statement and Section
2.07.

     USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 3.18.

     Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated as follows: (1) 98% to the Class A, Class M and Class B
Certificates, with the allocation among such Certificates to be in proportion to
the Certificate Principal Balance of each Class relative to the Certificate
Principal Balance of all other Classes and (2) each Class of the Class C and
Class P will be allocated 2% of the Voting Rights. Voting Rights will be
allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

     SECTION 2.01. Conveyance of Mortgage Loans.

     The Depositor, concurrently with the execution and delivery hereof, does
hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).

     It is agreed and understood by the Depositor, the Servicer and the Trustee
that it is not intended that any Mortgage Loan be included in the Trust that is,
without limitation, a "High-Cost Home Loan" as


                                      -36-

<PAGE>

defined by the Home Ownership and Equity Protection Act of 1994 or any other
applicable anti-predatory lending laws, including but not limited to (i) a
"High-Cost Home Loan" as defined in the New Jersey Home Ownership Act effective
November 27, 2003; (ii) a "High-Cost Home Loan" as defined in the New Mexico
Home Loan Protection Act effective January 1, 2004; or (iii) a "High-Cost Home
Loan" as defined in the Massachusetts Predatory Home Loan Practices Act
effective November 7, 2004 or (iv) a "High-Cost Home Loan" as defined by the
Indiana High Cost Home Loan Law effective January 1, 2005.

     (i) In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee, the following documents or instruments with
respect to each Mortgage Loan:

          (A) The original Mortgage Note endorsed in blank or, "Pay to the order
     of Wells Fargo Bank, N.A., as trustee, without recourse" together with all
     riders thereto. The Mortgage Note shall include all intervening
     endorsements showing a complete chain of the title from the originator to
     [____________________];

          (B) Except as provided below and for each Mortgage Loan that is not a
     MERS Loan, the original recorded Mortgage together with all riders thereto,
     with evidence of recording thereon, or, if the original Mortgage has not
     yet been returned from the recording office, a copy of the original
     Mortgage together with all riders thereto certified by the Seller to be
     true copy of the original of the Mortgage that has been delivered for
     recording in the appropriate recording office of the jurisdiction in which
     the Mortgaged Property is located and in the case of each MERS Loan, the
     original Mortgage together with all riders thereto, noting the presence of
     the MIN of the Loan and either language indicating that the Mortgage Loan
     is a MOM Loan or if the Mortgage Loan was not a MOM Loan at origination,
     the original Mortgage and the assignment thereof to MERS, with evidence of
     recording indicated thereon, or a copy of the Mortgage certified by the
     public recording office in which such Mortgage has been recorded;

          (C) In the case of each Mortgage Loan that is not a MERS Loan, the
     original Assignment of each Mortgage endorsed either in blank or, to "Wells
     Fargo Bank, N.A., as trustee;"

          (D) The original policy of title insurance (or a preliminary title
     report, commitment or binder if the original title insurance policy has not
     been received from the title insurance company);

          (E) Originals of any intervening assignments of the Mortgage, with
     evidence of recording thereon or, if the original intervening assignment
     has not yet been returned from the recording office, a copy of such
     assignment certified to be a true copy of the original of the assignment
     which has been sent for recording in the appropriate jurisdiction in which
     the Mortgaged Property is located; and

          (F) Originals of all assumption and modification agreements, if any.

     (ii) In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned that is a Co-op Loan:

          (A) (i) The original Mortgage Note (or a lost note affidavit
     (including a copy of the original Mortgage Note)) or (ii) the original
     consolidation, extension and modification agreement (or a lost note
     affidavit (including a copy of the original consolidation, extension and


                                      -37-

<PAGE>

     modification agreement)), in either case endorsed either in blank or, "Pay
     to the order of Wells Fargo Bank, N.A., as trustee, without recourse";

          (B) The original Mortgage entered into by the Mortgagor with respect
     to such Co-Op Loan;

          (C) The original Assignment of Mortgage endorsed either in blank or to
     "Wells Fargo Bank, N.A., as trustee";

          (D) The original assignments of Mortgage showing a complete chain of
     assignment from the originator of the related Co-Op Loan to the last
     endorsee on the Mortgage Note;

          (E) The original Form UCC-1 and any continuation statements with
     evidence of filing thereon entered into by the Mortgagor with respect to
     such Co-Op Loan (or a recorded copy thereof);

          (F) Form UCC-3 (or copy thereof) by the Seller or its agent assigning
     the security interest covered by such Form UCC-1 to "Wells Fargo Bank,
     N.A., as trustee," together with all Forms UCC-3 (or copies thereof)
     showing a complete chain of assignment from the originator of the related
     Co-op Loan to the Seller, with evidence of recording thereon;

          (G) The original stock certificate representing the stock allocated to
     the related dwelling unit in the related residential cooperative housing
     corporation and pledged by the related Mortgagor to the originator of such
     Co-op Loan with a stock power in blank attached;

          (H) The original proprietary lease;

          (I) The original assignment of proprietary lease or a copy thereof, to
     the Trustee or in blank, and all intervening assignments thereof;

          (J) The original recognition agreement or a copy thereof of the
     interests of the mortgagee with respect to the Co-op Loan by the
     residential cooperative housing corporation, the stock of which was pledged
     by the related Mortgagor to the originator of such Co-op Loan; and

          (K) Originals of any assumption, consolidation or modification
     agreements relating to any of the items specified in (A) through (F) above
     with respect to such Co-op Loan.

     If in connection with any Mortgage Loan that is not a Co-op Loan, the
Depositor cannot deliver the Mortgage, Assignments of Mortgage or assumption,
consolidation or modification, as the case may be, with evidence of recording
thereon, if applicable, concurrently with the execution and delivery of this
Agreement solely because of a delay caused by the public recording office where
such Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, has been delivered for recordation, the
Depositor shall deliver or cause to be delivered to the Trustee written notice
stating that such Mortgage or assumption, consolidation or modification, as the
case may be, has been delivered to the appropriate public recording office for
recordation. Thereafter, the Depositor shall deliver or cause to be delivered to
the Trustee such Mortgage, Assignments of Mortgage or assumption, consolidation
or modification, as the case may be, with evidence of recording indicated
thereon, if applicable, upon receipt thereof from the public recording office.
To the extent any required endorsement is not contained on a Mortgage Note or an
Assignment of Mortgage, the Depositor shall make or cause such endorsement to be
made.


                                      -38-

<PAGE>

     With respect to any Mortgage Loan that is not a Co-op Loan, none of the
Depositor, the Servicer or the Trustee shall be obligated to cause to be
recorded the Assignment of Mortgage referred to in this Section 2.01. With
respect to any Co-op Loan, none of the Depositor, the Servicer or the Trustee
shall be obligated to cause to be filed the Form UCC-3 referred to in this
Section 2.01. In the event that any Assignment of Mortgage referred to in this
Section 2.01 is not recorded or is improperly recorded, the Servicer and the
Trustee shall have no liability for any failure to receive or act on notices
related to such Assignment of Mortgage.

     The ownership of each Mortgage Note, the Mortgage and the contents of the
related Mortgage File is vested in the Trustee on behalf of the
Certificateholders. Neither the Depositor nor the Servicer shall take any action
inconsistent with such ownership and shall not claim any ownership interest
therein. The Depositor and the Servicer shall respond to any third party
inquiries with respect to ownership of the Mortgage Loans by stating that such
ownership is held by the Trustee on behalf of the Certificateholders. Mortgage
documents relating to the Mortgage Loans not delivered to the Trustee are and
shall be held in trust by the Servicer, for the benefit of the Trustee as the
owner thereof, and the Servicer's possession of the contents of each Mortgage
File so retained is for the sole purpose of servicing the related Mortgage Loan,
and such retention and possession by the Servicer is in a custodial capacity
only. The Depositor agrees to take no action inconsistent with the Trustee's
ownership of the Mortgage Loans, to promptly indicate to all inquiring parties
that the Mortgage Loans have been sold and to claim no ownership interest in the
Mortgage Loans.

     It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.

     In addition to the conveyance made in the first paragraph of this Section
2.01, the Depositor does hereby convey, assign and set over to the Trustee for
the benefit of the Certificateholders its rights and interests under the Sale
Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement, and the benefit
of the repurchase obligations and the obligation of the Seller contained in the
Sale Agreement to take, at the request of the Depositor or the Trustee, all
action on its part which is reasonably necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be
entitled to exercise all rights of the Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor. The foregoing sale, transfer,
assignment, set-over, deposit and conveyance does not and is not intended to
result in creation or assumption by the Trustee of any obligation of the
Depositor, the Seller, or any other Person in


                                      -39-

<PAGE>

connection with the Mortgage Loans or any other agreement or instrument relating
thereto except as specifically set forth herein.

     SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans.

     Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Seller to repurchase
any Mortgage Loan to which a material exception was taken in the Exception
Report unless such exception is cured to the satisfaction of the Trustee within
45 Business Days of the Closing Date.

     The Trustee acknowledges receipt of the two Cap Contracts (forms of which
are attached hereto as Exhibits N-1 and N-2) and the Sale Agreement.

     The Trustee agrees, for the benefit of Certificateholders and the NIMs
Insurer, to review each Mortgage File delivered to it within 60 days after the
Closing Date to ascertain and to certify, within 70 days of the Closing Date, to
the NIMs Insurer, the Depositor and the Servicer that all documents required by
Section 2.01 have been executed and received, and that such documents relate to
the Mortgage Loans identified in Exhibit B that have been conveyed to it. If the
Trustee finds any document or documents constituting a part of a Mortgage File
to be missing or defective (that is, mutilated, damaged, defaced or unexecuted)
in any material respect, the Trustee shall promptly (and in any event within no
more than five Business Days) after such finding so notify the NIMs Insurer, the
Servicer, the Seller and the Depositor. In addition, the Trustee shall also
notify the NIMs Insurer, the Servicer, the Seller and the Depositor if the
original Mortgage with evidence of recording thereon with respect to a Mortgage
Loan is not received within 60 days of the Closing Date; if it has not been
received because of a delay caused by the public recording office where such
Mortgage has been delivered for recordation, the Depositor shall deliver or
cause to be delivered to the Trustee written notice stating that such Mortgage
has been delivered to the appropriate public recording office for recordation
and thereafter the Depositor shall deliver or cause to be delivered such
Mortgage with evidence of recording thereon upon receipt thereof from the public
recording office. If such omission, defect or other irregularity (i) materially
interferes with the ability of the Servicer to foreclose on the related
Mortgaged Property at the time of foreclosure, (ii) constitutes a Qualification
Defect with respect to that Mortgage Loan or (iii) causes a material adverse
change in the value of that Mortgage Loan or the interest of the Trust therein,
the Trustee shall request that the Seller correct or cure such omission, defect
or other irregularity, or substitute a Mortgage Loan pursuant to the provisions
of Section 2.03, within 90 days from the date the Seller was notified of such
omission or defect and, if the Seller does not correct or cure such omission or
defect within such period, that the Seller purchase such Mortgage Loan from the
Trust Fund within 90 days from the date the Trustee notified the Seller of such
omission, defect or other irregularity at the Purchase Price of such Mortgage
Loan. The Purchase Price for any Mortgage Loan purchased pursuant to this
Section 2.02 shall be paid to the Servicer and deposited by the Servicer in the
Certificate Account or Collection Account, as appropriate, promptly upon
receipt, and, upon receipt by the Trustee of written notification of such
deposit signed by a Servicing Officer, the Trustee, upon receipt of a Request
for Release, shall promptly release to the Seller the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or
assignment, without recourse, as shall be requested by the Seller and necessary
to vest in the Seller or its designee, as the case may be, any Mortgage Loan
released pursuant hereto, and the Trustee shall have no further responsibility
with regard to such Mortgage Loan. It is understood and agreed that the
obligation of the Seller to purchase, cure or substitute any Mortgage Loan as to
which a material defect in or


                                      -40-

<PAGE>

omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Trustee on behalf of
Certificateholders and the NIMs Insurer. The preceding sentence shall not,
however, limit any remedies available to the Certificateholders, the NIMs
Insurer, the Depositor or the Trustee pursuant to the Sale Agreement. The
Trustee shall be under no duty or obligation to inspect, review and examine such
documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, recordable or appropriate to the represented purpose, or
that they have actually been recorded, or that they are other than what they
purport to be on their face. The Servicer and the Trustee shall keep
confidential the name of each Mortgagor except as required for the performance
of this Agreement and the Servicer and the Trustee shall not solicit any such
Mortgagor for the purpose of refinancing the related Mortgage Loan;
notwithstanding anything herein to the contrary, the foregoing shall not be
construed to prohibit (i) disclosure of any and all information that is or
becomes publicly known, or information obtained by the Trustee or the Servicer
from sources other than the other parties hereto, (ii) disclosure of any and all
information (A) if required to do so by any applicable law, rule or regulation,
(B) to any government agency or regulatory body having or claiming authority to
regulate or oversee any aspects of the Trustee's business or that of its
affiliates, (C) pursuant to any subpoena, civil investigation demand or similar
demand or request of any court, regulatory authority, arbitrator or pursuant to
any arbitration to which Trustee or any affiliate or an officer, director,
employer or shareholder thereof is a party or (D) to any affiliate, independent
or internal auditor, agent, employee or attorney of the Trustee having a need to
know the same, provided that the Trustee advises such recipient of the
confidential nature of the information being disclosed, or (iii) any other
disclosure authorized by the Depositor. The Servicer shall provide to the
Depositor any information related to the Mortgage Loans requested by the
Depositor. It is understood and agreed that all rights and benefits relating to
the solicitation of any Mortgagors and the attendant rights, title and interest
in and to the list of Mortgagors and data relating to their Mortgages shall be
retained by the Servicer.

     Within 70 days of the Closing Date, the Trustee shall deliver to the NIMs
Insurer, the Depositor and the Servicer the Trustee's Certification,
substantially in the form of Exhibit D attached hereto, evidencing the
completeness of the Mortgage Files, with any exceptions noted thereto.

     SECTION 2.03. Representations, Warranties and Covenants of the Depositor.

          (a) The Depositor hereby represents and warrants to the Servicer, the
NIMs Insurer and the Trustee as follows, as of the date hereof:

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

          (ii) The Depositor has the full corporate power and authority to
     execute, deliver and perform, and to enter into and consummate the
     transactions contemplated by, this Agreement and the Sale Agreement and has
     duly authorized, by all necessary corporate action on its part, the
     execution, delivery and performance of this Agreement and the Sale
     Agreement; and this Agreement and the Sale Agreement, assuming the due
     authorization, execution and delivery hereof by the other parties hereto,
     constitutes a legal, valid and binding obligation of the Depositor,
     enforceable against the Depositor in accordance with its terms, subject, as
     to enforceability, to (i) bankruptcy, insolvency, reorganization,
     moratorium and other similar laws affecting creditors' rights generally and
     (ii) general principles of equity, regardless of whether enforcement is
     sought in a proceeding in equity or at law.


                                      -41-

<PAGE>

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

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

          (v) No consent, approval, authorization or order of any court or
     governmental agency or body is required for the execution, delivery and
     performance by the Depositor of, or compliance by the Depositor with, this
     Agreement and the Sale Agreement or the consummation of the transactions
     contemplated hereby, or if any such consent, approval, authorization or
     order is required, the Depositor has obtained the same. The Depositor
     hereby represents and warrants to the Trustee with respect to each Mortgage
     Loan as of the Closing Date, and following the transfer of the Mortgage
     Loans to it by the Seller, the Depositor had good title to the Mortgage
     Loans and the Mortgage Notes were subject to no offsets, claims, liens,
     mortgage, pledge, charge, security interest, defenses or counterclaims.

          (b) The representations and warranties of the Seller with respect to
the Mortgage Loans contained in the Sale Agreement were made as of the Closing
Date. To the extent that any fact, condition or event with respect to a Mortgage
Loan constitutes a breach of a representation or warranty of the Seller under
the Sale Agreement, the only right or remedy of the Trustee, the NIMs Insurer or
of any Certificateholder shall be the Trustee's right to enforce the obligations
of the Seller under any applicable representation or warranty made by it. The
Trustee acknowledges that the Depositor shall have no obligation or liability
with respect to any breach of any representation or warranty with respect to the
Mortgage Loans (except as set forth in Section 2.03(a)(v)) under any
circumstances.

          (c) Upon discovery by any of the Depositor, the Servicer, the NIMs
Insurer or the Trustee of a breach of any of such representations and warranties
set forth in the Sale Agreement that adversely and materially affects the value
of the related Mortgage Loan, Prepayment Charges or the interests of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties. Within 90 days of the discovery of such breach of
any representation or warranty, the the Seller shall either (a) cure such breach
in all material respects, (b) repurchase such Mortgage Loan or any property
acquired in respect thereof from the Trustee at the Purchase Price or (c) within
the two year period following the Closing Date, substitute a Replacement
Mortgage Loan for the affected Mortgage Loan. In the event of discovery of a
breach of any representation and warranty of the Seller, the Trustee shall
enforce its rights under the Sale Agreement for the benefit of
Certificateholders and the NIMs Insurer. If a breach of the representations and
warranties set forth in the Sale Agreement exists solely


                                      -42-

<PAGE>

due to the unenforceability of a Prepayment Charge, the Trustee shall notify the
NIMs Insurer thereof and not seek to enforce the repurchase remedy provided for
herein unless directed in writing to do so by the NIMs Insurer. In the event of
a breach of the representations and warranties with respect to the Mortgage
Loans set forth in the Sale Agreement, the Trustee shall, at the request of the
NIMs Insurer, enforce the right of the Trust Fund and the NIMs Insurer to be
indemnified for such breach of representation and warranty. In the event that
such breach relates solely to the unenforceability of a Prepayment Charge,
amounts received in respect of such indemnity up to the amount of such
Prepayment Charge shall be distributed pursuant to Section 4.04(b)(i). As
provided in the Sale Agreement, if the Seller substitutes for a Mortgage Loan
for which there is a breach of any representations and warranties in the Sale
Agreement which adversely and materially affects the value of such Mortgage Loan
and such substitute mortgage loan is not a Replacement Mortgage Loan, under the
terms of the Sale Agreement, the Seller will, in exchange for such substitute
Mortgage Loan, (i) provide the applicable Purchase Price for the affected
Mortgage Loan or (ii) within two years of the Closing Date, substitute such
affected Mortgage Loan with a Replacement Mortgage Loan. Any such substitution
shall not be effected prior to the additional delivery to the Trustee of a
Request for Release substantially in the form of Exhibit I and shall not be
effected unless it is within two years of the Startup Day. As provided in the
Sale Agreement, the Seller indemnifies and holds the Trust Fund, the Trustee,
the Depositor, the NIMs Insurer, the Servicer and each Certificateholder
harmless against any and all taxes, claims, losses, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trust Fund, the Trustee, the Depositor, the
NIMs Insurer, the Servicer and any Certificateholder may sustain in connection
with any actions of the Seller relating to a repurchase of a Mortgage Loan other
than in compliance with the terms of this Section 2.03 and the Sale Agreement,
to the extent that any such action causes (i) any federal or state tax to be
imposed on the Trust Fund or any REMIC provided for herein, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup day" under Section
860G(d)(1) of the Code, or (ii) any REMIC created hereunder to fail to qualify
as a REMIC at any time that any Certificate is outstanding. In furtherance of
the foregoing, if the Seller is not a member of MERS and repurchases a Mortgage
Loan which is registered on the MERS System, the Seller, at its own expense and
without any right of reimbursement, shall cause MERS to execute and deliver an
assignment of the Mortgage in recordable form to transfer the Mortgage from MERS
to the Seller and shall cause such Mortgage to be removed from registration on
the MERS System in accordance with MERS' rules and regulations.

     With respect to any Mortgage Loan repurchased by the Depositor pursuant to
this Agreement or by the Seller pursuant to the Sale Agreement, the principal
portion of the funds received by the Servicer in respect of such repurchase of a
Mortgage Loan will be considered a Principal Prepayment and shall be deposited
by the Servicer in the Collection Account pursuant to Section 3.05 and the
Servicer shall notify the Trustee of its receipt of the same. The Trustee, upon
receipt of the full amount of the Purchase Price for a Deleted Mortgage Loan, or
upon receipt of the Mortgage File for a Replacement Mortgage Loan substituted
for a Deleted Mortgage Loan, shall release or cause to be released and reassign
to the Depositor or the Seller, as applicable, the related Mortgage File for the
Deleted Mortgage Loan and shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, representation or warranty, as
shall be necessary to vest in such party or its designee or assignee title to
any Deleted Mortgage Loan released pursuant hereto, free and clear of all
security interests, liens and other encumbrances created by this Agreement,
which instruments shall be prepared by the Trustee, and the Trustee shall not
have any further responsibility with respect to the Mortgage File relating to
such Deleted Mortgage Loan.

     With respect to each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor or the Seller, as applicable, must deliver to
the Trustee (or its custodian) the Mortgage File for the Replacement Mortgage


                                      -43-

<PAGE>

Loan containing the documents set forth in Section 2.01 along with a written
certification certifying as to the satisfaction by such Mortgage Loan of all
requirements under the definition of Replacement Mortgage Loan and the delivery
of such Mortgage File and containing the granting language set forth in Section
2.01; and (ii) the Depositor will be deemed to have made, with respect to such
Replacement Mortgage Loan, each of the representations and warranties made by it
with respect to the related Deleted Mortgage Loan. The Trustee (or its
custodian) shall review the Mortgage File with respect to each Replacement
Mortgage Loan and certify to the NIMs Insurer and the Depositor that all
documents required by Section 2.01 have been executed and received.

     For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
Prepayment Charges with respect to such Replacement Mortgage Loans is less than
the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
Prepayment Charges of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") plus an amount equal to any unreimbursed
costs, penalties and/or damages incurred by the Trust Fund in connection with
any violation relating to such Deleted Mortgage Loan of any predatory or abusive
lending law shall be remitted by the Seller to the Servicer for deposit into the
Collection Account on the Determination Date for the Distribution Date relating
to the Prepayment Period during which the related Mortgage Loan became required
to be purchased or replaced hereunder.

     Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Replacement Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee and the NIMs Insurer
shall have received an Opinion of Counsel (at the expense of the party seeking
to make the substitution) that, under current law, such substitution will not
(A) affect adversely the status of any REMIC established hereunder as a REMIC,
or of the related "regular interests" as "regular interests" in any such REMIC,
or (B) cause any such REMIC to engage in a "prohibited transaction" or
prohibited contribution pursuant to the REMIC Provisions.

     The Trustee shall cause the Mortgage Loan Schedule to be amended in
accordance with the terms of this Agreement.

     The Seller shall give or cause to be given written notice to the
Certificateholders and the NIMs Insurer that such substitution has taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Replacement Mortgage Loan or Replacement Mortgage Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to the NIMs Insurer, the Servicer and the
Trustee. Upon such substitution by the Seller, such Replacement Mortgage Loan or
Replacement Mortgage Loans shall constitute part of the Mortgage Pool and shall
be subject in all respects to the terms of this Agreement and the Sale
Agreement, including all applicable representations and warranties thereof
included in the Sale Agreement as of the date of substitution.

          (d) It is understood and agreed that the representations, warranties
and indemnification (i) set forth in this Section 2.03 and (ii) of the Seller
and the Depositor set forth in the Sale Agreement and assigned to the Trustee by
the Depositor hereunder shall each survive delivery of the Mortgage Files and
the Assignment of Mortgage of each Mortgage Loan to the Trustee and shall
continue throughout the term of this Agreement.


                                      -44-

<PAGE>

          (e) The Depositor shall deliver a copy of the Mortgage Loan Schedule
to the Servicer on the Closing Date.

     SECTION 2.04. Representations and Warranties of the Servicer.

          (i) The Servicer hereby represents and warrants to the Depositor and
     the Trustee as follows, as of the date hereof:

          (ii) The Servicer is duly organized and is validly existing as a
     corporation in good standing under the laws of the State of Nevada and is
     duly authorized and qualified to transact any and all business contemplated
     by this Agreement to be conducted by the Servicer in any state in which a
     Mortgaged Property (or Underlying Mortgaged Property, in the case of a
     Co-op Loan) is located or is otherwise not required under applicable law to
     effect such qualification and, in any event, is in compliance with the
     doing business laws of any such state, to the extent necessary to ensure
     its ability to enforce each Mortgage Loan, to service the Mortgage Loans in
     accordance with the terms of this Agreement and to perform any of its other
     obligations under this Agreement in accordance with the terms hereof.

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

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

          (v) The Servicer is an approved servicer of mortgage loans for Fannie
     Mae and is an approved servicer of mortgage loans for Freddie Mac.

          (vi) No litigation is pending or, to the best of the Servicer's
     knowledge, threatened, against the Servicer that would materially and
     adversely affect the execution, delivery or


                                      -45-

<PAGE>

     enforceability of this Agreement or the ability of the Servicer to service
     the Mortgage Loans or to perform any of its other obligations under this
     Agreement in accordance with the terms hereof.

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

          (viii) The Servicer has fully furnished and will fully furnish (for
     the period it serviced the Mortgage Loans), in accordance with the Fair
     Credit Reporting Act and its implementing regulations, accurate and
     complete information (e.g., favorable and unfavorable) on its borrower
     credit files to Equifax, Experian and Trans Union Credit Information
     Company on a monthly basis.

     SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which are not
"Qualified Mortgages."

     Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within 5 Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Depositor shall, at
the Depositor's option, either (i) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan
within 90 days of such discovery in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 2.03. The
Trustee shall reconvey to the Depositor the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty
contained in Section 2.03.

     SECTION 2.06. Authentication and Delivery of Certificates.

     The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, the Trustee has caused
to be authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by the Trustee
in authorized denominations evidencing ownership of the entire Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates and to
perform its duties set forth in this Agreement in accordance with the provisions
hereof to the best of its abilities, to the end that the interests of the
Holders may be adequately and effectively protected.

     SECTION 2.07. REMIC Elections.

          (a) The Depositor hereby instructs and authorizes the Trustee to make
an appropriate election to treat each of the Upper Tier REMIC and the Lower Tier
REMIC as a REMIC. The Trustee shall sign the returns providing for such
elections and such other tax or information returns which are required to be
signed by the Trustee under applicable law. This Agreement shall be construed so
as to carry out the intention of the parties that each of the Upper Tier REMIC
and the Lower Tier REMIC be treated as a REMIC at all times prior to the date on
which the Trust Fund is terminated.


                                      -46-

<PAGE>

          (b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day" for purposes of the REMIC Provisions shall be the
Closing Date. Each REMIC's fiscal year shall be the calendar year.

     The Lower Tier REMIC shall consist of all of the assets of the Trust Fund,
other than (i) amounts distributable to the Class P Certificates pursuant to
Section 4.04(b)(i) hereof, (ii) the interests issued by the Lower Tier REMIC,
(iii) the grantor trusts described in Section 2.07 hereof, (iv) amounts
collected in respect of P&I Arrearages (v) the Advance Reserve Account and (vi)
each Cap Contract and the Cap Contract Account. The Lower Tier REMIC shall issue
the Lower Tier REMIC Regular Interests which shall be designated as regular
interests of such REMIC and shall issue the Class LTR Interest that shall be
designated as the sole class of residual interest in the Lower Tier REMIC. Each
of the Lower Tier REMIC Regular Interests shall have the characteristics set
forth in its definition.

