Exhibit 4.1

<PAGE>

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
                                    Depositor


                             CITICORP MORTGAGE, INC.
                     Master Servicer and Trust Administrator


                         U.S. BANK NATIONAL ASSOCIATION
                                     Trustee

                                       and

                      U.S. BANK TRUST NATIONAL ASSOCIATION
                                   Co-Trustee



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

                         POOLING AND SERVICING AGREEMENT
                            Dated as of March 1, 2000

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



                       Mortgage Pass-Through Certificates

                                  Series 2000-1

<PAGE>


<TABLE>
<CAPTION>
                                             TABLE OF CONTENTS
                                             -----------------

SECTION                                                                                               PAGE
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<S>                                                                                                   <C>
                                                 ARTICLE I

                                                DEFINITIONS

1.01.     Defined Terms..................................................................................3
          Administration Fee.............................................................................3
          Administration Fee Rate........................................................................3
          Advancing Person...............................................................................3
          Affiliate......................................................................................3
          Agreement......................................................................................3
          Allocated Realized Loss Amount.................................................................4
          Assignment.....................................................................................4
          Available Distribution Amount..................................................................4
          Bankruptcy Amount..............................................................................4
          Bankruptcy Code................................................................................5
          Bankruptcy Loss................................................................................5
          Book-Entry Certificate.........................................................................5
          Book-Entry Custodian...........................................................................5
          Business Day...................................................................................5
          Cash-out Refinancing...........................................................................5
          Certificate....................................................................................5
          Certificate Factor.............................................................................5
          Certificateholder or Holder....................................................................5
          Certificate Owner..............................................................................6
          Certificate Principal Balance..................................................................6
          Certificate Register...........................................................................6
          Class   .......................................................................................6
          Class A Certificate............................................................................6
          Class A-1 Certificate..........................................................................6
          Class A-2 Certificate..........................................................................6
          Class B Percentage.............................................................................7
          Class B-1 Certificate..........................................................................7
          Class B-1 Percentage...........................................................................7
          Class B-2 Certificate..........................................................................7
          Class B-2 Percentage...........................................................................7
          Class B-3 Certificate..........................................................................7
          Class B-3 Percentage...........................................................................7
          Class B-4 Certificate..........................................................................8
          Class B-4 Percentage...........................................................................8
          Class B-5 Certificate..........................................................................8
          Class B-5 Percentage...........................................................................8
          Class B-6 Certificate..........................................................................8


                                                     i

<PAGE>


SECTION                                                                                               PAGE
-------                                                                                               ----

          Class B-6 Percentage...........................................................................8
          Class IO Certificate...........................................................................8
          Class IO Mortgage Loan.........................................................................9
          Class PO Certificate...........................................................................9
          Class PO Mortgage Loan.........................................................................9
          Class PO Percentage............................................................................9
          Class PO Principal Distribution Amount.........................................................9
          Class R-I Certificate.........................................................................10
          Class R-II Certificate........................................................................10
          Closing Date..................................................................................10
          Co-Trustee....................................................................................10
          Code    ......................................................................................10
          Collection Account............................................................................10
          Commission....................................................................................11
          Corporate Trust Office........................................................................11
          Cut-off Date..................................................................................11
          Debt Service Reduction........................................................................11
          Deficient Valuation...........................................................................11
          Definitive Certificates.......................................................................11
          Deleted Mortgage Loan.........................................................................11
          Depositor.