     The assets of the Upper Tier REMIC shall be the Lower Tier REMIC Regular
Interests. The REMIC Regular Interests shall be designated as the regular
interests in the Upper Tier REMIC and the Residual Interest shall be designated
as the sole class of residual interest in the Upper Tier REMIC. For federal
income tax purposes, the pass-through rate on each REMIC Regular Interest (other
than the Uncertificated Class C Interest) and on the sole class of residual
interest in the Upper Tier REMIC shall be subject to a cap equal to the Net
Rate.

     The beneficial ownership of the Class LTR Interest and the Residual
Interest shall be represented by the Class R Certificate. The Class LTR Interest
shall not have a principal balance or bear interest.

          (c) The "tax matters person" with respect to each REMIC for purposes
of the REMIC Provisions shall be the beneficial owner of the Class R
Certificate; provided, however, that the Holder of the Class R Certificate, by
its acceptance thereof, irrevocably appoints the Trustee as its agent and
attorney-in-fact to act as "tax matters person" with respect to each REMIC for
purposes of the REMIC Provisions. If there is more than one beneficial owner of
the Class R Certificate, the "tax matters person" shall be the Person with the
greatest percentage interest in the Class R Certificate and, if there is more
than one such Person, shall be determined under Treasury regulation Section
1.860F-4(d) and Treasury regulation Section 301.6231(a)(7)-1.

          (d) It is intended that the rights of each Class of the Class A, Class
M and Class B Certificates to receive payments in respect of Excess Interest
shall be treated as a right in interest rate cap contracts written by the Class
C Certificateholders in favor of the holders of each Class of the Class A, Class
M and Class B Certificates and such shall be accounted for as property held
separate and apart from the regular interests in the Upper Tier REMIC held by
the holders of the Class A (other than the Class R Certificate), Class M and
Class B Certificates and the residual interest in the Upper Tier REMIC held by
the holder of the Class R Certificate. For information reporting requirements,
the rights of the Class A, Class M and Class B Certificates to receive payments
in respect of Excess Interest shall be assumed to have zero or a de minimis
value. This provision is intended to satisfy the requirements of Treasury
Regulations Section 1.860G-2(i) for the treatment of property rights coupled
with REMIC interests to be separately respected and shall be interpreted
consistently with such regulation. On each Distribution Date, to the extent that
any of the Class A, Class M and Class B Certificates receive payments in respect
of Excess Interest, such amounts, to the extent not derived from payments on the
Cap Contracts or amounts collected in respect of P&I Arrearages, will be treated
as distributed by the Upper Tier REMIC to the Class C Certificates pro rata in
payment of the amounts specified in Section 4.04(g) and then paid to the
relevant Class of Certificates pursuant to the related interest rate cap
agreement.


                                      -47-

<PAGE>

          (e) The parties intend that the portion of the Trust Fund consisting
of the Uncertificated Class C Interest, the Cap Contracts, the Cap Contract
Account, amounts collected in respect of P&I Arrearages, and the obligation of
the holders of the Class C Certificates to pay amounts in respect of Excess
Interest to the holders of the Class A, Class M and Class B Certificates shall
be treated as a "grantor trust" under the Code, for the benefit of the holders
of the Class C Certificates, and the provisions hereof shall be interpreted
consistently with this intention. In furtherance of such intention, the Trustee
shall (i) furnish or cause to be furnished to the holders of the Class C
Certificates information regarding their allocable share, if any, of the income
with respect to such grantor trust, (ii) file or cause to be filed with the
Internal Revenue Service Form 1041 (together with any necessary attachments) and
such other forms as may be applicable and (iii) comply with such information
reporting obligations with respect to payments from such grantor trust to the
holders of Class A, Class M, Class B and Class C Certificates as may be
applicable under the Code. Amounts collected in respect of P&I Arrearages shall
be an "outside reserve fund" for federal income tax purposes and not an asset of
any REMIC. Furthermore, the Holders of the Class C Certificates shall be the
beneficial owners of amounts collected in respect of P&I Arrearages for all
federal income tax purposes.

          (f) The parties intend that the portion of the Trust Fund consisting
of the right to receive amounts distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof shall be treated as a "grantor trust"
under the Code, for the benefit of the holders of the Class P Certificates, and
the provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall (i) furnish or cause to be
furnished to the holders of the Class P Certificates information regarding their
allocable share of the income with respect to such grantor trust and (ii) file
or cause to be filed with the Internal Revenue Service Form 1041 (together with
any necessary attachments) and such other forms as may be applicable.

          (g) The parties intend that the portion of the Trust Fund consisting
of the Advance Reserve Account shall be treated as a "grantor trust" under the
Code for the benefit of the Servicer until such time as such amounts are applied
in accordance with Section 3.09, and the provisions hereof shall be interpreted
consistently with such intentions.

          (h) All payments of principal and interest at the Net Mortgage Rate on
each of the Mortgage Loans (other than amounts distributable to the Class P
Certificates pursuant to Section 4.04(b)(i) hereof and other than amounts
collected in respect of P&I Arrearages) received from the Mortgage Loans shall
be paid to the Lower Tier REMIC Regular Interests until the principal balance of
all such interests have been reduced to zero and any losses allocated to such
interests have been reimbursed. Any excess amounts shall be distributed to the
Class LTR Interest. On each Distribution Date, an amount equal to 50% of the
increase in the Overcollateralization Amount shall be payable as a reduction of
the principal amounts of the Lower Tier REMIC Marker Classes (with such amount
allocated among the Lower Tier REMIC Marker Classes so that each Lower Tier
REMIC Marker Class will have its principal reduced by an amount equal to 50% of
any increase in the Overcollateralization Amount that results in a reduction in
the principal balance of its Related Certificates) and will be accrued and added
to the principal balance of the Class LTX Interest. All payments of scheduled
principal and prepayments of principal on the Mortgage Loans shall be allocated
50% to the Class LTX Interest and 50% to the Lower Tier REMIC Marker Classes
(with principal payments allocated to each of the Lower Tier REMIC Marker
Classes in an amount equal to 50% of the principal amounts distributed to the
Related Certificates in reduction of their principal amounts). Notwithstanding
the preceding sentence, an amount equal to the principal payments that result in
a reduction in the Overcollateralization Amount shall be treated as payable
entirely to the Class LTX Interest. Realized Losses that are allocated to the
Certificates shall be applied to the Lower Tier REMIC Marker Classes and the
Class LTX Interest so that after all distributions have been made on each
Distribution Date (i) the principal balance of each of the Lower Tier REMIC
Marker Classes is equal to 50% of the principal


                                      -48-

<PAGE>

balance of the Related Certificates and (ii) the principal balance of the Class
LTX Interest is equal to the sum of (x) 50% of the aggregate Stated Principal
Balance of the Mortgage Loans and (y) 50% of the Overcollateralization Amount.
Each Lower Tier REMIC Marker Class shall be entitled to receive an amount equal
to 50% of all amounts distributed to the Related Certificates in respect of
unreimbursed amounts of Realized Losses. The Class LTX Interest shall be
entitled to receive all other amounts distributed to the Certificates in respect
of unreimbursed amounts of Realized Losses.

     If on any Distribution Date the Certificate Principal Balance of any Class
of Certificates is increased pursuant to the last sentence of the definition of
"Certificate Principal Balance", then there shall be an equivalent increase in
the principal amounts of the Lower Tier REMIC Regular Interests, with such
increase allocated (before the making of distributions and the allocation of
losses on the Lower Tier REMIC Regular Interests on such Distribution Date)
among the Lower Tier REMIC Regular Interests so that (i) each of the Lower Tier
Marker Classes has a principal balance equal to 50% of the principal balance of
the Related Certificates, (ii) the Class LTX Interest has a principal balance
equal to the sum of (x) 50% of the aggregate Stated Principal Balance of the
Mortgage Loans and (y) 50% of the Overcollateralization Amount.

          (i) In the event that any REMIC provided for herein fails to qualify
as a REMIC, loses its status as a REMIC or incurs federal, state or local taxes
as a result of a prohibited transaction or prohibited contribution under the
REMIC Provisions due to the negligent performance by the Servicer of its duties
and obligations set forth herein, the Servicer shall indemnify the Trustee, and
the Trust Fund against any and all Losses resulting from such negligence;
provided, however, that the Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Depositor, the Trustee or the
Holder of the Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Class R Certificate
on which the Servicer has relied. The foregoing shall not be deemed to limit or
restrict the rights and remedies of the Holder of such Class R Certificate now
or hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Servicer have any liability (1) for any action or
omission that is taken in accordance with and in compliance with the express
terms of, or which is expressly permitted by the terms of, this Agreement, (2)
for any Losses other than those arising out of a negligent performance by the
Servicer of its duties and obligations set forth herein, and (3) for any special
or consequential damages to Certificateholders (in addition to payment of
principal and interest on the Certificates).

          (j) In the event that any REMIC provided for herein fails to qualify
as a REMIC, loses its status as a REMIC, or incurs federal, state or local taxes
as a result of a prohibited transaction or prohibited contribution under the
REMIC Provisions due to the negligent performance by the Trustee of its duties
and obligations set forth herein, the Trustee shall indemnify the Trust Fund
against any and all Losses resulting from such negligence; provided, however,
that the Trustee shall not be liable for any such Losses attributable to the
action or inaction of the Servicer, the Depositor or the Holder of the Class R
Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Class R Certificate on which the
Trustee has relied. The foregoing shall not be deemed to limit or restrict the
rights and remedies of the Holder of such Class R Certificate now or hereafter
existing at law or in equity. Notwithstanding the foregoing, however, in no
event shall the Trustee have any liability (1) for any action or omission that
is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than those arising out of a negligent performance by the Trustee of its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).

     SECTION 2.08. [RESERVED]


                                      -49-

<PAGE>

     SECTION 2.09. Covenants of the Servicer.

     The Servicer hereby covenants to each of the other parties to this
Agreement as follows:

          (a) the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy;

          (b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, the NIMs
Insurer or the Trustee, any affiliate of the Depositor, the NIMs Insurer or the
Trustee and prepared by the Servicer pursuant to this Agreement is inaccurate in
any material respect, provided, however, that the Servicer shall not be
responsible for inaccurate information provided to it by third parties.

     SECTION 2.10. [RESERVED].

     SECTION 2.11. Permitted Activities of the Trust. The Trust is created for
the object and purpose of engaging in the Permitted Activities. In furtherance
of the foregoing, the Trustee is hereby authorized and directed to execute and
deliver on behalf of the Trust, and to perform the duties and obligations of the
Trustee under, the Cap Contracts, an insurance and indemnity agreement with a
NIMs Insurer and any other agreement or instrument related thereto, in each case
in such form as the Depositor shall direct or shall approve, the execution and
delivery of any such agreement by the Depositor to be conclusive evidence of its
approval thereof.

     SECTION 2.12. Qualifying Special Purpose Entity. For purposes of SFAS 140,
the parties hereto intend that the Trust Fund shall be treated as a "qualifying
special purpose entity" as such term is used in SFAS 140 and any successor rule
thereto and its power and authority as stated in Section 2.11 of this Agreement
shall be limited in accordance with paragraph 35 thereof.

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

     SECTION 3.01. Servicer to Service Mortgage Loans.

     For and on behalf of the Certificateholders, the Servicer shall service and
administer the Mortgage Loans, including without limitation, any powers of
attorney, in accordance with Accepted Servicing Practices. In connection with
such servicing and administration, the Servicer shall have full power and
authority, acting alone and/or through subservicers as provided in Section 3.02
hereof, to do or cause to be done any and all things that it may deem necessary
or desirable in connection with such servicing and administration, including but
not limited to, the power and authority, subject to the terms hereof (i) to
execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property (or the stock allocated to a
dwelling unit related to a Co-op Loan) and assumptions of the Mortgage Notes and
related Mortgages (but only in the manner provided in this Agreement), (iii) to
collect any Insurance Proceeds and other Liquidation Proceeds and (iv) subject
to Section 3.12(a), to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property (or the stock allocated to a dwelling unit
related to a Co-op Loan) securing any Mortgage Loan; provided that, subject to
Section 6.03, the Servicer shall not take any action that is inconsistent with
or prejudices the interests of the Trust Fund or the Certificateholders in any
Mortgage Loan serviced by it under this Agreement or the rights and interests of


                                      -50-

<PAGE>

the other parties to this Agreement except as otherwise required by this
Agreement or by law. The Servicer shall not make or permit any modification,
waiver or amendment of any term of any Mortgage Loan which would cause any of
the REMICs provided for herein to fail to qualify as a REMIC or result in the
imposition of any tax under Section 860G(a) or 860G(d) of the Code. The Servicer
shall represent and protect the interest of the Trust Fund in the same manner as
it currently protects its own interest in mortgage loans in its own portfolio in
any claim, proceeding or litigation regarding a Mortgage Loan, but in any case
not in any manner that is a lesser standard than that provided in the first
sentence of this Section 3.01. Without limiting the generality of the foregoing,
the Servicer, in its own name or in the name of the Depositor and the Trustee,
is hereby authorized and empowered by the Depositor and the Trustee, when the
Servicer believes it appropriate in its reasonable judgment, to execute and
deliver, on behalf of the Trustee, the Depositor, the Certificateholders or any
of them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, subordinations and all other comparable
instruments, with respect to the Mortgage Loans, and with respect to the
Mortgaged Properties held for the benefit of the Certificateholders. The
Servicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by any or all of them as are
necessary or appropriate to enable the Servicer to service and administer the
Mortgage Loans, to the extent that the Servicer is not permitted to execute and
deliver such documents pursuant to the preceding sentence. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Servicer. For purposes of this Section 3.01, the Trustee
hereby grants to the Servicer a limited power of attorney to execute and file
any and all documents necessary to fulfill the obligations of the Servicer under
this Section 3.01.

     The Trustee shall execute any powers of attorney provided by the Servicer
in a form reasonably acceptable to the Trustee, promptly after request therefor
by the Servicer.

     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 payment of taxes and assessments on any first lien Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08.

     All costs incurred by the Servicer, if any, in effecting the timely
payments of taxes and assessments on the Mortgaged Properties and related
insurance premiums shall not, for the purpose of calculating monthly
distributions to the Certificateholders, be added to the Stated Principal
Balance under the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loans so permit.

     In the event that the Mortgage Loan Documents relating to any Mortgage Loan
contain provisions requiring the related Mortgagor to submit to binding
arbitration any disputes arising in connection with such Mortgage Loan, the
Servicer shall be entitled to waive any such provisions on behalf of the Trust
and to send written notice of such waiver to the related Mortgagor, although the
Mortgagor may still require arbitration of such disputes at its option.

     The Servicer shall not be required to make any Servicing Advance with
respect to a Mortgage Loan that is 150 days or more delinquent.

     The Servicer shall deliver a list of Servicing Officers to the Trustee by
the Closing Date.

     The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Fannie Mae Guide Announcement 97-02 and that for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.


                                      -51-

<PAGE>

     The Servicer further is authorized and empowered by the Trustee, on behalf
of the Certificateholders and the Trustee, in its own name or in the name of the
Sub-Servicer, when the Servicer or the Sub-Servicer, as the case may be,
believes it is appropriate in its best judgment to register any Mortgage Loan on
the MERS System, or cause the removal from the registration of any Mortgage Loan
on the MERS System, to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of assignment,
release and other comparable instruments with respect to such assignment,
release or re-recording of a Mortgage in the name of MERS, solely as nominee for
the Trustee and its successors and assigns. Any reasonable expenses incurred in
connection with the actions described in the preceding sentence or as a result
of MERS discontinuing or becoming unable to continue operations in connection
with the MERS System, shall be subject to withdrawal by the Servicer from the
Collection Account (provided that such expenses constitute "unanticipated
expenses" within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).

     With respect to any Mortgage Loan, the Servicer may consent to the
refinancing of the prior senior lien relating to such Mortgage Loan, provided
that the following requirements are met:

          (a) the resulting Combined Loan-to-Value Ratio of such Mortgage Loan
is no higher than the Combined Loan-to-Value Ratio prior to such refinancing;
and

          (b) the interest rate for the loan evidencing the refinanced senior
lien is no more than 2.0% higher than the interest rate on the loan evidencing
the existing senior lien immediately prior to the date of such refinancing; and

          (c) the loan evidencing the refinanced senior lien is not subject to
negative amortization.

     SECTION 3.02. Servicing and Subservicing; Enforcement of the Obligations of
Servicer.

          (a) The Servicer may arrange for the subservicing of any Mortgage Loan
by a subservicer, which may be an affiliate (each, a "subservicer") pursuant to
a subservicing agreement (each, a "Subservicing Agreement"); provided, however,
that (i) such subservicing arrangement and the terms of the related Subservicing
Agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder, (ii) that
such agreement would not result in a withdrawal or downgrading by any Rating
Agency of the ratings of any Certificates or any of the NIM Notes evidenced by a
letter to that effect delivered by each Rating Agency to the Depositor and the
NIMs Insurer and (iii) the NIMs Insurer shall have consented to such
Subservicing Agreement, which consent shall not be unreasonably withheld.
Notwithstanding the provisions of 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 liable to the Depositor,
the Trustee and the Certificateholders for the servicing and administration of
the Mortgage Loans in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from 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. Every
Subservicing Agreement entered into by the Servicer shall contain a provision
giving any successor servicer the option to terminate such agreement, with the
consent of the NIMs Insurer (which consent shall not be unreasonably withheld),
in the event a successor servicer is appointed. All actions of the each
subservicer performed pursuant to the related Subservicing Agreement shall be
performed as an agent of the Servicer with the same force and effect as if
performed directly by the Servicer. The Servicer shall deliver to the NIMs
Insurer and the Trustee copies of all Subservicing Agreements.


                                      -52-

<PAGE>

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

     SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.

     Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.

     SECTION 3.04. 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), the Trustee or
its designee shall, within a period of time not to exceed ninety (90) days from
the date of notice of termination or resignation, 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 hereof or any acts or omissions of any 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 pursuant to Section 2.02 or 2.03 hereof,
(iv) responsible for any expenses of the Servicer pursuant to Section 2.03 or
(v) deemed to have made any representations and warranties hereunder, including
pursuant to Section 2.04 or the first paragraph of Section 6.02 hereof;
provided, however that the Trustee or its designee, in its capacity as the
successor servicer, shall immediately assume the Servicer's obligation to make
Advances and Servicing Advances). No such termination or resignation shall
affect any obligation of the Servicer to pay amounts owed under this Agreement
and to perform its duties under this Agreement until its successor assumes all
of its rights and obligations hereunder. 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, however, that the Trustee (or any
other successor servicer) shall not incur any liability or have any obligations
in its capacity as 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. To the extent any Servicing
Transfer Costs or expenses are not paid by the Servicer pursuant to this
Agreement, such amounts shall be payable out of the Certificate Account;
provided that the terminated servicer shall reimburse the Trust Fund for any
such expense incurred by the Trust Fund upon receipt of a reasonably detailed
invoice evidencing such expenses. If the Trustee is unwilling or unable to act
as servicer, or if the NIMs Insurer so directs the Trustee, the Trustee shall
seek to appoint a successor servicer that is eligible in accordance with the
criteria specified in this Agreement and reasonably acceptable to the NIMs
Insurer.

     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 and the Mortgage Loans then being serviced and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.

     SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account.

          (a) The Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage


                                      -53-

<PAGE>

Loans to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Required Insurance Policy. Consistent
with the foregoing and subject to Section 3.01, the Servicer may in its
discretion (i) waive any late payment charge or, if applicable, any default
interest charge, or (ii) extend the due dates for payments due on a Mortgage
Note for a period not greater than 180 days; provided, however, 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; provided, further, that the NIMs Insurer's prior written
consent shall be required for any modification, waiver or amendment after the
Cut-off Date if the aggregate number of outstanding Mortgage Loans which have
been modified, waived or amended exceeds 5% of the number of Mortgage Loans as
of the Cut-off Date. In the event of any such arrangement pursuant to clause
(ii) above, subject to Section 4.01, the Servicer shall make any Advances on the
related Mortgage Loan during the scheduled period in accordance with the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangements. Notwithstanding the foregoing, in the event that
any Mortgage Loan is in default or, in the judgment of the Servicer, such
default is reasonably foreseeable, the Servicer, consistent with the standards
set forth in Section 3.01, may also waive, modify or vary any term of such
Mortgage Loan (including modifications that would change the Mortgage Rate,
forgive the payment of principal or interest or extend the final maturity date
of such Mortgage Loan), accept payment from the related Mortgagor of an amount
less than the Stated Principal Balance in final satisfaction of such Mortgage
Loan, or consent to the postponement of strict compliance with any such term or
otherwise grant indulgence to any Mortgagor (any and all such waivers,
modifications, variances, forgiveness of principal or interest, postponements,
or indulgences collectively referred to herein as "forbearance"), provided,
however, that in no event shall the Servicer grant any such forbearance (other
than as permitted by the second sentence of this Section) with respect to any
one Mortgage Loan more than once in any 12 month period or more than three times
over the life of such Mortgage Loan, and provided, further, that in determining
which course of action permitted by this sentence it shall pursue, the Servicer
shall adhere to the standards of Section 3.01.

          (b) The Servicer will not waive any Prepayment Charge or portion
thereof unless, (i) the enforceability thereof shall have been limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment or (iii) in the Servicer's
reasonable judgment as described in Section 3.01 hereof, (x) such waiver relates
to a default or a reasonably foreseeable default, (y) such waiver would maximize
recovery of total proceeds taking into account the value of such Prepayment
Charge and related Mortgage Loan and (z) doing so is standard and customary in
servicing similar 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), or (iv) sufficient information is not made
available to enable it to collect the Prepayment Charge, or (v) the collection
of the Prepayment Charge or of a similar type of prepayment premium would be
considered "predatory" or "illegal" pursuant to written guidance published by
any applicable federal, state or local regulatory authority having jurisdiction
over such matters or has been challenged by any such authority, or (vi) there is
a certified class action in which a similar type of prepayment premium is being
challenged. Except as provided in the preceding sentence, 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. If the Servicer waives or does not collect all or a portion of a
Prepayment Charge relating to a Principal Prepayment in full or in part due to
any action or omission of the Servicer, other than as provided above, the
Servicer shall deposit the amount of such Prepayment Charge (or such portion
thereof as had been waived for deposit) into the Collection Account for
distribution in accordance with the terms of this Agreement.


                                      -54-

<PAGE>

          (c) The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage,
Mortgage Note or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.

          (d) The Servicer shall establish and initially maintain, on behalf of
the Trustee for the benefit of the Certificateholders, the Collection Account.
The Servicer shall deposit into the Collection Account daily, within two
Business Days of receipt thereof, in immediately available funds, the following
payments and collections received or made by it on and after the Cut-off Date
with respect to the Mortgage Loans:

               (i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on the Mortgage
Loans on or prior to the Cut-off Date;

               (ii) all payments on account of interest on the Mortgage Loans
net of the related Servicing Fee permitted under Section 3.15, other than (x)
interest due on the Mortgage Loans on or prior to the Cut-off Date and (y)
Prepayment Interest Excess;

               (iii) all Liquidation Proceeds, other than proceeds to be applied
to the restoration or repair of the Mortgaged Property (or Underlying Mortgaged
Property, in the case of a Co-op Loan) or released to either the Mortgagor or
the holder of a senior lien on the Mortgaged Property (or Underlying Mortgaged
Property, in the case of a Co-op Loan) in accordance with the Servicer's normal
servicing procedures;

               (iv) all Subsequent Recoveries;

               (v) all Compensating Interest;

               (vi) any amount required to be deposited by the Servicer pursuant
to Section 3.05(f) in connection with any losses on Permitted Investments;

               (vii) any amounts required to be deposited by the Servicer
pursuant to Section 3.10 hereof;

               (viii) all Purchase Prices and Substitution Adjustment Amounts;

               (ix) all Advances made by the Servicer pursuant to Section 4.01;

               (x) all Prepayment Charges;

               (xi) all net monthly rental income from REO  Properties  required
to be deposited by the Servicer pursuant to Section 3.12;

               (xii) any amounts required to be deposited by the Servicer
pursuant to Section 3.27 hereof;

               (xiii) any amounts collected in respect of P&I Arrearages; and

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


                                      -55-

<PAGE>

     The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, all servicing-related fees,
including all late payment charges, insufficient funds charges and payments in
the nature of assumption fees (i.e. fees related to the assumption of a Mortgage
Loan upon the purchase of the related Mortgaged Property or stock allocated to a
dwelling unit in the case of a Co-op Loan), modification fees, extension fees
and other similar ancillary fees and charges (other than Prepayment Charges) if
collected, and any Excess Proceeds or Prepayment Interest Excess need not be
remitted by the Servicer. Rather, such fees and charges and similar amounts may
be retained by the Servicer as additional servicing compensation. In the event
that the Servicer shall remit any amount not required to be remitted and not
otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may at any
time withdraw or direct the Trustee, or such other institution maintaining the
Collection Account, to withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding. The Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.

     The Servicer shall give notice to the NIMs Insurer and the Trustee of the
location of the Collection Account maintained by it when established and prior
to any change thereof. Not later than twenty days after each Distribution Date,
the Servicer shall forward to the NIMs Insurer, and upon request, to the Trustee
and the Depositor the most current available bank statement for the Collection
Account. Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Servicer to the Trustee.

          (e) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:

               (i) the aggregate amount withdrawn by the Servicer from the
Collection Account and required to be deposited in the Certificate Account;

               (ii) any amount required to be deposited by the Trustee pursuant
to Section 3.05(g) in connection with any losses on Permitted Investments; and

               (iii) the Optional Termination Amount paid by the winning bidder
at the Auction or by the NIMs Insurer or the Servicer pursuant to Section 9.01.

     Any amounts received by the Trustee prior to 3:00 p.m. New York City time
(or such earlier deadline for investment in the Permitted Investments designated
by the Trustee) which are required to be deposited in the Certificate Account by
the Servicer shall be invested in Permitted Investments on the Business Day on
which they were received. The foregoing requirements for remittance by the
Servicer and deposit by the Servicer into the Certificate Account shall be
exclusive. In the event that the Servicer shall remit any amount not required to
be remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time withdraw such amount from the Certificate Account,
any provision herein to the contrary notwithstanding. All funds deposited in the
Certificate Account shall be held by the Trustee in trust for the
Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Certificate Account at the direction of the
Servicer. The Trustee shall give notice to the NIMs Insurer and the Servicer of
the location of the Certificate Account maintained by it when established and
prior to any change thereof.


                                      -56-

<PAGE>

          (f) Each institution that maintains the Collection Account or the
Certificate Account shall invest the funds in each such account as directed by
the Servicer or the Trustee, as applicable, in writing, in Permitted
Investments, which shall mature not later than (i) in the case of the Collection
Account the Business Day preceding the related Servicer Remittance Date (except
that if such Permitted Investment is an obligation of the institution that
maintains such Collection Account or is otherwise immediately available, then
such Permitted Investment shall mature not later than the Servicer Remittance
Date) and (ii) in the case of the Certificate Account, the Business Day
immediately preceding the first Distribution Date that follows the date of such
investment (except that if such Permitted Investment is an obligation of the
institution that maintains such Certificate Account or is otherwise immediately
available, then such Permitted Investment shall mature not later than such
Distribution Date) and, in each case, shall not be sold or disposed of prior to
its maturity. All such Permitted Investments shall be made in the name of the
Servicer or the Trustee, as applicable, for the benefit of the
Certificateholders. All income and gain net of any losses realized from amounts
on deposit in the Collection Account shall be for the benefit of the Servicer as
servicing compensation and shall be remitted to it or withdrawn by it monthly as
provided herein. The amount of any losses incurred in the Collection Account in
respect of any such investments shall be deposited by the Servicer in the
Collection Account out of the Servicer's own funds immediately as realized.

          (g) All income and gain net of any losses realized from amounts on
deposit in the Certificate Account shall be for the benefit of the Trustee and
shall be remitted to or withdrawn by it monthly as provided herein. The amount
of any losses incurred in the Certificate Account in respect of any such
investments shall be deposited by the Trustee, in the Certificate Account out of
the Trustee's own funds immediately as realized.

     SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.

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

     Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium or PUD association dues, or comparable items, to reimburse the
Servicer out of related collections for any payments made pursuant to Sections
3.01 hereof (with respect to taxes, assessments, dues or comparable items and
insurance premiums) and 3.10 hereof (with respect to hazard insurance), to
refund to any Mortgagors any sums as may be determined to be overages, to pay
interest, if required by law or the terms of the related Mortgage or Mortgage
Note, to Mortgagors on balances in the Escrow Account to withdraw funds
deposited in error or amounts previously deposited but returned as unpaid due to
a "not sufficient funds" or other denial by the related Mortgagor's banking
institution or to clear and terminate the Escrow Account at the termination of
this Agreement in accordance with Section 9.01 hereof. The Escrow Accounts shall
not be a part of the Trust Fund.

     SECTION 3.07. Access to Certain Documentation and Information Regarding the
Mortgage Loans.

     Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other


                                      -57-

<PAGE>

regulatory authorities with respect to investment in the Certificates; provided,
that the Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Servicer in providing such
reports and access. The Servicer may from time to time provide the Depositor,
and any person designated by the Depositor, with reports and information
regarding the Mortgage Loans, including without limitation, information
requested by the Depositor or an originator of the Mortgage Loans for required
institutional risk control.

     SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.

          (a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes (the order below not constituting
an order of priority):

               (i) to pay to the Servicer (to the extent not previously paid to
or withheld by the Servicer), as servicing compensation in accordance with
Section 3.15, that portion of any payment or recovery of interest on a Mortgage
Loan that equals the Servicing Fee for the period with respect to which such
interest payment or recovery was made or allocated, and, as additional servicing
compensation, those other amounts set forth in Section 3.15;

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

               (iii) to reimburse the Servicer for any Non-Recoverable Advance
previously made and any Non-Recoverable Servicing Advances previously made to
the extent that, in the case of Non-Recoverable Servicing Advances,
reimbursement therefor constitutes "unanticipated expenses" within the meaning
of Treasury Regulation Section 1.860G-1(b)(3)(ii);

               (iv) to pay to the Servicer earnings on or investment income with
respect to funds in or credited to the Collection Account;

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

               (vi) to pay the Servicer any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances (to the extent that
reimbursement for Servicing Advances would constitute an "unanticipated expense"
within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)), the
Servicer's right to reimbursement of Servicing Advances pursuant to this
subclause (vi) with respect to any Mortgage Loan being limited to amounts
received on particular Mortgage Loan(s)(including, for this purpose, Liquidation
Proceeds and purchase and repurchase proceeds) that represent late recoveries of
the payments for which such advances were made pursuant to Section 3.01 or
Section 3.06;

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


                                      -58-

<PAGE>

               (viii) to reimburse the Servicer or the Depositor for expenses
incurred by any of them in connection with the Mortgage Loans or the
Certificates and reimbursable pursuant to Section 3.25 or Section 6.03 hereof;

               (ix) to reimburse the Trustee for enforcement expenses reasonably
incurred in respect of a breach or defect giving rise to the purchase obligation
in Section 2.03 including any expenses arising out of the enforcement of the
purchase obligation; provided that any such expenses will be reimbursable under
this subclause (ix) only to the extent that such expenses would constitute
"unanticipated expenses" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for herein;

               (x) to withdraw any amount deposited in the Collection Account
and not required to be deposited therein;

               (xi) to withdraw funds deposited in error or amounts previously
deposited but returned as unpaid due to a "not sufficient funds" or other denial
by the related Mortgagor's banking institution;

               (xii) to pay the Servicer any unpaid Servicing Fees for any
Mortgage Loan upon such Mortgage Loan being charged off and upon termination of
the obligations of the Servicer;

               (xiii) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 9.01 hereof;

               (xiv) to reimburse itself for Advances or Servicing Advances from
amounts in the Collection Account held for future distributions that were not
included in Available Funds for the preceding Distribution Date. An amount equal
to the amount withdrawn from the Collection Account pursuant to this subclause
(xiv) shall be deposited in the Collection Account by the Servicer on the next
succeeding Distribution Date on which funds are to be distributed to
Certificateholders; and

               (xv) to reimburse itself from any amounts in the Collection
Account for any prior Advances which have not otherwise been reimbursed at the
time a Mortgage Loan is modified.

     In addition, no later than 3:00 p.m. Eastern Time on the Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the Collection
Account the Interest Funds and the Principal Funds to the extent on deposit, and
such amount shall be deposited in the Certificate Account; provided, however, if
the Trustee does not receive such Interest Funds and Principal Funds by 4:00
p.m. Eastern Time, such Interest Funds and Principal Funds shall be deposited in
the Certificate Account on the next Business Day.

     With respect to any Mortgage Loan-specific withdrawal, 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.

     The Servicer shall provide written notification to the Trustee and the NIMs
Insurer on or prior to the next succeeding Servicer Remittance Date upon making
any withdrawals from the Collection Account pursuant to subclauses (iii) and
(viii) above.

     In the event of any failure by the Servicer to remit to the Trustee for
deposit into the Certificate Account any amounts (including any Advance)
required to be so remitted by the Servicer on the Servicer Remittance Date, the
Servicer shall pay to the Trustee, for its own account, interest on such amounts
at


                                      -59-

<PAGE>

the "prime rate" (as specified in the New York edition of The Wall Street
Journal) until such failure is remedied.

     Unless otherwise specified, any amounts reimbursable to the Servicer or the
Trustee from amounts on deposit in the Collection Account or the Certificate
Accounts shall be deemed to come from first, Interest Funds, and thereafter,
Principal Funds for the related Distribution Date.

          (b) The Trustee shall withdraw funds from the Certificate Account for
distribution to the Certificateholders in the manner specified in this Agreement
(and shall withhold from the amounts so withdrawn, the amount of any taxes that
it is authorized to retain pursuant to this Agreement). In addition, the Trustee
shall from time to time make withdrawals from the Certificate Account for the
following purposes (the order below not constituting an order of priority):

               (i) to withdraw any amount deposited in the Certificate Account
and not required to be deposited therein;

               (ii) to clear and terminate the Certificate Account upon
termination of the Agreement pursuant to Section 9.01 hereof (after paying all
amounts necessary to the Trustee or the Servicer in connection with any such
termination);

               (iii) to reimburse the Trustee for expenses incurred by the
Trustee reimbursable pursuant to Section 8.06 hereof;

               (iv) to pay to the Trustee the Trustee Fee; and

               (v) to pay to the Trustee earnings on or investment income with
respect to funds in or credited to the Certificate Account.

     SECTION 3.09. Advance Reserve Account

          (a) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Advance Reserve Account. The Trustee shall, promptly
upon receipt, deposit or cause to be deposited in the Certificate Account and
retain therein any amounts required to be deposited pursuant to the last
sentence of the definition of "P&I Arrearages".

          (b) The funds deposited in the Advance Reserve Account shall remain
uninvested.

          (c) Amounts on deposit in the Advance Reserve Account shall be
withdrawn by the Trustee as follows:

               (i) Upon the liquidation of any Mortgage Loan for which Advances
were deposited into the Advance Reserve Account (and not otherwise withdrawn
pursuant to this Section) the Trustee shall withdraw funds from the Advance
Reserve Account in an amount equal to the lesser of (x) the amount of Advances
deposited into the Advance Reserve Account (and not otherwise withdrawn pursuant
to this Section) with respect to such Mortgage Loan and (y) the amount of
Advances deducted by the Servicer from the Liquidation Proceeds with respect to
such Mortgage Loan. The amount withdrawn shall be applied to increase the
Liquidation Proceeds with respect to such Mortgage Loan.

               (ii) Following any Servicer Remittance Date upon which the
Servicer reports that it has collected amounts in respect of principal and/or
interest with respect to a Mortgage


                                      -60-

<PAGE>

Loan and for which the Servicer retains a portion of such collections as a
reimbursement of previously made Advances, if funds in respect of Advances were
deposited into and remain in the Advance Reserve Account, the Trustee shall
withdraw from the Advance Reserve Account an amount equal to the lesser of (x)
the amounts retained by the Servicer as a reimbursement of previously made
Advances with respect to such Due Period for such Mortgage Loan and (y) the
amount remaining in the Advance Reserve Account with respect to such Mortgage
Loan and shall distribute such amount in accordance with Section 4.04(l).

               (iii) Upon the purchase or repurchase of any Mortgage Loan for
which Advances were deposited into the Advance Reserve Account (and not
otherwise withdrawn pursuant to this Section) pursuant to Section 2.02, 2.03 or
9.01 and for which the Servicer is entitled to reimbursement of Advances, the
Trustee shall withdraw from the Advance Reserve Account an amount equal to the
lesser of (x) the unreimbursed Advances with respect to such Mortgage Loan
included in the Purchase Price or Optional Termination Price, as applicable and
(y) the amount of Advances deposited into the Advance Reserve Account (and not
otherwise withdrawn pursuant to this Section) with respect to such Mortgage Loan
and shall apply such amount in respect of amounts due to the Servicer in respect
of reimbursement of Advances for such Mortgage Loan.

     SECTION 3.10. Maintenance of Hazard Insurance.

     The Servicer shall cause to be maintained, for each first lien Mortgage
Loan (other than a Co-op Loan), fire and hazard insurance with extended coverage
in an amount, to the extent permitted by law, that is at least equal to the
lesser of (i) the replacement value of the improvements that are part of such
Mortgaged Property, or (ii) the greater of (a) the outstanding principal balance
of the Mortgage Loan and (b) an amount such that the proceeds of such policy
shall be sufficient to prevent the related Mortgagor and/or mortgagee from
becoming a co-insurer or (iii) the amount required under applicable HUD/FHA
regulations. Each policy of standard hazard insurance shall contain, or have an
accompanying endorsement that contains, a standard mortgagee clause. The
Servicer shall also cause flood insurance to be maintained on property acquired
upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan, to the
extent described below. Pursuant to Section 3.05 hereof, any amounts collected
by the Servicer under any such policies (other than the amounts to be applied to
the restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Servicer's
normal servicing procedures) shall be deposited in the Collection Account. Any
cost incurred by the Servicer in maintaining any such insurance shall not, for
the purpose of calculating monthly distributions to the Certificateholders or
remittances to the Trustee for their benefit, be added to the principal balance
of the Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so
permit. Such costs shall be recoverable by the Servicer out of late payments by
the related Mortgagor or out of Liquidation Proceeds to the extent and as
otherwise permitted by Section 3.08 hereof. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor or
maintained on property acquired in respect of a Mortgage other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If a first lien Mortgaged Property is
located at the time of origination of the Mortgage Loan in a federally
designated special flood hazard area and such area is participating in the
national flood insurance program, the Servicer shall cause flood insurance to be
maintained with respect to such first lien Mortgage Loan. Such flood insurance
shall be in an amount equal to the lesser of (i) the original principal balance
of the related Mortgage Loan, (ii) the replacement value of the improvements
that are part of such Mortgaged Property, or (iii) the maximum amount of such
insurance available for the related Mortgaged Property under the Flood Disaster
Protection Act of 1973, as amended.

     In the event that the Servicer shall obtain and maintain a blanket policy
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set


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<PAGE>

forth in the first sentence of this Section 3.10, it being understood and agreed
that such policy may contain a deductible clause on terms substantially
equivalent to those commercially available and maintained by comparable
servicers. If such policy contains a deductible clause, the Servicer shall, in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with the first sentence of this Section 3.10, and
there shall have been a loss that would have been covered by such policy,
deposit in the Collection Account the amount not otherwise payable under the
blanket policy because of such deductible clause which amount shall be deemed to
be that in excess of $1500 not payable under the blanket policy (i.e. the amount
deemed deductible under an individual policy). In connection with its activities
as servicer of the Mortgage Loans, the Servicer agrees to present, on behalf of
itself, the Depositor and the Trustee for the benefit of the Certificateholders,
claims under any such blanket policy.

     SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.

     When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, except as set forth below, to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale" clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law; provided, further, that the Servicer shall not take any action in relation
to the enforcement of any "due-on-sale" clause which would adversely affect or
jeopardize coverage under any Required Insurance Policy. An Opinion of Counsel
at the expense of the Servicer (which expense shall constitute a Servicing
Advance) delivered to the Trustee and the Depositor shall conclusively establish
the reasonableness of the Servicer's belief that any "due-on-sale" clause is not
enforceable under applicable law, but such Opinion of Counsel shall not be
required. In such event, the Servicer shall make reasonable efforts to enter
into an assumption and modification agreement with the Person to whom such
property has been or is about to be conveyed, pursuant to which such Person
becomes liable under the Mortgage Note and, unless prohibited by applicable law
or the Mortgage, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Servicer is 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
Mortgagor and becomes liable under the Note. In addition to the foregoing, the
Servicer shall not be required to enforce any "due-on-sale" clause if in the
reasonable judgment of the Servicer, entering into an assumption and
modification agreement with a Person to whom such property shall be conveyed and
releasing the original Mortgagor from liability would be in the best interests
of the Certificateholders. The Mortgage Loan, as assumed, shall conform in all
respects to the requirements, representations and warranties of this Agreement.
The Servicer shall notify the Trustee and the NIMs Insurer that any such
assumption or substitution agreement has been completed by forwarding to the
Trustee (with a copy to the NIMs Insurer) the original copy of such assumption
or substitution agreement (indicating the Mortgage File to which it relates)
which copy shall be added by the Trustee to the related Mortgage File and which
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. The
Servicer shall be responsible for recording any such assumption or substitution
agreements. In connection with any such assumption or substitution agreement, no
material term of the Mortgage Note (including, but not limited to, the Mortgage
Rate, the amount of Scheduled Payment, the Maximum Rate, the Minimum Rate, the
Gross Margin, the Periodic Rate Cap, the Adjustment Date, a Prepayment Charge or
any other term affecting the amount or timing of payment) shall be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Servicer for consenting to any such
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Servicer as additional servicing compensation.


                                      -62-

<PAGE>

          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 any assumption which the Servicer may be
restricted by law from preventing.

     SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination of
Excess Proceeds.

          (a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Collection Account pursuant to
Section 3.08 hereof). 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 proceeds of liquidation of
the related Mortgaged Property (or stock allocated to a dwelling unit, in the
case of a Co-op Loan) and if applicable, as a Non-Recoverable Servicing Advance,
as contemplated in Section 3.08 hereof. Any Mortgage Loan that is charged off
may be sold to the majority Certificateholder of the Class C Certificates, at
its option, at its fair market value after the time period specified in (e)
below. If the Servicer has knowledge that a Mortgaged Property (or Underlying
Mortgaged Property, in the case of a Co-op Loan) that the Servicer is
contemplating acquiring in foreclosure or by deed-in-lieu of foreclosure is
located within a one-mile radius of any site with environmental or hazardous
waste risks known to the Servicer, the Servicer will, prior to acquiring the
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan), consider such risks and only take action in accordance with
Accepted Servicing Practices.

     With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee or its nominee. 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
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Servicer and the Certificateholders for the
period prior to the sale of such REO Property. The Servicer shall prepare a
statement with respect to each REO Property that has been rented showing the
aggregate rental income received and all expenses incurred in connection with
the management and maintenance of such REO Property at such times as is
necessary to enable the Servicer to comply with the reporting requirements of
the REMIC Provisions. The net monthly rental income, if any, from such REO
Property shall be deposited in the Collection Account no later than the close of
business on the Determination Date immediately following the month concerned.
The Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 1445, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.

     In the event that the Trust Fund acquires any Mortgaged Property (or stock
allocated to a dwelling unit, in the case of a Co-op Loan) as aforesaid or
otherwise in connection with a default or


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<PAGE>

imminent default on a Mortgage Loan, the Servicer shall dispose of such
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) prior to the expiration of three years from the end of the year of
its acquisition by the Trust Fund or, at the expense of the Trust Fund, obtain,
in accordance with applicable procedures for obtaining an automatic extension of
the grace period, more than 60 days prior to the day on which such three-year
period would otherwise expire, an extension of the three-year grace period, in
which case such property must be disposed of prior to the end of such extension,
unless the Trustee and the NIMs Insurer shall have been supplied with an Opinion
of Counsel (such Opinion of Counsel not to be an expense of the Trustee or the
NIMs Insurer), to the effect that the holding by the Trust Fund of such
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) subsequent to such three-year period or extension will not result in
the imposition of taxes on "prohibited transactions" of the Trust Fund or any of
the REMICs provided for herein as defined in section 860F of the Code or cause
any of the REMICs provided for herein to fail to qualify as a REMIC at any time
that any Certificates are outstanding, in which case the Trust Fund may continue
to hold such Mortgaged Property (or stock allocated to a dwelling unit, in the
case of a Co-op Loan) (subject to any conditions contained in such Opinion of
Counsel). Notwithstanding any other provision of this Agreement, no Mortgaged
Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan)
acquired by the Trust Fund shall be held, rented (or allowed to continue to be
rented) or otherwise used for the production of income by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) to fail to qualify as "foreclosure property" within the meaning of
section 860G(a)(8) of the Code or (ii) subject the Trust Fund or any REMIC
provided for herein to the imposition of any federal, state or local income
taxes on the income earned from such Mortgaged Property (or stock allocated to a
dwelling unit, in the case of a Co-op Loan) under section 860G(c) of the Code or
otherwise, unless the Servicer or the Depositor has agreed to indemnify and hold
harmless the Trust Fund with respect to the imposition of any such taxes. The
Servicer shall have no liability for any losses resulting from a foreclosure on
a second lien Mortgage Loan in connection with the foreclosure of the related
first lien mortgage loan that is not a Mortgage Loan if the Servicer does not
receive notice of such foreclosure action.

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

     The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of
any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.

     The proceeds of any Liquidated Loan, as well as any recovery resulting from
a partial collection of Liquidation Proceeds, will be applied as between the
parties in the following order of priority: first, to reimburse the Servicer for
any related unreimbursed Servicing Advances and unpaid Servicing Fees,


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<PAGE>

pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse the
Servicer for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or this
Section 3.12; third, to accrued and unpaid interest (to the extent no Advance
has been made for such amount) on the Mortgage Loan, at the applicable Net
Mortgage Rate to the Due Date occurring in the month in which such amounts are
required to be distributed; and fourth, as a recovery of principal of the
Mortgage Loan, and fifth to any Prepayment Charges.

     The proceeds of any net income from an REO Property will be applied as
between the parties in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and unpaid Servicing
Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse
the Servicer for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or
this Section 3.12; third, as a recovery of principal; fourth, to accrued and
unpaid interest (to the extent no Advance has been made for such amount) on the
related REO Property, at the applicable Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed.

          (b) On each Determination Date, the Servicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.

          (c) [Reserved]

          (d) With respect to such of the Mortgage Loans as come into and
continue in default, the Servicer will decide, in its reasonable business
judgment, whether to (i) foreclose upon the Mortgaged Properties securing those
Mortgage Loans pursuant to Section 3.12(a), (ii) write off the unpaid principal
balance of the Mortgage Loans as bad debt (unless the Servicer, after making a
reasonable estimate of the expected recovery, determines that foreclosure
proceedings or other liquidation of the related Mortgaged Property would yield a
net recovery), (iii) take a deed in lieu of foreclosure, (iv) accept a short
sale or short refinance; (v) arrange for a repayment plan, or (vi) agree to a
modification of such Mortgage Loan. As to any Mortgage Loan that becomes 120
days delinquent, the Servicer shall have obtained or shall obtain a broker's
price opinion, the cost of which will be reimbursable as a Servicing Advance.
After obtaining the broker's price opinion, the Servicer will determine, in its
reasonable business judgment, whether foreclosure proceedings or other
liquidation of the related Mortgage Property would yield a net recovery. The
Servicer shall charge off the related Mortgage Loan at the time it becomes 180
days delinquent (unless the Servicer, after making a reasonable estimate of the
expected recovery, determines that foreclosure proceedings or other liquidation
of the related Mortgaged Property would yield a net recovery). Once a Mortgage
Loan has been charged off, the Servicer will discontinue making Advances, the
Servicer will not be entitled to Servicing Fees (except as provided below) with
respect to such Mortgage Loan, and the Mortgage Loan will be treated as a
Liquidated Mortgage Loan. If the Servicer determines that foreclosure
proceedings or other liquidation of the related Mortgaged Property would yield a
net recovery on a Mortgage Loan that becomes 180 days delinquent, the Servicer
may continue making Advances, and the Servicer will be required to notify the
Trustee of such decision.

          (e) Any Mortgage Loan that is charged off, pursuant to (d) above, may
continue to be serviced by the Servicer for the Certificateholders using
specialized collection procedures (including foreclosure, if appropriate). The
Servicer will be entitled to Servicing Fees and reimbursement of expenses in
connection with such Mortgage Loans after the date of charge off, only to the
extent of funds available from any recoveries on any such Mortgage Loans. Any
such Mortgage Loans serviced in accordance with the specialized collection
procedures shall be serviced for approximately six months. Any net recoveries
received on such Mortgage Loans during such six month period will be treated as
Subsequent Recoveries. On the date which is six months after the date on which
the Servicer begins servicing such Mortgage Loans using the specialized
collection procedures, unless specific net


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<PAGE>

recoveries are anticipated by the Servicer on a particular Mortgage Loan, such
charged off loan will be released to the majority holder of the Class C
Certificates, as identified with contact information in writing to the Servicer
by the Depositor, and thereafter, (i) the majority holder of the Class C
Certificates will be entitled to any amounts subsequently received in respect of
any such released loans (subject to a servicing fee pursuant to a servicing
agreement between the Servicer and the Seller if the servicing of such Mortgage
Loan has not been transferred from the Servicer), (ii) the majority holder of
the Class C Certificates may designate any servicer to service any such released
loan and (iii) the majority holder of the Class C Certificates may sell any such
released loan to a third party.

          (f) Notwithstanding anything to the contrary set forth herein, the
Servicer will not institute foreclosure proceedings with respect to any Mortgage
Loan based solely on such Mortgage Loan's status as a Re-Performing Loan or
Sub-Performing Loan as of the Cut-off Date.

     SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.

     Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of two copies of such request, the Trustee or its
designee shall promptly release the related Mortgage File to the Servicer, and
the Servicer is authorized to cause the removal from registration on the MERS
System of any such Mortgage if applicable, and the Servicer, on behalf of the
Trustee shall execute and deliver the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage together with the Mortgage Note with written evidence
of cancellation thereon. Expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Mortgagor to the
extent permitted by law, and otherwise to the Trust Fund to the extent such
expenses constitute "unanticipated expenses" within the meaning of Treasury
Regulations Section 1.860G-(1)(b)(3)(ii). From time to time and as shall be
appropriate for the servicing or foreclosure of any Mortgage Loan, including for
such purpose, collection under any policy of flood insurance, any fidelity bond
or errors or omissions policy, or for the purposes of effecting a partial
release of any Mortgaged Property from the lien of the Mortgage or the making of
any corrections to the Mortgage Note or the Mortgage or any of the other
documents included in the Mortgage File, the Trustee or its designee shall, upon
delivery to the Trustee or its designee of a Request for Release in the form of
Exhibit I signed by a Servicing Officer, release the Mortgage File to the
Servicer. Subject to the further limitations set forth below, the Servicer shall
cause the Mortgage File or documents so released to be returned to the Trustee
or its designee when the need therefor by the Servicer no longer exists, unless
the Mortgage Loan is liquidated and the proceeds thereof are deposited in the
Collection Account.

     Each Request for Release may be delivered to the Trustee or its designee
(i) via mail or courier, (ii) via facsimile or (iii) by such other means,
including, without limitation, electronic or computer readable medium, as the
Servicer and the Trustee or its designee shall mutually agree. The Trustee or
its designee shall promptly release the related Mortgage File(s) within four
(4) Business Days of receipt of a properly completed Request for Release
pursuant to clauses (i), (ii) or (iii) above. Receipt of a properly completed
Request for Release shall be authorization to the Trustee or its designee to
release such Mortgage Files, provided the Trustee or its designee has determined
that such Request for Release has been executed, with respect to clauses (i) or
(ii) above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the Mortgage Files within the period
previously specified, the Trustee or its designee shall immediately notify the
Servicer indicating the reason for such delay. If the Servicer is required to
pay penalties or damages due to the Trustee or its designee's negligent failure
to release the related Mortgage File or the Trustee or


                                      -66-

<PAGE>

its designee's negligent failure to execute and release documents in a timely
manner, the Trustee or its designee, shall be liable for such penalties or
damages respectively caused by it.

     On each day that the Servicer remits to the Trustee or its designee
Requests for Releases pursuant to clauses (ii) or (iii) above, the Servicer
shall also submit to the Trustee or its designee a summary of the total number
of such Requests for Releases requested on such day by the same method as
described in such clauses (ii) and (iii) above.

     If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property (or stock allocated to a dwelling unit, in the
case of a Co-op Loan) as authorized by this Agreement, the Servicer may deliver
or cause to be delivered to the Trustee or its designee, for signature, as
appropriate or on behalf of the Trustee, execute any court pleadings, requests
for trustee's sale or other documents necessary to effectuate such foreclosure
or any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity. Notwithstanding the foregoing, the
Servicer shall cause possession of any Mortgage File or of the documents therein
that shall have been released by the Trustee or its designee to be returned to
the Trustee promptly after possession thereof shall have been released by the
Trustee or its designee unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account, and the Servicer shall have delivered to the Trustee or its
designee a Request for Release in the form of Exhibit I or (ii) the Mortgage
File or document shall have 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 (or stock allocated to a dwelling unit, in the case of a Co-op Loan)
and the Servicer shall have delivered to the Trustee or its designee an
Officer's Certificate of a Servicing Officer certifying as to the name and
address of the Person to which the Mortgage File or the documents therein were
delivered and the purpose or purposes of such delivery.

     SECTION 3.14. Documents, Records and Funds in Possession of Servicer to be
Held for the Trustee.

     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 Trust Fund, 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 the Collection
Account or Certificate Account or in any Escrow Account, or any funds that
otherwise are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, 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 3.15. Servicing Compensation.

     As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
or recovery of interest on a Mortgage Loan included in the Trust Fund an amount
equal to interest at the applicable Servicing Fee Rate on the Stated Principal
Balance of the related Mortgage Loan as of the immediately preceding
Distribution Date.


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<PAGE>

     Additional servicing compensation in the form of any Excess Proceeds, late
payment fees, assumption fees (i.e. fees related to the assumption of a Mortgage
Loan upon the purchase of the related Mortgaged Property (or stock allocated to
a dwelling unit, in the case of Co-op Loan)), modification fees, extension fees
and similar fees payable by the Mortgagor, Prepayment Interest Excess, and all
income and gain net of any losses realized from Permitted Investments in the
Collection Account shall be retained by the Servicer to the extent not required
to be deposited in the Collection Account pursuant to Sections 3.05 or 3.12(a)
hereof. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including payment of any
premiums for hazard insurance, as required by Section 3.10 hereof and
maintenance of the other forms of insurance coverage required by Section 3.10
hereof) and shall not be entitled to reimbursement therefor except as
specifically provided in this Agreement.

     SECTION 3.16. Access to Certain Documentation.

     The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices of the Servicer designated by it provided, that
the Servicer shall be entitled to be reimbursed by each such Certificateholder
for actual expenses incurred by the Servicer in providing such reports and
access. Nothing in this Section shall limit the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.

     SECTION 3.17. Annual Statement as to Compliance.

     Pursuant to this Agreement, the Servicer shall deliver to the Depositor,
the Trustee and the NIMs Insurer on or before March 15 of each year beginning in
2006, or such other date in order to remain in compliance with the Section 302
Requirements, 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 officers' 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. The Trustee shall forward a copy of
each such statement to each Rating Agency. Copies of such statement shall be
provided by the Trustee to any Certificateholder upon written request at the
Certificateholder's expense, provided such statement has been delivered by the
Servicer to the Trustee.

     SECTION 3.18. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.

     On or before March 15 of each year, beginning in 2006 or such other date in
order to remain in compliance with the Section 302 Requirements, the Servicer at
its expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Servicer or any Affiliate
thereof) that is a member of the American Institute of Certified Public
Accountants to furnish a USAP Report to the Trustee and the Depositor. Copies of
the USAP Report shall be provided by the Trustee to any Certificateholder upon
request at the Certificateholder's expense, provided such report has been
delivered by the Servicer to the Trustee. The Trustee shall deliver to the NIMs
Insurer upon written request: (i) a copy of such USAP Report, and (ii) the
Servicer's annual officer's certificate as to compliance with this Agreement
provided by the Servicer to the Trustee pursuant to Section 3.17. In


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addition, at the NIMs Insurer's written request, the Servicer shall deliver
copies of evidence of the Servicer's fidelity bond or errors and omissions
insurance coverage to the NIMs Insurer.

     SECTION 3.19. Rights of the NIMs Insurer.

     Each of the rights of the NIMs Insurer set forth in this Agreement shall
exist so long as the NIM Notes issued pursuant to the Indenture remain
outstanding or the NIMs Insurer is owed amounts in respect of its guarantee of
payment on such NIM Notes.

     SECTION 3.20. Periodic Filings.

          (a) As part of the Form 10-K required to be filed pursuant to the
terms of this Agreement, the Trustee shall include the independent public
accountants report required pursuant to Section 3.18 as well as the Officer's
Certificate delivered by the Servicer pursuant to Section 3.17 relating to the
Servicer's performance of its obligations under this Agreement and any
significant deficiencies relating to the Servicer's compliance set forth in the
report of the Servicer's certified independent accountants described above.

          (b) The Depositor shall prepare and file the initial report on Form
8-K. The Trustee shall prepare for filing, and execute (other than the Form
10-Ks and the Certification), on behalf of the Trust Fund, and file with the
Securities and Exchange Commission, (i) within 15 days after each Distribution
Date in each month, each Monthly Statement on Form 8-K under the Exchange Act
executed by the Trustee, (ii) on or before March 31 of each year beginning in
2006 or such other date in order to remain in compliance with the Section 302
Requirements, a Form 10-K under the Exchange Act executed by the Servicer,
including any certification (the "Certification") required by the Section 302
Requirements, and (iii) any and all reports, statements and information
respecting the Trust Fund and/or the Certificates required to be filed on behalf
of the Trust Fund under the Exchange Act executed by the Trustee. The
Certification shall be executed by a senior officer of the Servicer. Upon such
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. Prior to making any such filings and certifications, the Trustee
shall comply with the provisions set forth in this Section. On or prior to
January 31st of the first year in which it is able to do so under applicable
law, the Trustee shall file a Form 15 under the Exchange Act unless instructed
otherwise by the Depositor. The Depositor hereby grants to the Trustee a limited
power of attorney to execute (other than the Form 10-Ks and the Certification)
and file each such document on behalf of the Depositor. Such power of attorney
shall continue until either the earlier of (i) receipt by the Trustee from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports, and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Trustee shall have no
responsibility to file any items other than those specified in this Section.

          (c) [RESERVED].

          (d) The obligations set forth in paragraphs (a) and (b) of this
Section shall only apply with respect to periods for which the Trustee is
obligated to file Form 8-Ks and 10-Ks pursuant to paragraph (b) of this Section.
In the event a Form 15 is properly filed pursuant to paragraph (b) of this
Section, there shall be no further obligations under paragraphs (a) and (b) of
this Section commencing with the fiscal year in which the Form 15 is filed
(other than the obligations in paragraphs (a) and (b) of this Section to be
performed in such fiscal year that relate back to the prior fiscal year).


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<PAGE>

     SECTION 3.21. Annual Certificate by Trustee.

          (a) (a) Within 15 days prior to the date on which a Form 10-K is to be
filed with a Certification by the Depositor, an officer of the Trustee shall
execute and deliver an Officer's Certificate, signed by the senior officer in
charge of the Trustee or any officer to whom that officer reports, to the
Depositor for the benefit of such Depositor and its officers, directors and
affiliates, certifying as to the matters described in the Officer's Certificate
attached hereto as Exhibit K.

          (b) The Trustee shall indemnify and hold harmless the Depositor and
its officers, directors, agents and affiliates from and against any losses,
damages, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Trustee or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.21 any material misstatement or omission in the
Officer's Certificate required under this Section or the negligence, bad faith
or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Trustee agrees 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 Trustee on the one hand and the Depositor on
the other in connection with a breach of the Trustee's obligations under this
Section 3.21, any material misstatement or omission in the Officer's Certificate
required under this Section or the Trustee's negligence, bad faith or willful
misconduct in connection therewith.

     SECTION 3.22. Annual Certificate by Servicer.

          (a) Within 15 days prior to the date on which a Form 10-K is required
to be filed with a Certification by the Depositor, the Servicer shall execute
and deliver an Officer's Certificate in the form of Exhibit L attached hereto,
signed by the senior officer in charge of servicing of the Servicer or any
officer to whom that officer reports, to the Trustee and Depositor for the
benefit of the Trustee and Depositor and their respective officers, directors
and affiliates, certifying as to the following matters:

          (i) I have reviewed the information required to be delivered to the
     Trustee pursuant to the Pooling and Servicing Agreement (the "Servicing
     Information");

          (ii) Based on my knowledge, the information in the Annual Statement of
     Compliance, and all servicing reports, officer's certificates and other
     information relating to the servicing of the Mortgage Loans submitted to
     the Trustee by the Servicer taken as a whole, does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading as of the last day of the period
     covered by the Annual Statement of Compliance;

          (iii) Based on my knowledge, the Servicing Information required to be
     provided to the Trustee by the Servicer under this Agreement has been
     provided to the Trustee; and

          (iv) I am responsible for reviewing the activities performed by the
     Servicer under this Agreement and based upon the review required hereunder,
     and except as disclosed in the Annual Statement of Compliance, the Annual
     Independent Certified Public Accountant's Servicing Report and all
     servicing reports, officer's certificates and other information relating to
     the servicing of the Mortgage Loans submitted to the Trustee by the
     Servicer, the Servicer has, as of the last day of the period covered by the
     Annual Statement of Compliance fulfilled its obligations under this
     Agreement.


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<PAGE>

          (b) The Servicer shall indemnify and hold harmless the Depositor and
its officers, directors, agents and affiliates from and against any losses,
damages, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Servicer or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.22, any material misstatement or omission in
the Officer's Certificate required under this Section or the negligence, bad
faith or willful misconduct of the Servicer in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Servicer agrees that it shall contribute to the
amount paid or payable by the Trustee and 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 Servicer on the other in connection with a breach of the Servicer's
obligations under this Section 3.22, any material misstatement or omission in
the Officer's Certificate required under this Section or the Servicer's
negligence, bad faith or willful misconduct in connection therewith.

     SECTION 3.23. Prepayment Charge Reporting Requirements.

     Promptly after each Distribution Date, the Servicer shall provide to the
Depositor, the Trustee and the NIMs Insurer the following information with
regard to each Mortgage Loan that has prepaid during the related Prepayment
Period:

          (i) loan number;

          (ii) current Mortgage Rate;

          (iii) current principal balance;

          (iv) original principal balance;

          (v) Prepayment Charge amount due;

          (vi) Prepayment Charge amount collected; and

          (vii) reason why full Prepayment Charge amount was not collected, if
applicable.

     SECTION 3.24. Statements to Trustee.

     Not later than the later of (a) two Business Days after the 15th day of
each month and (b) the 18th day of the month (or if the 18th is not a Business
Day, the next succeeding Business Day), the Servicer shall furnish to the
Trustee and the NIMs Insurer an electronic file providing loan level accounting
data as of the Determination Date for the period ending on the last Business Day
of the preceding month and for the applicable Prepayment Period with respect to
prepayments and collections in respect of P&I Arrearages in the format mutually
agreed upon between the Servicer and the Trustee, including but not limited to
information sufficient to allow the Trustee to prepare the Monthly Statement
described in Section 4.05(a).

     SECTION 3.25. Indemnification.

     The Servicer shall indemnify the Seller, the Trust Fund, the Trustee, the
Depositor, the NIMs Insurer and their officers, directors, employees and agents
and hold each of 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 such
parties may sustain in


                                      -71-

<PAGE>

any way related to the failure of the Servicer to perform its duties and service
the Mortgage Loans in compliance with the terms of this agreement by reason of
negligence, willful misfeasance or bad faith in the performance of its duties or
by reason of reckless disregard of obligations and duties hereunder. The
Servicer promptly shall notify the Seller, the Trustee, the Depositor and the
NIMs Insurer or any other relevant party if a claim is made by a third party
with respect to this Agreement or the Mortgage Loans and, if subject to this
indemnification obligation, assume (with the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any of such parties in respect of such
claim. The Servicer shall follow any reasonable written instructions received
from the Trustee and the NIMs Insurer in connection with such claim and the
Servicer will not have liability for following such instructions. The Servicer
shall provide the Depositor, the Trustee and the NIMs Insurer with a written
report of all expenses and advances incurred by the Servicer pursuant to this
Section 3.25, and the Servicer shall promptly reimburse itself from the assets
of the Trust Fund in the Collection Account for all amounts advanced by it
pursuant to the preceding sentence except when the claim in any way relates to
the gross negligence, bad faith or willful misconduct of the Servicer. The
provisions of this paragraph shall survive the termination of this Agreement and
the payment of the outstanding Certificates.

     SECTION 3.26. Nonsolicitation.

     For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its affiliates and
agents will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer which are directed to the general public at large, or certain segments
thereof, shall not constitute solicitation as that term is used in this Section
3.26.

     SECTION 3.27. [Reserved]

     SECTION 3.28. High Cost Mortgage Loans.

     In the event that the Servicer reasonably determines that a Mortgage Loan
may be a "high cost mortgage loan", "high cost home", "covered", "high cost",
"high risk home", "predatory" or similarly classified loan under any applicable
state, federal or local law, the Servicer may notify the Depositor and the
Trustee thereof; the Servicer may terminate its servicing thereof; and such
determination shall be deemed to materially and adversely affect the interests
of the Certificateholders in such Mortgage Loan and the Seller will repurchase
the Mortgage Loan within a 30 day period from the date of such notice in the
manner described in Section 2.02.

                                   ARTICLE IV

                                  DISTRIBUTIONS

     SECTION 4.01. Advances.

          (a) Subject to the conditions of this Article IV, the Servicer, as
required below, shall make an Advance and deposit such Advance in the Collection
Account. Each such Advance shall be remitted to the Collection Account no later
than 3:00 p.m. Eastern time on the Servicer Advance Date in immediately
available funds. The Servicer shall be obligated to make any such Advance only
to the extent that such advance would not be a Non-Recoverable Advance. If the
Servicer shall have


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<PAGE>

determined that it has made a Non-Recoverable Advance or that a proposed Advance
or a lesser portion of such Advance would constitute a Non-Recoverable Advance,
the Servicer shall deliver (i) to the Trustee for the benefit of the
Certificateholders, funds constituting the remaining portion of such Advance, if
applicable, and (ii) to the Depositor, the NIMs Insurer, each Rating Agency and
the Trustee an Officer's Certificate setting forth the basis for such
determination. The Servicer may, in its sole discretion, make an Advance with
respect to the principal portion of the final Scheduled Payment on a Balloon
Loan, but the Servicer is under no obligation to do so; provided, however, that
nothing in this sentence shall affect the Servicer's obligation under this
Section 4.01 to advance the interest portion of the final Scheduled Payment with
respect to a Balloon Loan as if such Balloon Loan were a fully amortizing
Mortgage Loan. If a Mortgagor does not pay its final Scheduled Payment on a
Balloon Loan when due, the Servicer shall Advance (unless it determines in its
good faith judgment that such amounts would constitute a Non-Recoverable
Advance) a full month of interest (net of the Servicing Fee) on the Stated
Principal Balance thereof each month until its Stated Principal Balance is
reduced to zero.

     In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the Collection Account that any amount held for future distribution has been
used by the Servicer in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Collection Account to the Certificate Account.
In addition, the Servicer shall have the right to reimburse itself for any such
Advance from amounts held from time to time in the Collection Account to the
extent such amounts are not then required to be distributed. Any funds so
applied and transferred pursuant to the previous two sentences shall be replaced
by the Servicer by deposit in the Collection Account no later than the close of
business on the Servicer Advance Date on which such funds are required to be
distributed pursuant to this Agreement. The Servicer shall be entitled to be
reimbursed from the Collection Account for all Advances of its own funds made
pursuant to this Section as provided in Section 3.08. The obligation to make
Advances with respect to any Mortgage Loan shall continue until the earlier of
(i) the date such Mortgage Loan is paid in full, (ii) the date the related
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) or related REO Property has been liquidated or until the purchase or
repurchase thereof (or substitution therefor) from the Trust Fund pursuant to
any applicable provision of this Agreement, except as otherwise provided in this
Section 4.01, or (iii) the date on which such Mortgage Loan becomes 150 days
delinquent as set forth below.

          (b) Notwithstanding anything in this Agreement to the contrary
(including, but not limited to, Sections 3.01 and 4.01(a) hereof), no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
Advance or Servicing Advance would, if made, constitute a Non-Recoverable
Advance or a Non-Recoverable Servicing Advance. The determination by the
Servicer that it has made a Non-Recoverable Advance or a Non-Recoverable
Servicing Advance or that any proposed Advance or Servicing Advance, if made,
would constitute a Non-Recoverable Advance or a Non-Recoverable Servicing
Advance, respectively, shall be evidenced by an Officer's Certificate of the
Servicer delivered to the Depositor and the Trustee. In addition, the Servicer
shall not be required to advance any Relief Act Shortfalls.

          (c) Notwithstanding the foregoing, the Servicer shall not be required
to make any Advances for any Mortgage Loan after such Mortgage Loan becomes 150
days delinquent. The Servicer shall identify such delinquent Mortgage Loans in
the Servicer Statement referenced in Section 3.24. In addition, the Servicer
shall provide the Trustee with an Officer's Certificate listing such delinquent
Mortgage Loans and certifying that such loans are 150 days or more delinquent.


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<PAGE>

     SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.

     In the event that any Mortgage Loan is the subject of a Prepayment Interest
Shortfall resulting from a Principal Prepayment in full between the 15th day of
the month and the last day of such month of the applicable Prepayment Period,
the Servicer shall, from amounts in respect of the Servicing Fee for such
Distribution Date, deposit into the Collection Account, as a reduction of the
Servicing Fee for such Distribution Date, no later than the Servicer Advance
Date immediately preceding such Distribution Date, an amount up to the
Prepayment Interest Shortfall; provided that the amount so deposited with
respect to any Distribution Date shall be limited to the product of (x) 0.25%
per annum and (y) the aggregate Stated Principal Balance of the Mortgage Loans.
In case of such deposit, the Servicer shall not be entitled to any recovery or
reimbursement from the Depositor, the Trustee, the Trust Fund or the
Certificateholders. With respect to any Distribution Date, to the extent that
the Prepayment Interest Shortfall exceeds Compensating Interest (such excess, a
"Non-Supported Interest Shortfall"), such Non-Supported Interest Shortfall shall
reduce the Current Interest with respect to each Class of Certificates, pro
rata, based upon the amount of interest each such Class would otherwise be
entitled to receive on such Distribution Date. Notwithstanding the foregoing,
there shall be no reduction of the Servicing Fee in connection with Prepayment
Interest Shortfalls relating to the Relief Act and the Servicer shall not be
obligated to pay Compensating Interest with respect to Prepayment Interest
Shortfalls related to the Relief Act.

     SECTION 4.03. Distributions on the REMIC Interests.

     On each Distribution Date, amounts on deposit in the Certificate Account
shall be treated for federal income tax purposes as applied to distributions on
the interests in the Lower Tier REMIC in an amount sufficient to make the
distributions on the respective Certificates on such Distribution Date in
accordance with the provisions of Section 4.04.

     SECTION 4.04. Distributions.

          (a) [Reserved]

          (b) On each Distribution Date, the Trustee shall make the following
distributions from funds then available in the Certificate Account, of an amount
equal to the Interest Funds in the following order of priority:

               (i) to the Class P Certificates, any Prepayment Charges received
with respect to the Mortgage Loans during the related Prepayment Period and all
amounts paid by the Servicer or the Seller in respect of Prepayment Charges
pursuant to this Agreement or the Sale Agreement, as applicable, and all amounts
received in respect of any indemnification paid as a result of a Prepayment
Charge being unenforceable in breach of the representations and warranties set
forth in the Sale Agreement for the related Prepayment Period;

               (ii) to each class of the Class A Certificates, the Current
Interest and any Interest Carry Forward Amount with respect to such Class;
provided, however, if such amount is not sufficient to make a full distribution
of the Current Interest and any Interest Carry Forward Amount with respect to
the Class A Certificates, such amount will be distributed pro rata among each
Class of the Class A Certificates based on the ratio of (x) the Current Interest
and Interest Carry Forward Amount for each class of the Class A Certificates to
(y) the total amount of Current Interest and any Interest Carry Forward Amount
for the Class A Certificates;


                                      -74-

<PAGE>

               (iii) to the Class M-1 Certificates, the Class M-1 Current
Interest and any Class M-1 Interest Carry Forward Amount;

               (iv) to the Class M-2 Certificates, the Class M-2 Current
Interest and any Class M-2 Interest Carry Forward Amount;

               (v) to the Class B-1 Certificates, the Class B-1 Current Interest
and any Class B-1 Interest Carry Forward Amount;

               (vi) to the Class B-2 Certificates, the Class B-2 Current
Interest and any Class B-2 Interest Carry Forward Amount; and

               (vii) any remainder pursuant to Section 4.04(f) hereof.

          (c) [Reserved]

          (d) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Principal
Distribution Amount in the following order of priority, and each such
distribution shall be made only after all distributions pursuant to Section
4.04(b) above shall have been made until such amount shall have been fully
distributed for such Distribution Date:

               (i) to the Class A Certificates, the Class A Principal
Distribution Amount shall be distributed sequentially to the Class R, Class A-1
and Class A-2 Certificates until the respective Certificate Principal Balance of
each such Class has been reduced to zero; provided, however, on any Distribution
Date following the Distribution Date on which the Certificate Principal Balances
of the Class M and Class B Certificates have been reduced to zero and the
Overcollateralization Amount has been reduced to zero, the Class A Principal
Distribution Amount shall be distributed as follows: first, to the Class R
Certificate until its Certificate Principal Balance has been reduced to zero,
and second, pro rata to the Class A-1 and Class A-2 Certificates, based on their
relative Certificate Principal Balances, until the Certificate Principal Balance
of each such Class has been reduced to zero;

               (ii) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount;

               (iii) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount;

               (iv) to the Class B-1 Certificates, the Class B-1 Principal
Distribution Amount;

               (v) to the Class B-2 Certificates, the Class B-2 Principal
Distribution Amount; and

               (vi) any remainder pursuant to Section 4.04(f) hereof.

          (e) [Reserved].

          (f) On each Distribution Date, the Trustee shall make the following
distributions up to the following amounts from the Certificate Account of the
remainders pursuant to Section 4.04(b)(vii) and (d)(vi) hereof and each such
distribution shall be made only after all distributions pursuant to


                                      -75-

<PAGE>

Sections 4.04(b) and (d) above shall have been made until such remainders shall
have been fully distributed for such Distribution Date:

               (i) for distribution as part of the Principal Distribution
Amount, the Extra Principal Distribution Amount;

               (ii) to the Class M-1 Certificates, the Class M-1 Unpaid Realized
Loss Amount;

               (iii) to the Class M-2 Certificates, the Class M-2 Unpaid
Realized Loss Amount;

               (iv) to the Class B-1 Certificates, the Class B-1 Unpaid Realized
Loss Amount;

               (v) to the Class B-2 Certificates, the Class B-2 Unpaid Realized
Loss Amount;

               (vi) to the Class A, Class M and Class B Certificates, on a pro
rata basis, based upon outstanding Floating Rate Certificate Carryover for each
such Class, the Floating Rate Certificate Carryover for each Class; and

               (vii) the remainder pursuant to Section 4.04(g) hereof.

          (g) on each Distribution Date, the Trustee shall allocate the
remainders pursuant to Section 4.04(f)(vii) as follows:

               (i) to the Class C Certificates in the following order of
priority, (I) the Class C Current Interest, (II) the Class C Interest Carry
Forward Amount, (III) as principal on the Class C Certificate until the
Certificate Principal Balance of the Class C Certificates has been reduced to
zero and (IV) the Class C Unpaid Realized Loss Amount; and

               (ii) the remainder pursuant to Section 4.04(h) hereof.

          (h) On each Distribution Date, the Trustee shall allocate the
remainder pursuant to Section 4.04(g)(ii) hereof (i) to the Trustee to reimburse
amounts or pay indemnification amounts owing to the Trustee from the Trust Fund
pursuant to Section 8.06 to the extent such amounts shall have exceeded the cap
set forth in Section 8.06(c), and (ii) thereafter, to the Class R Certificate
and such distributions shall be made only after all preceding distributions
shall have been made until such remainder shall have been fully distributed.

          (i) On each Distribution Date, after giving effect to distributions on
such Distribution Date, the Trustee shall allocate the Applied Realized Loss
Amount for the Certificates to reduce the Certificate Principal Balances of the
Class C Certificates and the Subordinated Certificates in the following order of
priority:

               (i) to the Class C Certificates, until the Class C Certificate
Principal Balance is reduced to zero;

               (ii) to the Class B-2 Certificates until the Class B-2
Certificate Principal Balance is reduced to zero;


                                      -76-

<PAGE>

               (iii) to the Class B-1 Certificates until the Class B-1
Certificate Principal Balance is reduced to zero;

               (iv) to the Class M-2 Certificates until the Class M-2
Certificate Principal Balance is reduced to zero; and

               (v) to the Class M-1 Certificates until the Class M-1 Certificate
Principal Balance is reduced to zero.

          (j) Subject to Section 9.02 hereof respecting the final distribution,
on each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.

     In accordance with this Agreement, the Servicer shall prepare and deliver a
report (the "Remittance Report") to the Trustee and the NIMs Insurer in the form
of a computer readable magnetic tape (or by such other means as the Servicer,
the Trustee and the NIMs Insurer may agree from time to time) containing such
data and information such as to permit the Trustee to prepare the Monthly
Statement to Certificateholders and make the required distributions for the
related Distribution Date.

     The Trustee shall promptly notify the NIMs 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 C Certificates or the
Class P Certificates. Each Holder of the Class C Certificates or the Class P
Certificates, by its purchase of such Certificates and the Trustee hereby agree
that the NIMs Insurer 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 NIMs Insurer shall be subrogated to the rights
of the Trustee and each Holder of the Class C Certificates and the Class P
Certificates in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim;
provided, however, that the NIMs Insurer will not have any rights with respect
to any Preference Claim set forth in this paragraph unless the indenture trustee
with respect to the NIM Notes or the holder of any NIMs Notes has been required
to relinquish a distribution made on the Class C Certificates, the Class P
Certificates or the NIM Notes, as applicable, and the NIMs Insurer made a
payment in respect of such relinquished amount.

          (k) The Trustee is hereby directed by the Depositor to execute the Cap
Contracts on behalf of the Trust Fund in the form presented to it by the
Depositor and shall have no responsibility for the contents, adequacy or
sufficiency of such Cap Contracts, including, without limitation, the
representations and warranties contained therein. Any funds payable by the
Trustee under the Cap Contracts at closing shall be paid by the Depositor.
Notwithstanding anything to the contrary contained herein or in any Cap
Contract, the Trustee shall not be required to make any payments to the
counterparty under any Cap Contract. Any payments received under the terms of
the related Cap Contract will be available to pay the holders of the related
Certificates up to the amount of any Floating


                                      -77-

<PAGE>

Rate Certificate Carryovers remaining after all other distributions required
under this Section 4.04 (other than distributions required under Section
4.04(l)) are made on such Distribution Date, other than Floating Rate
Certificate Carryovers attributable to the fact that Applied Realized Loss
Amounts are not allocated to the Class A Certificates. Any amounts received
under the terms of any Cap Contract on a Distribution Date that are not used to
pay such Floating Rate Certificate Carryovers will be distributed to the holders
of the Class C Certificates. Payments in respect of such Floating Rate
Certificate Carryovers from proceeds of a Cap Contract shall be paid to the
related Classes of Certificates, pro rata based upon such Floating Rate
Certificate Carryovers for each such class of Certificates.

               (i) The Trustee shall establish and maintain, for the benefit of
the Trust Fund and the Certificateholders, the Cap Contract Account. On or prior
to the related Cap Contract Termination Date, amounts, if any, received by the
Trustee for the benefit of the Trust Fund in respect of the related Cap Contract
shall be deposited by the Trustee into the Cap Contract Account and will be used
to pay Floating Rate Certificate Carryovers on the related Certificates to the
extent provided in the immediately preceding paragraph. With respect to any
Distribution Date on or prior to the related Cap Contract Termination Date, the
amount, if any, payable by the Cap Contract Counterparty under the related Cap
Contract will equal the product of (i) the excess of (x) One-Month LIBOR (as
determined by the Cap Contract Counterparty and subject to a cap equal to the
rate with respect to such Distribution Date as shown under the heading "1ML
Upper Collar" in the schedule to the related Cap Contract), over (y) the rate
with respect to such Distribution Date as shown under the heading "1ML Strike
Lower Collar" in the schedule to the related Cap Contract, (ii) an amount equal
to the related Cap Contract Notional Balance and (iii) the number of days in
such Accrual Period, divided by 360. If a payment is made to the Trust Fund
under a Cap Contract and the Trustee is required to distribute excess amounts to
the holders of the Class C Certificates as described above, the Trustee shall
send a notice on the Business Day prior to the related Distribution Date,
stating the amount received on the related Cap Contract, the amounts paid with
respect to Floating Rate Certificate Carryovers and the amount due to the
holders of the Class C Certificates. Such notice shall be sent by the Trustee
via facsimile to the holders of the Class C Certificates.

               (ii) Amounts on deposit in the Cap Contract Account will remain
uninvested pending distribution to Certificateholders.

          (l) On each Distribution Date after giving effect to any distributions
on such Distribution Date made pursuant to Section 4.04(a)-(i) and 4.04(k), the
Trustee shall make the following distributions from funds then available in the
Advance Reserve Account, of an amount equal to any amounts collected in respect
of P&I Arrearages in the following order of priority:

               (i.) to the Class A-1 and Class A-2 Certificates, on a pro rata
          basis, any Current Interest and Interest Carry Forward Amount to the
          extent unpaid;

               (ii.) sequentially, to the Class M-1, Class M-2, Class B-1 and
          Class B-2 Certificates, any Current Interest to the extent unpaid;

               (iii.) to the Class A-1 and Class A-2 Certificates, on a pro rata
          basis, the amount of any realized losses that would have been
          allocated to the Class A Certificates but for the fact that the
          Pooling and Servicing Agreement does not provide for the reduction of
          the Certificate Principal Balance of the Class A Certificates as a
          result of Realized Losses;


                                      -78-

<PAGE>

               (iv.) to the Class A-1 and Class A-2 Certificates, on a pro rata
          basis, the amount of any realized losses that have caused any
          reduction in the balance of the Class C Certificates;

               (v.) sequentially, to the Class M-1, Class M-2, Class B-1 and
          Class B-2 Certificates, any Interest Carry Forward Amount to the
          extent unpaid;

               (vi.) sequentially, to the Class M-1, Class M-2, Class B-1 and
          Class B-2 Certificates, any Unpaid Realized Loss Amount to the extent
          unpaid ;

               (vii.) to the Offered Certificates and the Class B-1 and Class
          B-2 Certificates, on a pro rata basis, any Floating Rate Certificate
          Carryover to the extent unpaid; and

               (viii.) to the Class C Certificates, the remaining amount.

     SECTION 4.05. Monthly Statements to Certificateholders.

          (a) Not later than each Distribution Date based on information
provided by the Servicer, the Trustee shall prepare and make available on its
website located at www.ctslink.com to each Holder of a Class of Certificates of
the Trust Fund, the Servicer, the NIMs Insurer, the Rating Agencies and the
Depositor a statement setting forth for the Certificates:

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

               (ii) the amount of such distribution to Holders of each Class
allocable to interest, together with any Non-Supported Interest Shortfalls
allocated to each Class;

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

               (iv) the Pool Stated Principal Balance for such Distribution
Date;

               (v) the related amount of the Servicing Fee paid to or retained
by the Servicer and the related amount of the Trustee Fee paid to or retained by
the Trustee;

               (vi) the Pass-Through Rate for each Class of Certificates for
such Distribution Date;

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

               (viii) the cumulative amount of (A) Realized Losses and (B)
Applied Realized Loss Amounts to date;


                                      -79-

<PAGE>

               (ix) the amount of (A) Realized Losses and (B) Applied Realized
Loss Amounts with respect to such Distribution Date;

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

               (xi) 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 last
day of the calendar month preceding such Distribution Date and the date of
acquisition thereof;

               (xii) the total number and principal balance of any REO
Properties as of the close of business on the last day of the calendar month
preceding such Distribution Date;

               (xiii) the aggregate Stated Principal Balance of all Liquidated
Loans as of the preceding Distribution Date;

               (xiv) whether a Stepdown Trigger Event or a Class A-1 Trigger
Event has occurred and is in effect;

               (xv) with respect to each Class of Certificates, any Interest
Carry Forward Amount with respect to such Distribution Date for each such Class,
any Interest Carry Forward Amount paid for each such Class and any remaining
Interest Carry Forward Amount for each such Class;

               (xvi) the number and Stated Principal Balance (as of the
preceding Distribution Date) of any Mortgage Loans which were purchased or
repurchased during the preceding Due Period and since the Cut-off Date;

               (xvii) the number of Mortgage Loans for which Prepayment Charges
were received during the related Prepayment Period and, for each such Mortgage
Loan, the amount of Prepayment Charges received during the related Prepayment
Period and in the aggregate of such amounts for all such Mortgage Loans since
the Cut-off Date;

               (xviii) the amount and purpose of any withdrawal from the
Collection Account pursuant to Section 3.08(a)(viii);

               (xix) the amount of any payments to each Class of Certificates
that are treated as payments received in respect of a REMIC "regular interest"
or REMIC "residual interest" and the amount of any payments to each Class of
Certificates that are not treated as payments received in respect of a REMIC
"regular interest" or REMIC "residual interest";

               (xx) as of each Distribution Date, the amount, if any, to be
deposited in the Cap Contract Account pursuant to the related Cap Contract as
described in Section 4.04(k) and the amount thereof to be paid to the Class A-1,
Class M, Class B-1 and Class C Certificates described in Section 4.04(k) hereof;


                                      -80-

<PAGE>

               (xxi) the amount of collections in respect of P&I Arrearages and
any amounts distributed therefrom pursuant to Section 4.04(l)(i) through (viii)
with respect to each Class of Certificates; and

               (xxii) any Floating Rate Certificate Carryover paid and all
Floating Rate Certificate Carryover remaining on each class of Class A, Class M
and Class B Certificates on such Distribution Date.

          (b) The Trustee will make the Monthly Statement (and, at its option,
any additional files containing the same information in an alternative format)
available each month to Certificateholders, other parties to this Agreement and
any other interested parties via the Trustee's Internet website. The Trustee's
Internet website shall initially be located at www.ctslink.com". Assistance in
using the website can be obtained by calling the Trustee's customer service desk
at (301) 815-6600. Parties that are unable to use the website are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trustee shall have the right to change the
way the monthly statements to Certificateholders are distributed in order to
make such distribution more convenient and/or more accessible to the above
parties and the Trustee shall provide timely and adequate notification to all
above parties regarding any such changes.

     The Trustee shall also be entitled to rely on but shall not be responsible
for the content or accuracy of any information provided by third parties for
purposes of preparing the monthly statement and may affix thereto any disclaimer
it deems appropriate in its reasonable discretion (without suggesting liability
on the part of any other party hereto).

     As a condition to access the Trustee's internet website, the Trustee may
require registration and the acceptance of a disclaimer. The Trustee will not be
liable for the dissemination of information in accordance with this Agreement.

          (c) The Servicer shall deliver to the NIMs Insurer a copy of any
report delivered by the Servicer to the Trustee.

          (d) 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) without regard to subclauses (A)-(D)
thereof and (a)(ii) of this Section 4.05 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 are from time to time in
effect.

          (e) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificate and the NIMs Insurer each Form
1066 and each Form 1066Q and shall respond promptly to written requests made not
more frequently than quarterly by any Holder of a Class R Certificate with
respect to the following matters:

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


                                      -81-

<PAGE>

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

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

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

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

               (vi) The amount and timing of any non-interest expenses of the
REMICs; and

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

     The information pursuant to clauses (i), (ii), (iii) and (iv) above shall
be provided by the Depositor pursuant to Section 8.12.

                                    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
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:

<TABLE>
<CAPTION>
           Minimum     Integral Multiples in   Original Certificate
Class   Denomination     Excess of Minimum       Principal Balance
-----   ------------   ---------------------   --------------------
<S>     <C>            <C>                     <C>
A-1      $25,000.00            $1.00              $58,342,000.00
A-2      $25,000.00            $1.00              $33,833,000.00
M-1      $25,000.00            $1.00              $ 7,152,000.00
M-2      $25,000.00            $1.00              $ 5,249,000.00
B-1      $25,000.00            $1.00              $ 4,614,000.00
B-2      $25,000.00            $1.00              $ 4,326,000.00
C            (1)                (1)                    100%
R        $   100.00             N/A               $       100.00
P            (2)                (2)                      (2)
</TABLE>


                                      -82-

<PAGE>

----------
(1)  The Class C Certificates shall not have minimum dollar denominations or
     certificate notional amounts and shall be issued in a minimum percentage
     interest of 10%. The initial Overcollateralization Amount is $1,847,505.66.

(2)  The Class P Certificates shall not have minimum dollar denominations or
     Certificate Principal Balances and shall be issued in a minimum percentage
     interest of 100%.

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

     The Class B Certificates sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more permanent
global certificates in definitive, fully registered form without interest
coupons with the applicable legends set forth in Exhibit A hereto added to the
form of each such Certificate (each, a "Regulation S Book-Entry Certificate"),
which shall be deposited on behalf of the Holders of such Certificates
represented thereby with the Trustee, as custodian for DTC and registered in the
name of a nominee of DTC, duly executed and authenticated by the Trustee as
hereinafter provided. The aggregate principal amounts of the Regulation S
Book-Entry Certificates may from time to time be increased or decreased by
adjustments made on the records of the Trustee or DTC or its nominee, as the
case may be, as hereinafter provided.

     The Class B Certificates sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global certificates in
definitive, fully registered form without interest coupons with the applicable
legends set forth in Exhibit A hereto added to the form of each such Certificate
(each, a "Rule 144A Book-Entry Certificate"), which shall be deposited on behalf
of the Holders of such Certificates represented thereby with the Trustee, as
custodian for DTC and registered in the name of a nominee of DTC, duly executed
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amounts of the Rule 144A Book-Entry Certificates may from time to time
be increased or decreased by adjustments made on the records of the Trustee or
DTC or its nominee, as the case may be, as hereinafter provided.

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

     At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon


                                      -83-

<PAGE>

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

     No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.

          (b) No Transfer of a Class C or Class P Certificate shall be made
unless such Transfer is made pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws or is exempt
from the registration requirements under the Securities Act and such state
securities laws. In the event that a Transfer is to be made in reliance upon an
exemption from the Securities Act and such laws, in order to assure compliance
with the Securities Act and such laws, the Certificateholder desiring to effect
such Transfer and such Certificateholder's prospective transferee shall (except
with respect to the initial transfer of a Class C or Class P Certificate by
Merrill Lynch & Co. or, in connection with a transfer of a Class C or Class P
Certificate to the indenture trustee under an Indenture pursuant to which NIM
Notes are issued, whether or not such notes are guaranteed by the NIMs Insurer)
each certify to each Trustee in writing the facts surrounding the Transfer in
substantially the form set forth in Exhibit F (the "Transferor Certificate") and
(i) deliver a letter in substantially the form of either Exhibit G (the
"Investment Letter") or Exhibit H (the "Rule 144A Letter") or (ii) there shall
be delivered to the Trustee an Opinion of Counsel that such Transfer may be made
pursuant to an exemption from the Securities Act, which Opinion of Counsel shall
not be an expense of the Depositor or the Trustee. The Depositor shall provide
to any Holder of a Class C or Class P Certificate and any prospective transferee
designated by any such Holder, information regarding the related Certificates
and the Mortgage Loans and such other information as shall be necessary to
satisfy the condition to eligibility set forth in Rule 144A(d)(4) for Transfer
of any such Certificate without registration thereof under the Securities Act
pursuant to the registration exemption provided by Rule 144A. The Trustee shall
cooperate with the Depositor in providing the Rule 144A information referenced
in the preceding sentence, including providing to the Depositor such information
in the possession of the Trustee 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
Class C or Class P Certificate desiring to effect such Transfer shall, and does
hereby agree to, indemnify the Depositor and the Trustee 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.

     By acceptance of a Regulation S Global Security, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will only transfer such a Certificate as provided herein. In
addition, each Holder of a Regulation S Global Security shall be deemed to have
represented and warranted to the Depositor, the Trustee and any of their
respective successors that: (i) such Person is not a "U.S. person" within the
meaning of Regulation S and was, at the time the buy order was originated,
outside the United States and (ii) such Person understands that such
Certificates have not been registered under the Securities Act and that (x)
until the expiration of the 40-day distribution compliance period (within the
meaning of Regulation S), no offer, sale, pledge or other transfer of such
Certificates or any interest therein shall be made in the United States or to or
for the account or benefit of a U.S. person (each as defined in Regulation S),
(y) if in the future it decides to offer, resell, pledge or otherwise transfer
such Certificates,


                                      -84-

<PAGE>

such Certificates may be offered, resold, pledged or otherwise transferred only
(A) to a person which the seller reasonably believes is a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act, that is
purchasing such Certificates for its own account or for the account of a
qualified institutional buyer to which notice is given that the transfer is
being made in reliance on Rule 144A or (B) in an offshore transaction (as
defined in Regulation S) in compliance with the provisions of Regulation S, in
each case in compliance with the requirements of this Agreement; and it will
notify such transferee of the transfer restrictions specified in this Section.

     No transfer of an ERISA Restricted Certificate that is a Class R
Certificate may be made to any Person unless the Trustee has received a
representation from the transferee of the Class R Certificate, acceptable to and
in form and substance satisfactory to the Trustee, to the effect that such
transferee is not an employee benefit plan subject to Title I of ERISA, a plan
subject to Section 4975 of the Code or a plan subject to any state, local,
federal, non-U.S. or other law substantively similar to the foregoing provisions
of ERISA or the Code ("Similar Law") (collectively, a "Plan"), or to any Person
directly or indirectly acquiring such Certificate for, on behalf of, or with any
assets of any such Plan. Each Person to whom a Class R Certificate is to be
transferred shall be required or deemed to represent that it is not a Plan.

     No transfer of an ERISA-Restricted Certificate (other than the Class R
Certificate) shall be made to any Person unless the Trustee has received (A) a
representation that such transferee is not a Plan and is not directly or
indirectly acquiring the Certificate for, on behalf of, or with the assets of
any such Plan, (B) if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, a representation that such transferee is an
insurance company that is acquiring the Certificate with assets contained in an
"insurance company general account," as defined in Section V(e) of Prohibited
Transaction Class Exemption ("PTCE") 95-60, and the acquisition and holding of
the Certificate are covered and exempt under Sections I and III of PTCE 95-60,
or (C) solely in the case of any such Certificate that is a Definitive
Certificate, an Opinion of Counsel satisfactory to the Trustee, and upon which
the Trustee and the NIMs Insurer shall be entitled to rely, to the effect that
the acquisition and holding of such Certificate will not constitute or result in
a nonexempt prohibited transaction under Title I of ERISA or Section 4975 of the
Code, or a violation of Similar Law, and will not subject the Trustee, the
Servicer, the NIMs Insurer or the Depositor to any obligation in addition to
those expressly undertaken in this Agreement, which Opinion of Counsel shall not
be an expense of the Trustee, the Servicer, the NIMs Insurer or the Depositor.

     For purposes of the two immediately preceding paragraphs of this Subsection
5.02(b), other than clause (C) in the immediately preceding paragraph, the
representations as set forth therein shall be deemed to have been made to the
Trustee by the transferee's acceptance of an ERISA Restricted Certificate (or
the acceptance by a Certificate Owner of the beneficial interest in any Class of
ERISA Restricted Certificates). Notwithstanding any other provision herein to
the contrary, any purported transfer of an ERISA Restricted Certificate to or on
behalf of a Plan without the delivery to the Trustee of a representation or an
Opinion of Counsel satisfactory to the Trustee as described above shall be void
and of no effect. The Trustee shall not be under any liability to any Person for
any registration or transfer of any ERISA Restricted Certificate that is in fact
not permitted by this Section 5.02(b), nor shall the Trustee be under any
liability 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. The Trustee shall be entitled, but
not obligated, to recover from any Holder of any ERISA Restricted Certificate
that was in fact a Plan and that held such Certificate in violation of this
Section 5.02(b) all payments made on such ERISA Restricted Certificate at and
after the time it commenced such holding. Any such payments so recovered shall
be paid and delivered to the last preceding Holder of such Certificate that is
not a Plan.


                                      -85-

<PAGE>

          (c) Each Person who has or who acquires any Ownership Interest in a
Class R 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 Class R
Certificate are expressly subject to the following provisions:

               (i) Each Person holding or acquiring any Ownership Interest in a
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 a Class R Certificate may be
purchased, transferred or sold, directly or indirectly, except in accordance
with the provisions hereof. No Ownership Interest in a Class R Certificate may
be registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Class R 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 E-1 and an affidavit of the proposed transferor in the form
attached hereto as Exhibit E-2. In the absence of a contrary instruction from
the transferor of a Class R Certificate, declaration (11) in Appendix A of the
Transfer Affidavit may be left blank. If the transferor requests by written
notice to the Trustee prior to the date of the proposed transfer that one of the
two other forms of declaration (11) in Appendix A of the Transfer Affidavit be
used, then the requirements of this Section 5.02(c)(ii) shall not have been
satisfied unless the Transfer Affidavit includes such other form of declaration.

               (iii) Each Person holding or acquiring any Ownership Interest in
a 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 in
a 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 a Class R Certificate and (C) not to Transfer its Ownership Interest
in a Class R Certificate or to cause the Transfer of an Ownership Interest in a
Class R Certificate to any other Person if it has actual knowledge that such
Person is not a Permitted Transferee. Further, no transfer, sale or other
disposition of any Ownership Interest in a Class R Certificate may be made to a
person who is not a U.S. Person (within the meaning of Section 7701 of the Code)
unless such person furnishes the transferor and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI (or any successor
thereto) and the Trustee consents to such transfer, sale or other disposition in
writing.

               (iv) Any attempted or purported Transfer of any Ownership
Interest in a Class R 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
Class R 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 Class
R Certificate. The Trustee shall be under no liability to any Person for any
registration of Transfer of a Class R 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. The Trustee
shall be entitled but not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time it became a
Holder or, at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Class R 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.


                                      -86-

<PAGE>

               (v) At the option of the Holder of the Class R Certificate, the
Class LTR Interest and the residual interest in the Upper Tier REMIC may be
severed and represented by separate certificates (with the certificate that
represents the Residual Interest also representing all rights of the Class R
Certificate to distributions attributable to a Pass-Through Rate on the Class R
Certificate in excess of the Net Rate); provided, however, that such separate
certification may not occur until the Trustee and the NIMs Insurer receive an
Opinion of Counsel to the effect that separate certification in the form and
manner proposed would not result in the imposition of federal tax upon the Trust
Fund or any of the REMICs provided for herein or cause any of the REMICs
provided for herein to fail to qualify as a REMIC; and provided further, that
the provisions of Sections 5.02(b) and (c) will apply to each such separate
certificate as if the separate certificate were a Class R Certificate. If, as
evidenced by an Opinion of Counsel, it is necessary to preserve the REMIC status
of any of the REMICs provided for herein, the Class LTR Interest and the
residual interest in the Upper Tier REMIC shall be severed and represented by
separate Certificates.

     The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee and the NIMs Insurer of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee or the
Depositor, to the effect that the elimination of such restrictions will not
cause any of the REMICs provided for herein 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, any REMIC provided for herein, a Certificateholder or
another Person. Each Person holding or acquiring any Ownership Interest in a
Class R Certificate hereby consents to any amendment of this Agreement that,
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
Class R Certificate is not transferred, directly or indirectly, to a Person that
is not a Permitted Transferee and (b) to provide for a means to compel the
Transfer of a Class R Certificate that is held by a Person that is not a
Permitted Transferee to a Holder that is a Permitted Transferee.

          (d) The transferor of the Class R Certificate shall notify the Trustee
in writing upon the transfer of the Class R Certificate.

          (e) Additional Restrictions on Class B Certificates.

     The Class B Certificates may not be offered or sold except to (i) QIBs in
reliance on the exemption from the registration requirements of the Securities
Act provided by Rule 144A, (ii) Institutional Accredited Investors or (iii)
outside the United States, persons who are not U.S. persons (as defined by
Regulation S) in offshore transactions in compliance with Regulation S.

     To permit compliance with the foregoing in connection with any proposed
transfer of the Class B Certificates, the Trustee shall cooperate with the
Depositor in furnishing, upon the request of any Certificateholder, to such
Certificateholder or Certificate Owner and a prospective transferee designated
by such Certificateholder, the information required to be delivered under Rule
144A(d)(4).

          Each Certificateholder, by its acceptance of a Class B Certificate,
will be deemed to have represented and agreed as follows (terms used in this
section that are defined in Rule 144A are used herein as defined therein):

               (1) It (A)(i) is a QIB, (ii) is aware that the sale of the Class
          B-1 or Class B-2 Certificates, as applicable, is being made in
          reliance on Rule 144A and (iii) is acquiring such Certificates for its
          own account or for the account of a QIB, as the case may be, (B)(i) is
          an Institutional Accredited Investor, (ii) is purchasing the Class B-1
          or Class B-2


                                      -87-

<PAGE>

          Certificates being sold to it for its own account or for certain
          qualified institutional accounts and (iii) is not acquiring such Class
          B-1 or Class B-2 Certificates with a view to any resale or
          distribution thereof other than in accordance with the restrictions
          set forth below or (C) (i) is not a U.S. person (as defined by
          Regulation S), (ii) was at the time the buy order was originated
          outside the United States and (iii) until the expiration of the 40-day
          distribution compliance period (within the meaning of Regulation S),
          no offer, sale, pledge or other transfer of such Certificates or any
          interest thereon shall be made in the United States or to or for the
          account or benefit of a U.S. person (as defined by Regulation S).

               (2) It understands that the Class B-1 and Class B-2 Certificates
          have not been and will not be registered under the Securities Act and
          may not be reoffered, resold, pledged or otherwise transferred except
          (A)(i) to a Person whom it reasonably believes is a QIB in a
          transaction meeting the requirements of Rule 144A, (ii) to an
          Institutional Accredited Investor in a transaction exempt from the
          registration requirements of the Securities Act, or (iii) outside the
          United States, to Persons who are not U.S. persons (as defined by
          Regulation S) in offshore transactions in compliance with Regulation S
          and (B) in accordance with all applicable securities laws of the
          states of the United States.

               (3) It understands that any Class B-1 or Class B-2 Certificates
          acquired by it pursuant to clause (1)(B) above will be in the form of
          definitive physical certificates ("Certificates") bearing the legend
          set forth in in paragraph (4) below.

               (4) The Class B Certificates will bear a legend to the following
          effect:

               THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
               OF 1933, AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF
               1940, AS AMENDED (THE "1940 ACT") OR ANY STATE SECURITIES OR
               "BLUE SKY" LAWS, AND MAY NOT, DIRECTLY OR INDIRECTLY, BE SOLD OR
               OTHERWISE TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH TRANSFER
               IS NOT SUBJECT TO REGISTRATION UNDER THE ACT, THE 1940 ACT AND
               ANY APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER ALSO
               COMPLIES WITH THE OTHER PROVISIONS OF SECTION 5.02 OF THE POOLING
               AND SERVICING AGREEMENT. IF THE CERTIFICATE IS A DEFINITIVE
               CERTIFICATE, NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS
               THE TRUSTEE SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE
               SATISFACTORY TO THE TRUSTEE (A) AN INVESTMENT LETTER FROM THE
               PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS FROM THE TRANSFEROR
               REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.

               THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO
               OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A)
               PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
               EFFECTIVE UNDER THE ACT, (B) TO A PERSON IT REASONABLY BELIEVES
               IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
               UNDER THE ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
               ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
               GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE


                                      -88-

<PAGE>

               144A, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR AS DEFINED IN
               RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D, OR (D) OUTSIDE
               THE UNITED STATES TO A PERSON WHO IS NOT A U.S. PERSON (AS
               DEFINED BY REGULATION S OF THE ACT ("REGULATION S")) IN AN
               OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S, AND IN EACH
               CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
               UNITED STATES AND SUBJECT TO THE TRUSTEE'S RIGHT PRIOR TO ANY
               SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF A
               CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE POOLING AND
               SERVICING AGREEMENT.

               Any Class B Certificate acquired pursuant to Regulation S will
          bear the following two legends in replacement of the legends above:

               THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
               OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.
               NEITHER THIS CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN
               MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
               ENCUMBERED OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES (AS
               DEFINED IN RULES 901 THROUGH 905 OF THE ACT ("REGULATION S")) OR
               TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED
               IN REGULATION S), IN THE ABSENCE OF SUCH REGISTRATION, UNLESS
               SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

               THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES
               (A) THAT, UNTIL THE EXPIRATION OF THE APPLICABLE "DISTRIBUTION
               COMPLIANCE PERIOD" WITHIN THE MEANING OF REGULATION S, ANY OFFER,
               SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE SHALL NOT BE
               MADE IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
               OF, ANY U.S. PERSON (EACH AS DEFINED IN REGULATION S) AND (B) TO
               OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS CERTIFICATE WITHIN
               THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S.
               PERSON (EACH AS DEFINED IN REGULATION S) ONLY (1) PURSUANT TO A
               REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
               THE ACT, (2) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
               INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE ACT THAT
               PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
               INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
               BEING MADE IN RELIANCE ON RULE 144A, (3) TO AN INSTITUTIONAL
               ACCREDITED INVESTOR AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
               OF REGULATION D, OR (4) OUTSIDE THE UNITED STATES TO A PERSON WHO
               IS NOT A U.S. PERSON (AS DEFINED BY REGULATION S OF THE ACT
               ("REGULATION S")) IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
               REGULATION S, AND IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE
               SECURITIES LAWS OF THE UNITED STATES AND SUBJECT TO THE TRUSTEE'S
               RIGHT PRIOR TO


                                      -89-

<PAGE>

               ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF A
               CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE POOLING AND
               SERVICING AGREEMENT.

               (5) Any information the purchaser desires concerning the Class
          B-1 or Class B-2 Certificates or any other matter relevant to its
          decision to purchase the Class B-1 or Class B-2 Certificates is or has
          been made available to it.

     The transferor of a Class B Certificate or a beneficial interest in a Class
B Certificate (except in the case of the transfer of (i) a beneficial interest
in a Rule 144A Book-Entry Certificate for a beneficial interest in a Rule 144A
Book-Entry Certificate or (ii) a beneficial interest in a Regulation S
Book-Entry Certificate for a beneficial interest in a Regulation S Book-Entry
Certificate) shall be required to provide to the Trustee (i) in the case of a
transferor holding a Definitive Certificate or a beneficial interest in a
Regulation S Book-Entry Certificate and wishing to transfer to a Person in the
form of a beneficial interest in a Rule 144A Book-Entry Certificate, a
transferor letter substantially in the form attached as Exhibit Q and a
transferee letter substantially in the form attached as Exhibit H or (ii) in the
case of a transferor holding a Definitive Certificate or a beneficial interest
in a Rule 144A Book-Entry Certificate and wishing to transfer to a Person in the
form of a beneficial interest in a Regulation S Book-Entry Certificate, a
transferor letter substantially in the form attached as Exhibit P.

     No transfer of a Certificate to a transferee in the form of a Definitive
Certificate shall be registered unless such transfer is (i) to a QIB and a
transferor letter substantially in the form attached as Exhibit Q and a
transferee letter substantially in the form attached as Exhibit H are delivered
to the Trustee, (ii) outside the United States, to a person who is not a U.S.
person (as defined by Regulation S) in an offshore transaction in compliance
with Regulation S and a transferor letter substantially in the form attached as
Exhibit P is delivered to the Trustee or (iii) to an "accredited investor" under
Rule 501(a)(1), (2), (3) or (7) under the Securities Act and a transferor letter
substantially in the form attached as Exhibit F and a transferor letter
substantially in the form attached as Exhibit G are delivered to the Trustee.

     The Trustee may conclusively rely on any such transferor letter and
representation letter as sufficient to confirm that the proposed transfer is
being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and other applicable laws.

          (f) The preparation and delivery of all certificates, opinions and
other writings referred to above in this Section 5.02 shall not be an expense of
the Trust Fund, the Depositor or the Trustee.

     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 of the ownership thereof and (b) there is delivered to
the Trustee and the NIMs Insurer such security or indemnity as may be required
by them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 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


                                      -90-

<PAGE>

constitute complete and indefeasible evidence of ownership in the Trust Fund, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time. All Certificates surrendered to the Trustee under
the terms of this Section 5.03 shall be canceled and destroyed by the Trustee in
accordance with its standard procedures without liability on its part.

     SECTION 5.04. Persons Deemed Owners.

     The NIMs Insurer, the Trustee and any agent of the NIMs 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 none of the NIMs
Insurer or the Trustee, nor any agent of the NIMs 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 that such
Certificateholders propose to transmit or if the NIMs Insurer or the Depositor
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
NIMs Insurer or the Depositor or such Certificateholders at such recipients'
expense the most recent list of the Certificateholders of the Trust Fund held by
the Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.

     SECTION 5.06. Book-Entry Certificates.

     The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Class C, Class P and ClassR shall be definitive certificates. The
Book-Entry Certificates shall initially be registered on the Certificate
Register in the name of the Depository or its nominee, and no Certificate Owner
of a Book-Entry Certificate will receive a definitive certificate representing
such Certificate Owner's interest in such Certificates, except as provided in
Section 5.08. Unless and until definitive, fully registered Certificates
("Definitive Certificates") have been issued to the Certificate Owners of the
Book-Entry Certificates pursuant to Section 5.08(a):

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

          (b) the Depositor, the NIMs Insurer and the Trustee may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of the Book-Entry Certificates;

          (c) registration of the Book-Entry Certificates may not be transferred
by the Trustee except to another Depository;

          (d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry


                                      -91-

<PAGE>

transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;

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

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

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

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

     In the event that Definitive Certificates are issued pursuant to Section
5.08(b), clauses (a) through (g) of this Section 5.06 shall continue to be
applicable with respect to all remaining Book-Entry Certificates.

     SECTION 5.07. Notices to Depository.

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

     SECTION 5.08. Definitive Certificates.

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


                                      -92-

<PAGE>

Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.

          (b) Any Class B Certificate sold to an "accredited investor" (as
defined under Rule 501(a)(1), (2), (3) or (7) under the Securities Act) shall be
issued in the form of one or more Definitive Certificates. The Trustee will
effect such transfer in accordance with its customary procedures.

     SECTION 5.09. Maintenance of Office or Agency.

     The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
offices at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479,
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
Series 2005-SD1 as offices for such purposes. The Trustee will give prompt
written notice to the Certificateholders of any change in such location of any
such office or agency.

                                   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.

     Except as provided in the next paragraph, the Depositor and the Servicer
will each keep in full effect its existence, rights and franchises as a
corporation or banking association 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 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 (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
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 Freddie Mac.

     SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and
Others.

     None of the Depositor, the Servicer, nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust Fund or the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer


                                      -93-

<PAGE>

or any such Person against any breach of representations or warranties made by
it herein or protect the Depositor, the Servicer or any such Person from any
liability that would otherwise be imposed by reasons of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor or the Servicer and
any director, officer, employee or agent of the Depositor or 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 Depositor
or the Servicer and any director, officer, employee or agent of the Depositor,
or the Servicer shall be indemnified by the Trust Fund and held harmless against
any loss, liability or expense, incurred in connection with the performance of
their duties under this agreement or 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, other than
any loss, liability or expense (i) incurred by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder or (ii) which does not
constitute an "unanticipated expense" within the meaning of Treasury Regulations
Section 1.860G-1(b)(3)(ii). Neither the Depositor nor the Servicer shall be
under any obligation to appear in, prosecute or defend any legal action that is
not incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that either the
Depositor or the Servicer in its discretion may undertake any such action 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 and the Servicer shall be
entitled to be reimbursed therefor out of the Collection Account as provided by
Section 3.08 hereof.

     SECTION 6.04. Limitation on Resignation of Servicer.

     The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the NIMs Insurer. No such resignation shall
become effective until the Trustee or a successor servicer reasonably acceptable
to the Trustee and the NIMs Insurer is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Section 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer.

     SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.

     The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of Fannie Mae or Freddie Mac for Persons
performing servicing for mortgage loans purchased by Fannie Mae or Freddie Mac.
The Servicer shall provide the Trustee and the NIMs Insurer, upon request and
reasonable notice, with copies of such policies and fidelity bond or a
certification from the insurance provider evidencing such policies and fidelity
bond. In the event that any such policy or bond ceases to be in effect, the
Servicer shall use its reasonable commercial efforts to obtain a comparable
replacement policy or bond from an insurer or issuer meeting the requirements
set forth above as of the date of such replacement.


                                      -94-

<PAGE>

                                   ARTICLE VII

                        DEFAULT; TERMINATION OF SERVICER

     SECTION 7.01. Events of Default.

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

               (i) any failure by the Servicer to make any Advance, to deposit
in the Collection Account or the Certificate Account or remit to the Trustee any
payment (excluding a payment required to be made under Section 4.01 hereof)
required to be made under the terms of this Agreement, which failure shall
continue unremedied for three Business Days and, with respect to a payment
required to be made under Section 4.01 hereof, for one Business Day, after the
date on which written notice of such failure shall have been given to the
Servicer by the Trustee or the Depositor, or to the Trustee and the Servicer by
the NIMs Insurer or the Holders of Certificates evidencing not less than 25% of
the Voting Rights evidenced by the Certificates; or

               (ii) any failure by the Servicer to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer contained in this Agreement or any representation or warranty shall
prove to be untrue, which failure or breach shall continue unremedied for a
period of 60 days after the date on which written notice of such failure shall
have been given to the Servicer by the Trustee or the Depositor, or to the
Trustee by the NIMs Insurer or the Holders of Certificates evidencing not less
than 25% of the Voting Rights evidenced by the Certificates; or

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

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

               (v) admission by a Servicer in writing of its inability to pay
its debts generally as they become due, file a petition to take advantage of, or
commence a voluntary case under, any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations.

     If an Event of Default shall occur with respect to the Servicer, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, or solely with respect to
clause (i) above by 5:00p.m. on the Servicer Remittance Date, the Trustee may
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), or at the direction of the NIMs Insurer or the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), 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. On or 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 as successor servicer. To the extent the Event
of Default resulted from the failure of the Servicer to make a required Advance,
the


                                      -95-

<PAGE>

Trustee shall thereupon make any Advance described in Section 4.01 hereof
subject to Section 3.04 hereof. 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 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. The Servicer and the Trustee shall promptly
notify the Rating Agencies of the occurrence of an Event of Default or an event
that, with notice, passage of time, other action or any combination of the
foregoing would be an Event of Default, such notice to be provided in any event
within two Business Days of such occurrence.

     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 that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a), and any other amounts payable
to the Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder. Notwithstanding anything herein to the
contrary, upon termination of the Servicer hereunder, any liabilities of the
Servicer which accrued prior to such termination shall survive 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 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, 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 advances pursuant to Section 4.01. As
compensation therefor, subject to the last paragraph of Section 7.01, the
Trustee shall be entitled to all fees, costs and expenses relating to the
Mortgage Loans that the Servicer would have been entitled to if the Servicer had
continued to act hereunder. Notwithstanding the foregoing, if the Trustee has
become the successor to the Servicer in accordance with Section 7.01 hereof, the
Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited
by applicable law from making Advances pursuant to Section 4.01 hereof 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 successor shall be approved by the NIMs Insurer and 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 Servicer shall be an institution that is acceptable to
the NIMs Insurer and is a Fannie Mae and Freddie Mac approved seller/servicer in
good standing, that has a net worth of at least $15,000,000, and that is willing
to service the Mortgage Loans and executes and delivers to the Depositor and the
Trustee an agreement accepting such delegation and assignment, that contains an
assumption by such Person of the rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer (other than liabilities of the
Servicer under Section 6.03 hereof incurred prior to termination of the Servicer
under Section 7.01), with like effect as if originally named as a party to this
Agreement; and provided further 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. No appointment of a successor to the Servicer hereunder shall be
effective until the Trustee and the NIMs


                                      -96-

<PAGE>

Insurer shall have consented thereto, prior written consent of the NIMs Insurer
is obtained and written notice of such proposed appointment shall have been
provided by the Trustee to each Certificateholder. The Trustee shall not resign
as servicer until a successor servicer has been appointed and has accepted such
appointment. 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 3.04 hereof, act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer hereunder. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Neither the
Trustee nor any other successor 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.

     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 6.05.

     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 NIMs Insurer 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 and the NIMs Insurer
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

     SECTION 8.01. Duties of the Trustee.

     The Trustee, prior to 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. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee
shall, at the direction of the majority of the Certificateholders or the NIMs
Insurer, or may, proceed to protect and enforce its rights and the rights of the
Certificateholders or the NIMs Insurer under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel and subject to the foregoing, shall deem most effectual to protect and
enforce any of the rights of the Trustee, the NIMs Insurer and the
Certificateholders.


                                      -97-

<PAGE>

     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 conform to the
requirements of this Agreement. If any such instrument is found not to conform
to the requirements of this Agreement in a material manner, the Trustee shall
take such action as it deems appropriate to have the instrument corrected and if
the instrument is not corrected to its satisfaction, the Trustee will provide
notice thereof to the NIMs Insurer and the Certificateholders and take such
further action as directed by the NIMs Insurer and the Certificateholders.

     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 misconduct, its negligent failure to perform its obligations in
compliance with this Agreement, or any liability that would be imposed by reason
of its willful misfeasance or bad faith; provided, however, that:

               (i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable, individually or as Trustee
except for the performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee 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 that it reasonably believed in
good faith to be genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder;

               (ii) the Trustee shall not be liable, individually or as Trustee,
for an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee unless the Trustee was negligent or acted in
bad faith or with willful misfeasance;

               (iii) the Trustee shall not be liable, individually or as
Trustee, with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with the direction of the NIMs Insurer or the
Holders of each Class of Certificates evidencing not less than 25% of the Voting
Rights of such Class 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; and

               (iv) except as otherwise expressly provided in this Agreement, if
any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, subject to Section 8.01 and Section
8.02, upon the request of the NIMs Insurer or the Holders of the Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings.

     SECTION 8.02. Certain Matters Affecting the Trustee.

          (a)  Except as otherwise provided in Section 8.01:

               (v) 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


                                      -98-

<PAGE>

paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;

               (vi) the Trustee may consult with counsel of its choice 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;

               (vii) the Trustee shall not be liable, individually or as
Trustee, 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;

               (viii) prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default that may have occurred, 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 so to do by the NIMs Insurer or the Holders of each
Class of Certificates evidencing not less than 25% of the Voting Rights of such
Class;

               (ix) 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;

               (x) the Trustee shall not be required to expend its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such liability is not assured to it;

               (xi) the Trustee shall not be liable, individually or as Trustee,
for any loss on any investment of funds pursuant to this Agreement (other than
as issuer of the investment security);

               (xii) 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;

               (xiii) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or defend
any litigation hereunder or in relation hereto at the request, order or
direction of any of the NIMs Insurer or the Certificateholders, pursuant to the
provisions of this Agreement, unless the NIMs Insurer or such Certificateholders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that may be incurred therein or thereby; and

               (xiv) if requested by the Servicer, the Trustee shall appoint the
Servicer as the Trustee's attorney-in-fact in order to carry out and perform
certain activities that are necessary or appropriate for the servicing and
administration of the Mortgage Loans pursuant to this Agreement. Such
appointment shall be evidenced by powers of attorney in such form as may be
agreed to by the Trustee and the Servicer. The Trustee shall have no liability
for any action or inaction of the Servicer in connection with such powers of
attorney and the Trustee shall be indemnified by the Servicer for all
liabilities, costs and expenses incurred by the Trustee in connection with the
Servicer's use or misuse of such powers of attorney.

          (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit,


                                      -99-

<PAGE>

action or proceeding instituted by the Trustee shall be brought in its name for
the benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.

     SECTION 8.03. Trustee Not Liable for Mortgage Loans.

     The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Mortgage Loan, of any
guarantee of a NIMs Insurer or related document other than with respect to the
Trustee's execution and authentication 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 or the
Certificate Account by the Depositor or the Servicer.

     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.

     The Trustee shall be entitled to the Trustee Fee and to all earnings on or
investment income with respect to funds in or credited to the Certificate
Account.

     SECTION 8.06. Indemnification of Trustee.

          (a) The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Trust Fund for any loss,
liability or expense incurred in connection with any legal proceeding or
incurred without negligence or willful misconduct on their part, arising out of,
or in connection with the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder,
including any applicable fees and expenses payable hereunder, and the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:

               (i) with respect to any such claim, the Trustee shall have given
the Depositor and the Holders written notice thereof promptly after the Trustee
shall have knowledge thereof; provided that failure to so notify shall not
relieve the Trust Fund of the obligation to indemnify the Trustee; however, any
reasonable delay by the Trustee to provide written notice to the Depositor and
the Holders promptly after the Trustee shall have obtained knowledge of a claim
shall not relieve the Trust Fund of the obligation to indemnify the Trustee
under this Section 8.06;

               (ii) while maintaining control over its own defense, the Trustee
shall cooperate and consult fully with the Depositor in preparing such defense;

               (iii) notwithstanding anything to the contrary in this Section
8.06, the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which consent
shall not be unreasonably withheld; and

               (iv) any such loss, liability or expense to be indemnified by the
Trust Fund must constitute an "unanticipated expense" of the Trust Fund within
the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii).


                                     -100-

<PAGE>

     The provisions of this Section 8.06 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.

          (b) The Trustee shall be entitled to all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
this Agreement (including fees and expenses of its counsel and all persons not
regularly in its employment), except any such expenses, disbursements and
advances that either (i) arise from its negligence, bad faith or willful
misconduct or (ii) do not constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-1(b)(3)(ii).

          (c) The Trustee's right to indemnification and reimbursement shall be
subject to a cap of $300,000 in the aggregate in any calendar year, excluding
(i) any Servicing Transfer Costs and (ii) any costs, damages or expenses
incurred by the Trustee in connection with any "high cost" home loans or any
predatory or abusive lending laws, which amounts shall in no case be subject to
any such limitation; provided, however, that such cap shall apply only if NIM
Notes have been issued and shall cease to apply after the date on which any NIM
Notes are paid in full and all amounts which the NIMs Insurer is entitled to be
paid or reimbursed shall have been paid or reimbursed. Any amounts not in excess
of this cap may be withdrawn by the Trustee from the Certificate Account at any
time

     SECTION 8.07. Eligibility Requirements for 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 that would
not cause any of the Rating Agencies to reduce their respective ratings of any
Class of Certificates below the ratings issued on the Closing Date (or having
provided such security from time to time as is sufficient to avoid such
reduction) and reasonably acceptable to the NIMs Insurer. 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 8.07 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 the
provisions of this Section 8.07, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.08 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor and the NIMs Insurer and their respective
Affiliates; provided, however, that such corporation cannot be an Affiliate of
the Servicer other than the Trustee in its role as successor to the Servicer.

     SECTION 8.08. Resignation and Removal of Trustee.

     The Trustee may at any time resign and be discharged from the trusts hereby
created by (1) giving written notice of resignation to the Depositor, the
Servicer and the NIMs Insurer by mailing notice of resignation by first class
mail, postage prepaid, to the Certificateholders at their addresses appearing on
the Certificate Register and each Rating Agency, not less than 60 days before
the date specified in such notice when, subject to Section 8.09, such
resignation is to take effect, and (2) acceptance of appointment by a successor
trustee acceptable to the NIMs Insurer in accordance with Section 8.09 and
meeting the qualifications set forth in Section 8.07. If no successor trustee
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.


                                     -101-

<PAGE>

     If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor or the NIMs Insurer, (ii) 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
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor or the NIMs
Insurer may remove the Trustee and the Depositor with the consent of the NIMS
insurer shall promptly appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which shall be delivered to the Servicer and one copy of which shall be
delivered to the successor trustee.

     The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates, with the consent of the NIMs Insurer, or the NIMs Insurer upon
failure of the Trustee to perform its obligations hereunder may at any time
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized (or by the NIMs Insurer), one complete
set of which instruments 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. Notice of any removal of the Trustee shall be given to
the NIMs Insurer and each Rating Agency by the successor trustee.

     Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.08 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.09 hereof.

     SECTION 8.09. Successor Trustee.

     Any successor trustee appointed as provided in Section 8.08 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
an instrument accepting such appointment hereunder and thereupon the resignation
or removal of the predecessor trustee, the NIMs Insurer and the Servicer 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.

     No successor trustee shall accept appointment as provided in this Section
8.09 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.07 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.

     Upon acceptance of appointment by a successor trustee as provided in this
Section 8.09, 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 ten 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 8.10. Merger or Consolidation of 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 all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper


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<PAGE>

or further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding (except for the execution of an assumption agreement
where such succession is not effected by operation of law).

     SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.

     Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the 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 and the NIMs Insurer to act as co-trustee or co-trustees
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the Trust
Fund or any part thereof, whichever is applicable, and, subject to the other
provisions of this Section 8.11, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable. Any
such co-trustee or separate trustee shall be subject to the written approval of
the Servicer and the NIMs Insurer. The Trustee shall not be liable for the
actions of any co-trustee; provided the appointment of a co-trustee shall not
relieve the Trustee of its obligations hereunder. If the Servicer and the NIMs
Insurer 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 8.07 and
no notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.09.

     Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

               (i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee except for the obligation of the Trustee under this
Agreement to advance funds on behalf of the 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 Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Trustee;

               (ii) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and

               (iii) The Trustee, with the consent of the NIMs Insurer, may at
any time accept the resignation of or remove any separate trustee or co-trustee.

     Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article 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


                                     -103-

<PAGE>

of, or affording protection to, the Trustee. Every such instrument shall be
filed with the Trustee and a copy thereof given to the Servicer, the NIMs
Insurer and the Depositor.

     Any separate trustee or co-trustee may, at any time, constitute the Trustee
its agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

     SECTION 8.12. Tax Matters.

          (a) It is intended that each of the REMICs provided for herein shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such REMIC to qualify as, a "real estate mortgage investment conduit"
as defined in and in accordance with the REMIC Provisions. It is also intended
that each of the grantor trusts provided for in Section 2.07 hereof shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such grantor trust to qualify as, a grantor trust under the
provisions of Subpart E, Part I of Subchapter J of the Code. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent (and
the Trustee is hereby appointed to act as agent) on behalf of each of the REMICs
provided for herein and that in such capacity it shall: (a) prepare and file, or
cause to be prepared and filed, 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 or cause to be prepared and
filed with the Internal Revenue Service and applicable state or local tax
authorities income tax or information returns for each taxable year with respect
to each of the REMICs and grantor trusts provided for herein, containing such
information and at the times and in the manner as may be required by the Code or
state or local tax laws, regulations, or rules, and furnish or cause to be
furnished to Certificateholders the schedules, statements or information at such
times and in such manner as may be required thereby; (b) within thirty days of
the Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Forms 8811 or as otherwise may be required by the Code, the name,
title, address, and telephone number of the person that the holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code for each of
the REMICs provided for herein; (c) make or cause to be made elections, on
behalf of each of the REMICs provided for herein to be treated as a REMIC on the
federal tax return of such REMICs for their first taxable years (and, if
necessary, under applicable state law); (d) prepare and forward, or cause to be
prepared and forwarded, to the Certificateholders and to the Internal Revenue
Service and, if necessary, state tax authorities, all information returns and
reports as and when required to be provided to them in accordance with the REMIC
Provisions or other applicable law, including without limitation, the
calculation of any original issue discount using the Prepayment Assumption; (e)
provide information necessary for the computation of tax imposed on the transfer
of a Class R Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a Person that is not a
Permitted Transferee, or a pass through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable
for such tax); (f) to the extent that they are under its control conduct the
affairs of each of the REMICs and grantor trusts provided for herein at all
times that any Certificates are outstanding so as to maintain the status of each
of the REMICs provided for herein as a REMIC under the REMIC Provisions and the
status of each of the grantor trusts provided for herein as a grantor trust
under Subpart E, Part I of Subchapter J of the Code; (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 of the REMICs provided for herein or
result in the imposition of tax upon any such REMIC; (h) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the grantor


                                     -104-

<PAGE>

trust status under Subpart E, Part I of Subchapter J of the Code of any of the
grantor trusts provided for herein or result in the imposition of tax upon any
such grantor trust; (i) pay, from the sources specified in the last paragraph of
this Section 8.12, the amount of any federal, state and local taxes, including
prohibited transaction taxes as described below, imposed on each of the REMICs
provided for herein prior to the termination of the Trust Fund when and as the
same shall be due and payable (but such obligation shall not prevent the Trustee
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); (j) sign or
cause to be signed federal, state or local income tax or information returns;
(k) maintain records relating to each of the REMICs provided for herein,
including but not limited to the income, expenses, assets and liabilities of
each of the REMICs and grantor trusts provided for herein, and the fair market
value and adjusted basis of the Trust Fund property determined at such intervals
as may be required by the Code, as may be necessary to prepare the foregoing
returns, schedules, statements or information, in each instance, to the extent
provided by the Servicer; and (l) as and when necessary and appropriate,
represent each of the REMICs provided for herein in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any of the REMICs provided for herein, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of any of the REMICs provided for herein, and otherwise act on behalf
of each of the REMICs provided for herein in relation to any tax matter
involving any of such REMICs or any controversy involving the Trust Fund.

     In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within 10
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, without limitation, the price,
yield, prepayment assumption and projected cash flows of the Certificates and
the Mortgage Loans. Thereafter, the Depositor shall provide to the Trustee
promptly upon written request therefor, any such additional information or data
that the Trustee may, from time to time, request in order to enable the Trustee
to perform its duties as set forth herein. The Depositor hereby agrees to
indemnify 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.

     In the event that any tax is imposed on "prohibited transactions" of any of
the REMICs provided for herein as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of any of such REMICs as defined in
Section 860G(c) of the Code, on any contribution to the Trust Fund after the
Startup Day pursuant to Section 860G(d) of the Code, or any other tax is
imposed, if not paid as otherwise provided for herein, such tax shall be paid by
(i) the Trustee, if any such other tax arises out of or results from a breach by
the Trustee of any of its obligations under this Agreement or as a result of the
location of the Trustee, (ii) any party hereto (other than the Trustee) to the
extent any such other tax arises out of or results from a breach by such other
party of any of its obligations under this Agreement or as a result of the
location of such other party or (iii) in all other cases, or in the event that
any liable party here fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid first with amounts (other than amounts
received by the Trust Fund pursuant to the Cap Contracts) otherwise to be
distributed to the Class R Certificateholders (pro rata) pursuant to Section
4.04, and second with amounts (other than amounts received by the Trust Fund
pursuant to the Cap Contracts) otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class C
Certificates (pro rata), second to the Class B-2 Certificates (pro rata), third
to the Class B-1 Certificates (pro rata), fourth to the Class M-2 Certificates
(pro rata), fifth, to the Class M-1 Certificates (pro rata), and sixth to the
Class A Certificates (pro rata). Notwithstanding anything to the contrary
contained herein, to the extent that such tax is payable by the Class R
Certificate, the Trustee is hereby authorized pursuant to such


                                     -105-

<PAGE>

instruction to retain on any Distribution Date, from the Holders of the Class R
Certificate (and, if necessary, from the Holders of all other Certificates in
the priority specified in the preceding sentence), funds otherwise distributable
to such Holders in an amount sufficient to pay such tax. The Trustee agrees to
promptly notify in writing the party liable for any such tax of the amount
thereof and the due date for the payment thereof.

          (b) Each of the Depositor and the Trustee agrees not to knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of a tax upon any of the REMICs provided for herein.

                                   ARTICLE IX

                                   TERMINATION

     SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
          Loans.

          (a) 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) an Optional Termination and
(b) the later of (i) the maturity or other liquidation of the last Mortgage Loan
remaining in the Trust Fund (or any Advance with respect thereto) and the
disposition of all REO Property and (ii) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor of
the descendants of Joseph P. Kennedy, the late Ambassador of the United States
to the Court of St. James's, living on the date hereof and (ii) the Latest
Possible Maturity Date.

          (b) On or before the Determination Date following the Initial Optional
Termination Date, the Trustee shall attempt to terminate the Trust Fund by
conducting an auction of all of the Mortgage Loans and REO Properties via a
solicitation of bids from at least three (3) bidders, each of which shall be a
nationally recognized participant in mortgage finance (the "Auction"). The
Depositor and the Trustee agree to work in good faith to develop bid procedures
in advance of the Initial Optional Termination Date to govern the operation of
the Auction. The Trustee shall be entitled to retain an investment banking firm
and/or other agents in connection with the Auction, the cost of which shall be
included in the Optional Termination Price (unless an Optional Termination does
not occur in which case such costs shall be an expense of the Trust Fund). The
Trustee shall accept the highest bid received at the Auction; provided that the
amount of such bid equals or exceeds the Optional Termination Price. The Trustee
shall determine the Optional Termination Price based upon information provided
by (i) the Servicer with respect to the amounts described in clauses (A) and (B)
of the definition of "Optional Termination Price" (other than Trustee expenses)
and (ii) the Depositor with respect to the information described in clause (C)
of the definition of "Optional Termination Price." The Trustee may conclusively
rely upon the information provided to it in accordance with the immediately
preceding sentence and shall not have any liability for the failure of any party
to provide such information.

     If an Optional Termination does not occur as a result of the Auction's
failure to achieve the Optional Termination Price, the NIMs Insurer (or the
Servicer, if there is not a NIMs Insurer at such time) may, on any Distribution
Date following such Auction, at its option, terminate the Trust Fund by
purchasing all of the Mortgage Loans and REO Properties at a price equal to the
Optional Termination Price. In the event that there is a NIMs Insurer at the
time of the Auction, the Auction fails to achieve the Optional Termination Price
and the NIMs Insurer does not exercise its option to terminate the Trust Fund on
the first Distribution Date on which it is able to exercise such option, the
Servicer may, at such time, at


                                     -106-

<PAGE>

its option, terminate the Trust Fund by purchasing all of the Mortgage Loans and
REO Properties at a price equal to the Optional Termination Price. In connection
with such termination, the Optional Termination Price shall be delivered to the
Trustee no later than the Business Day immediately preceding the related
Distribution Date. Notwithstanding anything to the contrary herein, the Optional
Termination Amount paid to the Trustee by the winning bidder at the Auction or
by the NIMs Insurer or the Servicer shall be deposited by the Trustee directly
into the Certificate Account immediately upon receipt. Upon any termination as a
result of an Auction, the Trustee shall, out of the Optional Termination Amount
deposited into the Certificate Account, (x) retain for its own account, its
costs and expenses necessary to conduct the Auction, any unpaid Trustee Fees and
any other unreimbursed amounts owing to it (without regard to the limitation
contained in Section 8.06(c)) and (y) pay to the Servicer, the aggregate amount
of any unreimbursed out-of-pocket costs and expenses owed to the Servicer and
any unpaid or unreimbursed Servicing Fees, Advances and Servicing Advances.

          (c) Notwithstanding anything to the contrary in clause (b) above, in
the event that the Trustee receives the written opinion of a nationally
recognized participant in mortgage finance acceptable to the Seller that the
Mortgage Loans and REO Properties to be included in the Auction will not be
saleable at a price sufficient to achieve the Optional Termination Price, the
Trustee need not conduct the Auction. In such event, the NIMs Insurer, if any,
and the Servicer in the event the NIMs Insurer declines to exercise its option,
shall have the option to purchase the Mortgage Loans and REO Properties at the
Optional Termination Price as of the Initial Optional Termination Date.

     SECTION 9.02. Final Distribution on the Certificates.

     If on any Determination Date, (i) the Trustee 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 Trustee shall send a final
distribution notice promptly to each Certificateholder and the NIMs Insurer or
(ii) the Trustee determines that a Class of Certificates shall be retired after
a final distribution on such Class, the Trustee shall notify the
Certificateholders within seven (7) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the Certificates at the office of the
Trustee.

     Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed no later than the last calendar day of
the month immediately preceding the month of such final distribution (or with
respect to an Auction, mailed no later than one Business Day following
completion of such Auction). Any such notice shall specify (a) the Distribution
Date upon which final distribution on the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated, (b)
the location of the office or agency at which such presentation and surrender
must be made, and (c) 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 to the NIMs Insurer and each Rating Agency at
the time such notice is given to Certificateholders.

     In the event such notice is given, the Servicer shall cause all funds in
the Collection Account to be deposited in the Certificate 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 Trustee or the NIMs
Insurer, as applicable, the Mortgage Files for the Mortgage Loans.


                                     -107-

<PAGE>

     Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.

     In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the 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 that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholders of such
funds and assets, the Trustee shall have no further duties or obligations with
respect thereto.

     SECTION 9.03. Additional Termination Requirements.

          (a) In the event the Trustee, the NIMs Insurer or the Servicer
completes an Optional Termination 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 Trustee, the NIMs Insurer or the Servicer, as applicable to the effect
that the failure of the Trust Fund to comply with the requirements of this
Section 9.03 will not (i) result in the imposition of taxes on "prohibited
transactions" of any of the REMICs provided for herein as defined in Section
860F of the Code, or (ii) cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that any Certificates are outstanding:

               (i) The Depositor shall establish a 90-day liquidation period and
notify the Trustee thereof, which shall in turn specify the first day of such
period in a statement attached to the final tax returns of each of the REMICs
provided for herein pursuant to Treasury Regulation Section 1.860F-1. The
Depositor shall satisfy all the requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder, as evidenced by an
Opinion of Counsel obtained at the expense of the Trustee or the NIMs Insurer,
as applicable;

               (ii) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Depositor as agent
of the Trustee shall sell all of the assets of the Trust Fund for cash; and

               (iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited, to the Class R Certificateholders all cash on hand (other than cash
retained to meet outstanding claims known to the Trustee), and the Trust Fund
shall terminate at that time, whereupon the Trustee shall have no further duties
or obligations with respect to sums distributed or credited to the Class R
Certificateholders.

          (b) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Depositor to specify the 90-day liquidation period for the
Trust Fund, which authorization shall be binding upon all successor
Certificateholders.


                                     -108-

<PAGE>

          (c) Upon the written request of the Depositor, the Trustee as agent
for each REMIC hereby agrees to adopt and sign such a plan of complete
liquidation as provided to it by the Depositor. The Trustee's obligation to
adopt and sign such plan of complete liquidation is subject to the Trustee's
receipt of the Opinion of Counsel referred to in Section 9.03(a)(i). In
addition, the Trustee shall take such other action in connection therewith as
may be reasonably requested by the Depositor.

          (d) Notwithstanding any other terms of this Agreement, prior to any
termination of the Trust Fund, the Servicer may prepare a reconciliation of all
Advances and Servicing Advances made by it for which it has not been reimbursed
and a reasonable estimate of all additional Servicing Advances and other costs
for which it would be entitled to be reimbursed if the Trust Fund were not being
terminated, including without limitation, any Servicing Advances and other costs
arising under Section 6.03 (Limitation on Liability of the Depositor, the
Servicer and Others), and the Servicer may recover these Advances, Servicing
Advances and estimated Servicing Advances and other costs from the Collection
Account (to the extent that such recovery of Servicing Advances, estimated
Servicing Advances and other costs constitutes "unanticipated expenses" within
the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).

          (e) Notwithstanding any other terms of this Agreement, unless the
Servicer previously has notified the Trustee that it has entered into a
servicing agreement for the servicing after the termination date of the Trust
Fund assets, at least 20 days prior to any termination of the Trust Fund, the
Trustee or the Depositor shall notify the Servicer in writing to transfer the
assets of the Trust Fund as of the termination date to the person specified in
the notice, or if such person is not then known, to continue servicing the
assets until the date that is 20 days after the termination date and on the
termination date, the Trustee or the Depositor shall notify the Servicer of the
person to whom the assets should be transferred on that date. In the latter
event the Servicer shall be entitled to recover its servicing fee and any
advances made for the interim servicing period from the collections on the
assets which have been purchased from the Trust and the new owner of the assets,
and the agreements for the new owner to obtain ownership of the assets of the
Trust Fund shall so provide.

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

     SECTION 10.01. Amendment.

     This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, with the consent of the NIMs Insurer and without the
consent of any of the Certificateholders to,

               (i) to cure any ambiguity or correct any mistake,

               (ii) to correct, modify or supplement any provision herein which
may be inconsistent with any other provision herein,

               (iii) to add any other provisions with respect to matters or
questions arising under this Agreement, or

               (iv) to modify, alter, amend, add to or rescind any of the terms
or provisions contained in this Agreement, provided, however, that, in the case
of clauses (iii) and (iv), such amendment will not, as evidenced by an Opinion
of Counsel addressed to the Trustee to such effect, adversely affect in any
material respect the interests of any Holder; provided, further, however, that
such amendment will be deemed to not adversely affect in any material respect
the interest of any Holder if the


                                     -109-

<PAGE>

Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment will not result in a reduction or withdrawal of its
rating of any Class of 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.

     Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the qualification of any of the REMICs provided for herein as REMICs under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund or any of the REMICs provided for herein pursuant to the Code that would be
a claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee and the NIMs Insurer shall have been
provided an Opinion of Counsel addressed to the Trustee, which opinion shall be
an expense of the party requesting such amendment but in any case shall not be
an expense of the Trustee, to the effect that such action is necessary or
appropriate to maintain such qualification or to avoid or minimize the risk of
the imposition of such a tax.

     This Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee and the Holders of the Certificates affected thereby
evidencing not less than 66 2/3% of the Voting Rights, with the consent of the
NIMs Insurer, 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 66 2/3% or more of the Voting Rights of such Class 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 addressed to the Trustee, which opinion shall be
an expense of the party requesting such amendment but in any case shall not be
an expense of the Trustee, to the effect that such amendment is permitted
hereunder and will not cause the imposition of any tax on the Trust Fund, any of
the REMICs provided for herein or the Certificateholders or cause any of the
REMICs provided for herein to fail to qualify as a REMIC at any time that any
Certificates are outstanding. A copy of such Opinion of Counsel shall be
provided to the NIMs Insurer.

     Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee or upon the written request of
the Trustee to the Servicer, the Servicer shall furnish written notification of
the substance of such amendment to each Certificateholder, the NIMs Insurer and
each Rating Agency.

     It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.


                                     -110-

<PAGE>

     Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer 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.

     The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.

     SECTION 10.02. Counterparts.

     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 WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.

     SECTION 10.04. Intention of Parties.

     It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in 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 conveyance 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 that constitute the Trust Fund, whether now owned
or hereafter acquired.

     The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. 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.


                                      -111-

<PAGE>

          (a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency and the NIMs Insurer with respect to each of the following
of which a Responsible Officer of the Trustee has actual knowledge:

               (i) Any material change or amendment to this Agreement;

               (ii) The occurrence of any Event of Default that has not been
cured;

               (iii) The resignation or termination of the Trustee or the
Servicer and the appointment of any successor;

               (iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02 or 2.03;

               (v) The final payment to Certificateholders; and

               (vi) Any change in the location of the Certificate Account.

          (b) The Trustee shall promptly furnish or make available to each
Rating Agency copies of the following:

               (i) Each report to Certificateholders described in Section 4.05;

               (ii) Each annual statement as to compliance described in Section
3.17; and

               (iii) Each annual independent public accountants' servicing
report described in Section 3.18.

All directions, demands 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, Merrill Lynch Mortgage Investors, Inc. 250 Vesey Street, 4 World
Financial Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed
Finance; (b) in the case of the Rating Agencies, (i) Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., 55 Water Street, New
York, New York 10041; (ii) Moody's Investors Service, Inc., 99 Church Street,
4th Floor, New York, New York 10007; and (iii) Fitch, Inc., One State Street
Plaza, New York, New York 10041; (c) in the case of the Servicer, Wilshire
Credit Corporation, 14523 S.W. Millikan Way, Suite 200, Beaverton, Oregon 97005;
Attention: Jay Memmott (d) in the case of the Trustee, Wells Fargo Bank, N.A.,
P.O. Box 98, Columbia, Maryland 21046, Attention: Client Manager -- MLMI Series
2005-SD1, with a copy to Wells Fargo Bank, N.A. 9062 Old Annapolis Road,
Columbia, Maryland 21045, Attention: Client Manager -- MLMI Series 2005-SD1; (e)
in the case of the NIMs Insurer, an address to be specified; and in the case of
any of the foregoing persons, such other addresses as may hereafter be furnished
by any such persons to the other parties to this 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.


                                     -112-

<PAGE>

     SECTION 10.07. Assignment; Advance Facility.

     Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor;
provided, however, the Servicer is hereby authorized to enter into an Advance
Facility under which (l) the Servicer sells, assigns or pledges to an Advancing
Person the Servicer's rights under this Agreement to be reimbursed for any
Advances or Servicing Advances and/or (2) an Advancing Person agrees to fund
some or all Advances or Servicing Advances required to be made by the Servicer
pursuant to this Agreement. No consent of the Trustee, Certificateholders, NIMs
Insurer or any other 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 Advances and/or Servicing Advances on
the Servicer's behalf, the Servicer shall remain obligated pursuant to this
Agreement to make 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 shall consist solely of amounts in respect of
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 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 Advances and/or Servicing Advances, and/or whose
obligations hereunder are limited to the funding of 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 such
reimbursement amounts distributed with respect to each Mortgage Loan be
allocated to outstanding unreimbursed 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 such reimbursement amount distributed to such Advancing Person
or Advance Facility trustee on each Distribution Date, to enable the Advancing
Person or Advance Facility trustee to make the FIFO allocation of each such
reimbursement amount with respect to each Mortgage Loan. The Servicer shall
remain entitled to be reimbursed by the Advancing Person or Advance Facility
trustee for all Advances and Servicing Advances funded by the Servicer to the
extent the related rights to be reimbursed therefor have not been sold, assigned
or pledged to an Advancing Person.

     Any amendment to this Section 10.07 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 10.07, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee and the Servicer, without the consent of any Certificateholder or the
NIMs Insurer notwithstanding anything to the contrary in this Agreement, upon
receipt by the Trustee of an Opinion of Counsel that such amendment has no
material adverse effect on the Certificateholders or written confirmation from
the Rating Agencies that such amendment will not adversely affect the ratings on
the Certificates. Prior to entering into an Advance Facility, the applicable
Servicer shall notify the lender under such facility in writing that: (a) the
Advances financed by and/or pledged to the lender are


                                     -113-

<PAGE>

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
Advances only to the extent provided herein, and the Trustee and the Trust Fund
are 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;
and (c) the Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between the Servicer and the lender.

     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 Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.

     No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members 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 hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to the Trustee 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 and/or the NIMs
Insurer, or to obtain or seek to obtain priority over or preference to any other
such Holder and/or the NIMs Insurer 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 NIMs Insurer, the Depositor 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 NIMs Insurer, the Depositor or the
Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees, agents, counsel and independent
public accountants (and by this provision the Servicer hereby authorizes such
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as


                                     -114-

<PAGE>

often as may be reasonably requested. Any out-of-pocket expense incident to the
exercise by the NIMs Insurer, Depositor or the Trustee of any right under this
Section 10.09 shall be borne by the party requesting such inspection; all other
such expenses 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. Third Party Rights.

     The NIMs Insurer shall be deemed a third-party beneficiary of this
Agreement to the same extent as if it were a party hereto, and shall have the
right to enforce the provisions of this Agreement.

     SECTION 10.12. Additional Rights of the NIMs Insurer.

          (a) Each party to this Agreement, any agent thereof and any successor
thereto shall furnish to the NIMs Insurer a copy of any notice, direction,
demand, opinion, schedule, list, certificate, report, statement, filing,
information, data or other communication provided by it or on its behalf to any
other Person pursuant to this Agreement at the same time, in the same form and
in the same manner as such communication is so provided and shall address or
cause such communication to be addressed to the NIMs Insurer in addition to any
other addressee thereof. The Servicer shall cause the NIMs Insurer to be an
addressee of any report furnished pursuant to this Agreement. With respect to
the Trustee, such obligation shall be satisfied with the provision of access to
the NIMs Insurer to the Trustee's website.

          (b) Wherever in this Agreement there shall be a requirement that there
be no downgrade, reduction, withdrawal or qualification of or other effect on
the rating of any Class of Certificates by any Rating Agency as of any date,
there also shall be deemed to be a requirement that there be no such effect on
any class of notes issued pursuant to the Indenture and guaranteed by the NIMs
Insurer as of such date. In addition, unless there exists a continuance of any
failure by the NIMs Insurer to make a required payment under the policy insuring
the NIM Notes (such event, a "NIMs Insurer Default"), wherever in this Agreement
there shall be a requirement that any Person or any communication, object or
other matter be acceptable or satisfactory to or otherwise receive the consent
or other approval of any other Person (whether as a condition to the eligibility
of such Person to act in any capacity, as a condition to any circumstance or
state of affairs related to such matter, or otherwise), there also shall be
deemed to be a requirement that such Person or matter be approved in writing by
the NIMs Insurer, which approval shall not be unreasonably withheld or delayed.


                                     -115-

<PAGE>

     IN WITNESS WHEREOF, the Depositor, the Trustee 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.

                                        MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                        as Depositor


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


                                        WELLS FARGO BANK, N.A., as Trustee


                                        By:
                                            ------------------------------------
                                        Name: Sandra Whalen
                                        Title: Vice President


                                        WILSHIRE CREDIT CORPORATION, as Servicer


                                        By:
                                            ------------------------------------
                                        Name: Heidi Peterson
                                        Title: Vice President

<PAGE>

                                    EXHIBIT A

                              FORMS OF CERTIFICATES

                             [INTENTIONALLY OMITTED]


                                       A-1

<PAGE>

                                    EXHIBIT B

                             MORTGAGE LOAN SCHEDULE

                             [Intentionally Omitted]


                                       B-1

<PAGE>

                                    EXHIBIT C

                                    RESERVED


                                       C-1

<PAGE>

                                    EXHIBIT D

                          FORM OF TRUSTEE CERTIFICATION

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Wilshire Credit Corporation
14523 S.W. Millikan Way,
Suite 200
Beaverton, Oregon 97005

Re:  Pooling and Servicing Agreement dated as of September 1, 2005 among Merrill
     Lynch Mortgage Investors, Inc., as depositor, Wells Fargo Bank, N.A., as
     trustee and Wilshire Credit Corporation, as servicer, relating to Merrill
     Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates,
     Series 2005-SD1

Ladies and Gentlemen:

     In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:

     (i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;

     (ii) In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing Date, it
has received evidence of such recording; and

     (iii) Such documents have been reviewed by it and appear regular on their
face and relate to such Mortgage Loan.

     The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond confirming (i) that each of the Mortgage Loan
Number, the name of the Mortgagor, the street address (excluding zip code), the
Initial Mortgage Rate, the original maturity date, the original principal
balance, and the first payment due date of the Mortgage Loan conform to the
related information listed in the Mortgage Loan Schedule, (ii) with respect to
each Adjustable Rate Mortgage Loan, that each of the related Periodic Rate Cap,
the Gross Margin and the Lifetime Rate Cap conform to the related information
listed in the Mortgage Loan Schedule and (iii) the existence in each Mortgage
File of each of the documents listed in subparagraphs (i)(A) through (F),
inclusive, or (ii)(A) through (K), inclusive, as applicable, of Section 2.01 in
the Agreement. The Trustee makes no representations or warranties as to the
validity, legality, recordability, sufficiency, enforceability or genuineness of
any of the documents


                                       D-1

<PAGE>

contained in each Mortgage Loan or the collectibility, insurability,
effectiveness or suitability of any such Mortgage Loan.

     Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                        WELLS FARGO BANK, N.A., as Trustee


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


                                       D-2

<PAGE>

                                   EXHIBIT E-1

                    FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
Series 2005-SD1

Ladies and Gentlemen:

     We propose to purchase Merrill Lynch Mortgage Investors Trust, Mortgage
Loan Asset-Backed Certificates, Series 2005-SD1, Class R, described in the
Prospectus Supplement, dated October 17, 2005, and Prospectus, dated August 26,
2005. Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated September 1, 2005
relating to this issuance of the Merrill Lynch Mortgage Investors Trust,
Mortgage Loan Asset-Backed Certificates, Series 2005-SD1 (the "Pooling and
Servicing Agreement").

     1. We certify that (a) we are not a disqualified organization and (b) we
are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.

     2. We certify that (a) we have historically paid our debts as they became
due, (b) we intend, and believe that we will be able, to continue to pay our
debts as they become due in the future, (c) we understand that, as beneficial
owner of the Class R Certificate, we may incur tax liabilities in excess of any
cash flows generated by the Class R Certificate, and (d) we intend to pay any
taxes associated with holding the Class R Certificate as they become due and (e)
we will not cause income from the Class R Certificate to be attributable to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of ours or another U.S. taxpayer.

     3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:(1)

          ________ The Class R Certificate will be registered in our name.

          ________ The Class R Certificate will be held in the name of our
          nominee, _________________, which is not a disqualified organization.

----------
(1)  Check appropriate box and if necessary fill in the name of the Transferee's
     nominee.


                                      E-1-1

<PAGE>

     4. We certify that we are not an employee benefit plan subject to Title I
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), a
plan subject to Section 4975 of the Code or a plan subject to federal, state,
local, non-U.S. or other law substantively similar to the foregoing provisions
of ERISA or the Code (each, a "Plan"), and are not directly or indirectly
acquiring the Class R Certificate on behalf of or with any assets of a Plan.

     5. We certify that (i) we are a U.S. person or (ii) we will hold the Class
R Certificate in connection with the conduct of a trade or business within the
United States and have furnished the transferor and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code; for this purpose the term
"U.S. person" means a citizen or resident of the United States, a corporation,
or partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any State thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to United States federal income tax regardless
of the source of its income, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more such U.S. persons have the authority to control all substantial
decisions of the trust (or, to the extent provided in applicable Treasury
regulations, certain trusts in existence on August 20, 1996 which are eligible
to elect to be treated as U.S. Persons. We agree that any breach by us of this
certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.

     6. We agree that in the event that at some future time we wish to transfer
any interest in the Class R Certificate, we will transfer such interest in the
Class R Certificate only (a) to a transferee that (i) is not a disqualified
organization and is not purchasing such interest in the Class R Certificate on
behalf of a disqualified organization, (ii) is a U.S. person or will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and will furnish us and the Trustee with a duly completed and
effective Internal Revenue Service Form W-8ECI or successor form at the time and
in the manner required by the Code and (iii) has delivered to the Trustee a
letter in the form of this letter (including the affidavit appended hereto) and,
we will provide the Trustee a written statement substantially in the form of
Exhibit E-2 to the Pooling and Servicing Agreement.

     7. We hereby designate _______________________ as our fiduciary to act as
the tax matters person for each of the REMICs provided for in the Pooling and
Servicing Agreement.

                                        Very truly yours,

                                        [PURCHASER]


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

Accepted as of __________ __, 200__


                                      E-1-2

<PAGE>

MERRILL LYNCH MORTGAGE INVESTORS, INC.


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


                                     E-1-3

<PAGE>

                                   APPENDIX A

                                        Affidavit pursuant to (i) Section
                                        860E(e)(4) of the Internal Revenue Code
                                        of 1986, as amended, and (ii) certain
                                        provisions of the Pooling and Servicing
                                        Agreement

Under penalties of perjury, the undersigned declares that the following is true:

          1.   He or she is an officer of _________________________ (the
               "Transferee"),

          2.   the Transferee's Employer Identification number is __________,

          3.   the Transferee is not a "disqualified organization" (as defined
               below), has no plan or intention of becoming a disqualified
               organization, and is not acquiring any of its interest in the
               Merrill Lynch Mortgage Investors Trust, Mortgage Loan
               Asset-Backed Certificates, Series 2005-SD1, Class R Certificate
               on behalf of a disqualified organization or any other entity,

          4.   unless Merrill Lynch Mortgage Investors, Inc.("MLMI") has
               consented to the transfer to the Transferee by executing the form
               of Consent affixed as Appendix B to the Transferee's Letter to
               which this Certificate is affixed as Appendix A, the Transferee
               is a "U.S. person" (as defined below),

          5.   that no purpose of the transfer is to avoid or impede the
               assessment or collection of tax,

          6.   the Transferee has historically paid its debts as they became
               due,

          7.   the Transferee intends, and believes that it will be able, to
               continue to pay its debts as they become due in the future,

          8.   the Transferee understands that, as beneficial owner of the Class
               R Certificate, it may incur tax liabilities in excess of any cash
               flows generated by the Class R Certificate,

          9.   the Transferee intends to pay any taxes associated with holding
               the Class R Certificate as they become due,

          10.  the Transferee consents to any amendment of the Pooling and
               Servicing Agreement that shall be deemed necessary by MLMI (upon
               advice of counsel) to constitute a reasonable arrangement to
               ensure that the Class R Certificate will not be owned directly or
               indirectly by a disqualified organization, and

          11.  IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the
               transfer is not a direct or indirect transfer of the Class R
               Certificate to a foreign permanent establishment or fixed base
               (within the meaning of an applicable income tax treaty) of the
               Transferee, and as to each of the residual interests represented
               by the Class R Certificate, the present value of


                                      E-1-4

<PAGE>

               the anticipated tax liabilities associated with holding such
               residual interest does not exceed the sum of:

               A.   the present value of any consideration given to the
                    Transferee to acquire such residual interest;

               B.   the present value of the expected future distributions on
                    such residual interest; and

               C.   the present value of the anticipated tax savings associated
                    with holding such residual interest as the related REMIC
                    generates losses.

     For purposes of this declaration, (i) the Transferee is assumed to pay tax
     at a rate equal to the highest rate of tax specified in Section 11(b)(1) of
     the Code, but the tax rate specified in Section 55(b)(1)(B) of the Code may
     be used in lieu of the highest rate specified in Section 11(b)(1) of the
     Code if the Transferee has been subject to the alternative minimum tax
     under Section 55 of the Code in the preceding two years and will compute
     its taxable income in the current taxable year using the alternative
     minimum tax rate, and (ii) present values are computed using a discount
     rate equal to the Federal short-term rate prescribed by Section 1274(d) of
     the Code for the month of the transfer and the compounding period used by
     the Transferee;]

[(11) (A) at the time of the transfer, and at the close of each of the
     Transferee's two fiscal years preceding the Transferee's fiscal year of
     transfer, the Transferee's gross assets for financial reporting purposes
     exceed $100 million and its net assets for financial reporting purposes
     exceed $10 million; and

     (B)  the Transferee is an eligible corporation as defined in Treasury
          regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that
          any subsequent transfer of the Class R Certificate will be to another
          eligible corporation in a transaction that satisfies Treasury
          regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
          1.860E-1(c)(4)(iii) and 1.860E-1(c)(5) and such transfer will not be a
          direct or indirect transfer to a foreign permanent establishment
          (within the meaning of an applicable income tax treaty) of a domestic
          corporation.

For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]

(12) The Transferee will not cause income from the Class R 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.


                                     E-1-5

<PAGE>

For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions
of such trust, (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons).

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


By:
    ---------------------------------

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

     Address of Investor for receipt of distribution:

     Address of Investor for receipt of tax information:

     (Corporate Seal)

     Attest:

    ---------------------------------
                                     , Secretary
    ---------------------------------


                                      E-1-6

<PAGE>

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 Investor, and acknowledged to me that he executed the same as his
free act and deed and the free act and deed of the Investor.

Subscribed and sworn before me this ____ day of ________, 200__.

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

County of
          --------------------------------------------
State of
         ---------------------------------------------

My commission expires the ________ day of ______________


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

Dated:
       ---------------------


                                      E-1-7

<PAGE>

                                   EXHIBIT E-2

                         FORM OF TRANSFEROR'S AFFIDAVIT

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
Series 2005-SD1

Re:  Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
     Certificates, Series 2005-SD1

     _______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true, and has no reason to believe that the
Transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to the
Class R Certificate referred to in the attached affidavit. In addition, the
Transferor has conducted a reasonable investigation at the time of the transfer
and found that the Transferee had historically paid its debts as they came due
and found no significant evidence to indicate that the Transferee will not
continue to pay its debts as they become due.

                                        Very truly yours,


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


                                      E-2-1

<PAGE>

                                    EXHIBIT F

                         FORM OF TRANSFEROR CERTIFICATE

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
Series 2005-SD1

RE: Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
    Certificates, Series 2005-SD1

Ladies and Gentlemen:

     In connection with our disposition of the Class [____] Certificate, 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 and (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 that would result in, a violation of Section 5 of the Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated as of September 1,
2005, among Merrill Lynch Mortgage Investors, Inc., as depositor, Wells Fargo
Bank, N.A., as trustee and Wilshire Credit Corporation, as servicer.

                                        Very truly yours,

                                        ------------------------------------
                                        Name of Transferor


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


                                       F-1

<PAGE>

                                    EXHIBIT G

                            FORM OF INVESTMENT LETTER
                              (ACCREDITED INVESTOR)

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
Series 2005-SD1

Re: Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
    Certificates, Series 2005-SD1

Ladies and Gentlemen:

     ______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Merrill Lynch Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2005-SD1, Class [____] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement, dated as of September 1,
2005 (the "Pooling and Servicing Agreement"), among Merrill Lynch Mortgage
Investors, Inc., as depositor (the "Depositor"), Wells Fargo Bank, N.A. as
trustee (the "Trustee") and Wilshire Credit Corporation, as servicer (the
"Servicer"). [THE PURCHASER INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN
THE NAME OF ____________________, AS NOMINEE FOR _________________.] All terms
used and not otherwise defined herein shall have the meanings set forth in the
Pooling and Servicing Agreement.

     For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

     1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.

     2. The Certificates (other than the Class R Certificate) will bear a legend
to the following effect:

     THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
     AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE
     "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT,
     DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR OFFERED FOR
     SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO REGISTRATION UNDER THE ACT,
     THE 1940 ACT AND ANY APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER
     ALSO COMPLIES WITH THE OTHER PROVISIONS OF SECTION 5.02 OF THE POOLING AND
     SERVICING AGREEMENT. NO


                                       G-1

<PAGE>

     TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
     RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE SERVICER (A) AN
     INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS
     FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.

     3. The ERISA Restricted Certificates (other than the Class R Certificates)
will bear a legend to the following effect:

     NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE HAS
     RECEIVED (A) A REPRESENTATION THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
     BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY
     ACT OF 1974, AS AMENDED ("ERISA"), A PLAN SUBJECT TO SECTION 4975 OF THE
     INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR A PLAN SUBJECT TO
     STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE
     FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW"), AND IS NOT
     DIRECTLY OR INDIRECTLY ACQUIRING THIS CERTIFICATE BY, ON BEHALF OF, OR WITH
     ANY ASSETS OF ANY SUCH PLAN, (B) IF THE CERTIFICATE HAS BEEN THE SUBJECT OF
     AN ERISA-QUALIFYING UNDERWRITING, A REPRESENTATION THAT SUCH TRANSFEREE IS
     AN INSURANCE COMPANY THAT IS ACQUIRING THE CERTIFICATE WITH ASSETS OF AN
     "INSURANCE COMPANY GENERAL ACCOUNT" AS DEFINED IN SECTION V(E) OF
     PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60 AND THE ACQUISITION
     AND HOLDING OF THE CERTIFICATE ARE COVERED AND EXEMPT UNDER SECTIONS I AND
     III OF PTCE 95-60, OR (C) SOLELY IN THE CASE OF A DEFINITIVE CERTIFICATE,
     AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE, AND UPON WHICH THE
     TRUSTEE SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT THE ACQUISITION AND
     HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE WILL NOT
     CONSTITUTE OR RESULT IN A NONEXEMPT PROHIBITED TRANSACTION UNDER TITLE I OF
     ERISA OR SECTION 4975 OF THE CODE OR A VIOLATION OF SIMILAR LAW AND WILL
     NOT SUBJECT THE TRUSTEE, THE NIMS INSURER, THE SERVICER OR THE DEPOSITOR TO
     ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE
     POOLING AND SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN
     EXPENSE OF THE TRUSTEE, THE NIMS INSURER, THE SERVICER OR THE DEPOSITOR. IF
     THE CERTIFICATE IS NOT A DEFINITIVE CERTIFICATE, THE TRANSFEREE IS DEEMED
     TO HAVE MADE THE REPRESENTATION IN (A) OR (B) ABOVE.

     4. The Class R Certificate will bear a legend to the following effect:

     THIS CLASS R CERTIFICATE MAY NOT BE TRANSFERRED, EXCEPT IN ACCORDANCE WITH
     SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT AND THE HOLDER OF THIS
     CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
     TRANSFER SUCH CERTIFICATE ONLY IN ACCORDANCE WITH SECTION 5.02 OF THE
     POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CERTIFICATE SHALL BE
     MADE UNLESS THE TRUSTEE SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE
     SATISFACTORY TO THE TRUSTEE (A) A TRANSFER AFFIDAVIT FROM THE PROSPECTIVE
     INVESTOR; AND (B) AN AFFIDAVIT FROM THE TRANSFEROR REGARDING THE OFFERING
     AND SALE OF THE CERTIFICATE.


                                       G-2

<PAGE>

     NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
     TRANSFEREE PROVIDES THE TRUSTEE WITH A REPRESENTATION THAT SUCH TRANSFEREE
     IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
     RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN
     SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO STATE, LOCAL,
     FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING
     PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW"), AND IS NOT DIRECTLY OR
     INDIRECTLY ACQUIRING THIS CERTIFICATE BY, ON BEHALF OF, OR WITH ANY ASSETS
     OF ANY SUCH PLAN.

     5. The Class B Certificates will bear a legend to the following effect:

     THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
     SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A
     REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE ACT, (B)
     TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
     DEFINED IN RULE 144A UNDER THE ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
     FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
     THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN
     INSTITUTIONAL ACCREDITED INVESTOR AS DEFINED IN RULE 501(A)(1), (2), (3) OR
     (7) OF REGULATION D, OR (D) OUTSIDE THE UNITED STATES TO A PERSON WHO IS
     NOT A U.S. PERSON (AS DEFINED BY REGULATION S OF THE ACT ("REGULATION S"))
     IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S, AND IN EACH
     CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES
     AND SUBJECT TO THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
     TRANSFER TO REQUIRE THE DELIVERY OF A CERTIFICATE OF TRANSFER IN THE FORM
     APPEARING IN THE POOLING AND SERVICING AGREEMENT.

     6. The Purchaser is acquiring the Transferred Certificates for its own
Paccount [FOR INVESTMENT ONLY]* and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.

     7. The Purchaser (a) is a substantial, sophisticated institutional investor
having such knowledge and experience in financial and business matters, and in
particular in such matters related to securities similar to the Certificates,
such that it is capable of evaluating the merits and risks of investment in the
Certificates, (b) is able to bear the economic risks of such an investment and
(c) is an "accredited investor" within the meaning of Rule 501(a) promulgated
pursuant to the Securities Act.

     8. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition

----------
*    Not required of a broker/dealer purchaser.


                                       G-3

<PAGE>

or other transfer of any Certificate, any interest in any Certificate or any
other similar security from any person in any manner, (c) otherwise approach or
negotiate with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) make any general
solicitation by means of general advertising or in any other manner, or (e) take
any other action, that would constitute a distribution of any Certificate under
the Securities Act or the Investment Company Act of 1940, as amended (the "1940
Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Securities Act or any state securities law, or that would
require registration or qualification pursuant thereto. Neither the Purchaser
nor anyone acting on its behalf has offered the Certificates for sale or made
any general solicitation by means of general advertising or in any other manner
with respect to the Certificates. The Purchaser will not sell or otherwise
transfer any of the Certificates, except in compliance with the provisions of
the Pooling and Servicing Agreement.

     9. The Purchaser of an ERISA Restricted Certificate (other than the Class R
Certificate) (A) is not an employee benefit plan subject to Title I of ERISA, a
plan subject to Section 4975 of the Code, a plan subject to any state, local,
federal, non-U.S. or other law substantively similar to the foregoing provisions
of ERISA or the Code ("Similar Law") and is not directly or indirectly acquiring
such Certificates by, on behalf of, or with any assets of any such plan, or (B)
if the Certificate has been the subject of an ERISA-Qualifying Underwriting, is
an insurance company that is acquiring the Certificate with assets of an
"insurance company general account," as defined in Section V(e) of Prohibited
Transaction Class Exemption ("PTCE") 95-60, and the acquisition and holding of
the Certificate are covered and exempt under Sections I and III of PTCE 95-60,
or (C) solely in the event the Certificate is a Definitive Certificate, herewith
delivers an Opinion of Counsel satisfactory to the Trustee, and upon which the
Trustee shall be entitled to rely, to the effect that the acquisition and
holding of the Certificate will not constitute or result in a nonexempt
prohibited transaction under Title I of ERISA or Section 4975 of the Code, or a
violation of Similar Law, and will not subject the Trustee, the NIMs Insurer,
the Servicer or the Depositor to any obligation in addition to those expressly
undertaken in the Pooling and Servicing Agreement, which Opinion of Counsel
shall not be an expense of the Trustee, the NIMs Insurer, the Servicer or the
Depositor.

     10. The Purchaser of a Class R Certificate is not an employee benefit plan
subject to Title I of ERISA, a plan subject to Section 4975 of the Code, a plan
subject to any state, local, federal, non-U.S. or other law substantively
similar to the foregoing provisions of ERISA or the Code ("Similar Law"), or a
Person directly or indirectly acquiring such Certificate by, on behalf of, or
with any assets of any such plan.

     11. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit H to the Pooling and Servicing Agreement.

     12. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.

                                        Very truly yours,

                                        [PURCHASER]


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


                                      G-4

<PAGE>

                                    EXHIBIT H

                       FORM OF RULE 144A INVESTMENT LETTER
                         (QUALIFIED INSTITUTIONAL BUYER)

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
Series 2005-SD1

Re:  Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
     Certificates, Series 2005-SD1

Ladies and Gentlemen:

     ______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Merrill Lynch Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2005-SD1, Class [____] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement, dated as of September 1,
2005 (the "Pooling and Servicing Agreement"), among Merrill Lynch Mortgage
Investors, Inc., as depositor (the "Depositor"), Wells Fargo Bank, N.A. as
trustee (the "Trustee") and Wilshire Credit Corporation, as servicer (the
"Servicer"). [THE PURCHASER INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN
THE NAME OF ____________________, AS NOMINEE FOR _________________.] All terms
used and not otherwise defined herein shall have the meanings set forth in the
Pooling and Servicing Agreement.

     For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

     In connection with our acquisition of the above Transferred 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 Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Transferred Certificates, (d)(A) solely with respect to
ERISA Restricted Certificates, we are not an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a plan subject to Section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code"), a plan subject to any state, local, federal, non-U.S.
or other law substantively similar to the foregoing provisions of ERISA or the
Code ("Similar Law"), or Persons directly or indirectly acting on behalf of or
using any assets of any such plan, or (B) solely with respect to ERISA
Restricted Certificates (other than the Class R Certificates), if the
Certificate has been the subject of an ERISA-Qualifying Underwriting, we are an
insurance company that is acquiring the Certificate with assets of an "insurance
company general account," as defined in Section V(e) of Prohibited Transaction
Class Exemption ("PTCE") 95-60, and the acquisition and holding of the
Certificate are covered and exempt under Sections I and III of PTCE 95-60, or
(C) solely in the event the Certificate is an ERISA Restricted Certificate
(other than a Class R Certificate) and also a Definitive


                                       H-1

<PAGE>

Certificate, we will herewith deliver an Opinion of Counsel satisfactory to the
Trustee, and upon which the Trustee shall be entitled to rely, to the effect
that the acquisition and holding of the Certificate will not constitute or
result in a nonexempt prohibited transaction under Title I of ERISA or Section
4975 of the Code, or a violation of Similar Law, and will not subject the
Trustee, the NIMs Insurer, the Servicer or the Depositor to any obligation in
addition to those expressly undertaken in the Pooling and Servicing Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the NIMs
Insurer, the Servicer or the Depositor, (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 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, (f) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
one of the forms of certification to that effect attached hereto as Annex 1 or
Annex 2. We are aware that the sale of the Transferred Certificates to us is
being made in reliance on Rule 144A. We are acquiring the Transferred
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 by us, based upon certifications of such
purchaser or information we have in our possession, 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.

     We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.

                                        Very truly yours,

                                        [PURCHASER]


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


                                       H-2

<PAGE>

                                                                         ANNEX 1

            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 the 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.

<TABLE>
<S>                  <C>
          __________ 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 Federal, 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 such institution 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, as
                     amended.
</TABLE>

----------
*    Buyer must own and/or invest on a discretionary basis at least $100,000,000
     in securities unless Buyer is a dealer, and, in that case, Buyer must own
     and/or invest on a discretionary basis at least $10,000,000 in securities.


                                      H-3

<PAGE>

<TABLE>
<S>                  <C>
          __________ 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 the 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 subject
                     to Title I of the Employee Retirement Income Security Act
                     of 1974, as amended.

          __________ Investment Advisor. The Buyer is an investment advisor
                     registered under the Investment Advisors Act of 1940, as
                     amended.

          __________ 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, as amended.

          __________ Business Development Company. Buyer is a business
                     development company as defined in Section 202(a)(22) of the
                     Investment Advisors Act of 1940, as amended.
</TABLE>

     3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (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.


                                      H-4

<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 as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.


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

                                        Date:
                                              ----------------------------------


                                      H-5

<PAGE>

                                                                         ANNEX 2

            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 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.

<TABLE>
<S>                  <C>
          __________ 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).
</TABLE>

     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, (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.


                                      H-6

<PAGE>

     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.


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


                                        IF AN ADVISER:

                                        ----------------------------------------
                                        Print Name of Buyer

                                        Date:
                                              ----------------------------------


                                      H-7

<PAGE>

                                    EXHIBIT I

                           FORM OF REQUEST FOR RELEASE

                                     [DATE]

To:  Wells Fargo Bank, N.A.
     1015 10th Avenue Southeast
     Minneapolis, Minnesota 55414

Re:  Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
     Certificates, Series 2005-SD1

     In connection with the administration of the Mortgage Loans held by you, as
Trustee, pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt, of the Mortgage File for
the Mortgage Loan described below, for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

Reason for Requesting Documents (check one):

_______ 1. Mortgage Paid in Full

_______ 2. Foreclosure

_______ 3. Substitution

_______ 4. Other Liquidation (Repurchases, etc.)

_______ 5. Nonliquidation

_______ 6. Other Reason: _____________________

Address to which the Trustee should deliver the Mortgage File:


                                        By:
                                            ------------------------------------
                                            (authorized signer)

                                        Address:
                                                 -------------------------------

                                        Date:
                                              ----------------------------------

If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.


                                       I-1

<PAGE>

If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.

Please acknowledge the execution of the above request by your signature and date
below:

Wells Fargo Bank, N.A., as Trustee


By:
    ---------------------------------   ----------------------------------------
    Signature                           Date


Documents returned to Trustee:


By:
    ---------------------------------   ----------------------------------------
    Signature                           Date


                                       I-2

<PAGE>

                                    EXHIBIT J

                                   [RESERVED]


                                      J-1

<PAGE>

                                    EXHIBIT K

                    FORM OF OFFICER'S CERTIFICATE OF TRUSTEE

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Re:  Pooling and Servicing Agreement dated as of September 1, 2005 among Merrill
     Lynch Mortgage Investors, Inc., as depositor, Wells Fargo Bank, N.A., as
     trustee and Wilshire Credit Corporation, as servicer (the "Agreement),
     relating to, Merrill Lynch Mortgage Investors Trust, Mortgage Loan
     Asset-Backed Certificates, Series 2005-SD1

     I, [identify the certifying individual], a [title] of the Trustee hereby
certify to the Depositor, and its officers, directors and affiliates, and with
the knowledge and intent that they will rely upon this certification, that:

1.   I have reviewed the Monthly Statements delivered pursuant to the Agreement
     since the last Officer's Certificate executed pursuant to Section 3.21 of
     the Agreement [or in the case of the first certification, since the Cut-off
     Date] (the "Trustee Information").

2.   Based on my knowledge, the information in the Monthly Statement, taken as a
     whole, does not contain any untrue statement of a material fact or omit to
     state a material fact necessary to make the statements made, in light of
     the circumstances under which such statements were made, not misleading as
     of the date hereof;

3.   Based on my knowledge, the Monthly Statements required to be prepared by
     the Trustee under the Agreement has been prepared and provided in
     accordance with the Agreement; and

4.   I am responsible for reviewing the activities performed by the Trustee
     under the Agreement and the Trustee has, as of the date hereof fulfilled
     its obligations under the Agreement and there are no significant
     deficiencies relating to the Trustee's compliance with the Agreement.

Date:
      ------------------------

                                        Wells Fargo Bank, N.A.,
                                        as Trustee


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


                                       K-1

<PAGE>

                                    EXHIBIT L

                        OFFICER'S CERTIFICATE OF SERVICER

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
Series 2005-SD1

Re:  Pooling and Servicing Agreement dated as of September 1, 2005 among Merrill
     Lynch Mortgage Investors, Inc., as depositor, Wells Fargo Bank, N.A., as
     trustee and Wilshire Credit Corporation, as servicer (the "Agreement),
     relating to, Merrill Lynch Mortgage Investors Trust, Mortgage Loan
     Asset-Backed Certificates, Series 2005-SD1

     I, [identify the certifying individual], an authorized representative of
the Servicer hereby certify to the Trustee and the Depositor, and each of their
respective officers, directors and affiliates, and with the knowledge and intent
that they will rely upon this certification, that:

1.   I have reviewed the information required to be delivered to the Trustee
     pursuant to the Agreement (the "Servicing Information").

2.   Based on my knowledge, the information in the Annual Statement of
     Compliance, and all servicing reports, officer's certificates and other
     information relating to the servicing of the Mortgage Loans submitted to
     the Trustee by the Servicer taken as a whole, does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading as of the last day of the period
     covered by the Annual Statement of Compliance;

3.   Based on my knowledge, the Servicing Information required to be provided to
     the Trustee by the Servicer under the Agreement has been provided to the
     Trustee; and


                                       L-1

<PAGE>

4.   I am responsible for reviewing the activities performed by the Servicer
     under the Agreement and based upon the review required hereunder, and
     except as disclosed in the Annual Statement of Compliance, the Annual
     Independent Certified Public Accountant's Servicing Report and all
     servicing reports, officer's certificates and other information relating to
     the servicing of the Mortgage Loans submitted to the Trustee by the
     Servicer, the Servicer has, as of the last day of the period covered by the
     Annual Statement of Compliance fulfilled its obligations under this
     Agreement.

Date:
      ------------------------

                                        Wilshire Credit Corporation, as Servicer


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


                                       L-2

<PAGE>

                                    EXHIBIT M

                                   [RESERVED]


                                       M-1

<PAGE>

                                   EXHIBIT N-1

                         FORM OF CLASS A-1 CAP CONTRACT

                             [INTENTIONALLY OMITTED]


                                      N-1-1

<PAGE>

                                   EXHIBIT N-2

                  FORM OF SUBORDINATED CERTIFICATE CAP CONTRACT

                             [INTENTIONALLY OMITTED]


                                      N-2-1

<PAGE>

                                   EXHIBIT O-1

                      ONE-MONTH LIBOR CAP TABLE - CLASS A-1

<TABLE>
<CAPTION>
          BEGINNING     ENDING        NOTIONAL     LOWER COLLAR   UPPER COLLAR
PERIOD     ACCRUAL      ACCRUAL      BALANCE($)       (%) (1)          (%)
------   ----------   ----------   -------------   ------------   ------------
<S>      <C>          <C>          <C>             <C>            <C>
   1     18/10/2005   25/10/2005   58,342,000.00       9.800          9.800
   2     25/10/2005   25/11/2005   55,113,909.53       6.695          9.800
   3     25/11/2005   25/12/2005   52,300,052.61       6.931          9.800
   4     25/12/2005   25/01/2006   49,552,740.77       6.708          9.800
   5     25/01/2006   25/02/2006   46,870,357.27       6.718          9.800
   6     25/02/2006   25/03/2006   44,251,277.31       7.467          9.800
   7     25/03/2006   25/04/2006   41,694,002.59       6.733          9.800
   8     25/04/2006   25/05/2006   39,197,027.86       6.973          9.800
   9     25/05/2006   25/06/2006   36,758,874.43       6.750          9.800
  10     25/06/2006   25/07/2006   34,378,114.82       6.991          9.800
  11     25/07/2006   25/08/2006   32,053,347.09       7.123          9.800
  12     25/08/2006   25/09/2006   29,775,818.69       7.139          9.800
  13     25/09/2006   25/10/2006   27,551,111.91       7.570          9.800
  14     25/10/2006   25/11/2006   25,372,584.63       7.333          9.800
  15     25/11/2006   25/12/2006   23,244,492.94       7.598          9.800
  16     25/12/2006   25/01/2007   21,165,591.57       7.361          9.800
  17     25/01/2007   25/02/2007   19,134,663.57       7.541          9.800
  18     25/02/2007   25/03/2007   17,146,428.20       8.392          9.800
  19     25/03/2007   25/04/2007   15,290,230.86       7.633          9.800
  20     25/04/2007   25/05/2007   13,479,828.28       8.843          9.800
  21     25/05/2007   25/06/2007   11,719,402.85       8.562          9.800
  22     25/06/2007   25/07/2007   10,001,556.32       8.865          9.800
  23     25/07/2007   25/08/2007    8,325,265.90       8.750          9.800
  24     25/08/2007   25/09/2007    6,690,513.02       8.764          9.800
  25     25/09/2007   25/10/2007    5,095,313.16       9.188          9.800
  26     25/10/2007   25/11/2007    3,538,947.15       9.216          9.800
  27     25/11/2007   25/12/2007    2,021,317.57       9.543          9.800
  28     25/12/2007   25/01/2008      540,390.57       9.243          9.800
</TABLE>

(1)  With respect to any Distribution Date, if One-Month LIBOR (as determined by
     the Cap Contract Counterparty and subject to a cap equal to 9.800%) exceeds
     the Lower Collar, the Trust Fund will receive payments pursuant to the
     Class A-1 Cap Contract.


                                      O-1-1

<PAGE>

                                   EXHIBIT O-2

        ONE-MONTH LIBOR CAP TABLE - SUBORDINATED CERTIFICATE CAP CONTRACT

<TABLE>
<CAPTION>
          BEGINNING     ENDING        NOTIONAL     LOWER COLLAR   UPPER COLLAR
PERIOD     ACCRUAL      ACCRUAL      BALANCE($)       (%)(1)           (%)
------   ----------   ----------   -------------   ------------   ------------
<S>      <C>          <C>          <C>             <C>            <C>
   1     18/10/2005   25/10/2005   17,015,000.00       8.550          8.550
   2     25/10/2005   25/11/2005   17,015,000.00       5.445          8.550
   3     25/11/2005   25/12/2005   17,015,000.00       5.681          8.550
   4     25/12/2005   25/01/2006   17,015,000.00       5.458          8.550
   5     25/01/2006   25/02/2006   17,015,000.00       5.468          8.550
   6     25/02/2006   25/03/2006   17,015,000.00       6.217          8.550
   7     25/03/2006   25/04/2006   17,015,000.00       5.483          8.550
   8     25/04/2006   25/05/2006   17,015,000.00       5.723          8.550
   9     25/05/2006   25/06/2006   17,015,000.00       5.500          8.550
  10     25/06/2006   25/07/2006   17,015,000.00       5.741          8.550
  11     25/07/2006   25/08/2006   17,015,000.00       5.873          8.550
  12     25/08/2006   25/09/2006   17,015,000.00       5.889          8.550
  13     25/09/2006   25/10/2006   17,015,000.00       6.320          8.550
  14     25/10/2006   25/11/2006   17,015,000.00       6.083          8.550
  15     25/11/2006   25/12/2006   17,015,000.00       6.348          8.550
  16     25/12/2006   25/01/2007   17,015,000.00       6.111          8.550
  17     25/01/2007   25/02/2007   17,015,000.00       6.291          8.550
  18     25/02/2007   25/03/2007   17,015,000.00       7.142          8.550
  19     25/03/2007   25/04/2007   17,015,000.00       6.383          8.550
  20     25/04/2007   25/05/2007   17,015,000.00       7.593          8.550
  21     25/05/2007   25/06/2007   17,015,000.00       7.312          8.550
  22     25/06/2007   25/07/2007   17,015,000.00       7.615          8.550
  23     25/07/2007   25/08/2007   17,015,000.00       7.500          8.550
  24     25/08/2007   25/09/2007   17,015,000.00       7.514          8.550
  25     25/09/2007   25/10/2007   17,015,000.00       7.938          8.550
  26     25/10/2007   25/11/2007   17,015,000.00       7.966          8.550
  27     25/11/2007   25/12/2007   17,015,000.00       8.293          8.550
  28     25/12/2007   25/01/2008   17,015,000.00       7.993          8.550
  29     25/01/2008   25/02/2008   17,015,000.00       8.175          8.550
  30     25/02/2008   25/03/2008   17,015,000.00       8.550          8.550
  31     25/03/2008   25/04/2008   17,015,000.00       8.302          8.550
</TABLE>

(1)  With respect to any Distribution Date, if One-Month LIBOR (as determined by
     the Cap Contract Counterparty and subject to a cap equal to 8.550%) exceeds
     the Lower Collar, the Trust Fund will receive payments pursuant to the
     Subordinated Certificate Cap Contract.


                                      O-2-1

<PAGE>

                                    EXHIBIT P
                    FORM OF TRANSFEROR REPRESENTATION LETTER
               FOR TRANSFER TO REGULATION S BOOK-ENTRY CERTIFICATE
        FROM A HOLDER OF A RULE 144A BOOK-ENTRY CERTIFICATE OR DEFINITIVE
                                   CERTIFICATE

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
Series 2005-SD1

RE:  Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
     Certificates, Series 2005-SD1

Ladies and Gentlemen:

          In connection with our disposition of the Class ___ Certificates which
are held in the form of Definitive Certificates or in the form of a beneficial
interest in a Rule 144A Book-Entry Certificate and to effect the transfer
pursuant to Regulation S under the Securities Act of 1933, as amended
("Regulation S") of the above Certificates in exchange for an equivalent
beneficial interest in a Regulation S Book-Entry Certificate, we hereby certify
that such transfer has been effected in accordance with (i) the transfer
restrictions set forth in the Pooling and Servicing Agreement, dated as of
September 1, 2005, among Merrill Lynch Mortgage Investors, Inc., as Depositor,
Wells Fargo Bank, N.A., as Trustee and Wilshire Credit Corporation, as Servicer
and in the Certificates and (ii) in accordance with Regulation S, and that:

          a. the offer of the Certificates was not made to a person in the
United States;

          b. at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;

          c. no directed selling efforts have been made in contravention of the
requirements of Rule 903 or 904 of Regulation S, as applicable;

          d. the transaction is not part of a plan or scheme to evade the
registration requirements of the United States Securities Act of 1933, as
amended; and

          e. the transferee is not a U.S. Person (as defined by Regulation S).

          You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal Proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.

                                        Very truly yours,


                                       P-1

<PAGE>

                                        ----------------------------------------
                                        Print Name of Transferor


                                        By:
                                            ------------------------------------
                                            Authorized Officer


                                       P-2

<PAGE>

                                    EXHIBIT Q
                    FORM OF TRANSFEROR REPRESENTATION LETTER
               FOR TRANSFER PURSUANT TO RULE 144A FROM A HOLDER OF
         A REGULATION S BOOK-ENTRY CERTIFICATE OR DEFINITIVE CERTIFICATE

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust,
Series 2005-SD1

RE:  Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
     Certificates, Series 2005-SD1

Ladies and Gentlemen:

          In connection with our disposition of the Class __ Certificates which
are held in the form of Definitive Certificates or in the form of a beneficial
interest in a Regulation S Book-Entry Certificate and to effect the transfer
pursuant to Rule 144A under the Securities Act of 1933, as amended ("Rule 144A")
of the above Certificates in exchange for an equivalent beneficial interest in a
Rule 144A Book-Entry Certificate or a Definitive Note, we hereby certify that
such Certificates are being transferred in accordance with (i) the transfer
restrictions set forth in the Pooling and Servicing Agreement, dated as of
September 1, 2005, among Merrill Lynch Mortgage Investors, Inc., as Depositor,
Wells Fargo Bank, N.A., as Trustee and Wilshire Credit Corporation, as Servicer
and in the Certificates and (ii) Rule 144A under the Securities Act of 1933, as
amended, to a transferee that we reasonably believe is purchasing the
Certificates for its own account or an account with respect to which the
transferee exercises sole investment discretion, the transferee and any such
account is a "qualified institutional buyer" within the meaning of Rule 144A, in
a transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any other
jurisdiction.

          You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal Proceedings or official inquiry with respect to the
matters covered hereby.

                                        Very truly yours,

                                        ----------------------------------------
                                        Print Name of Transferor


                                        By:
                                            ------------------------------------
                                            Authorized Officer


                                       Q-1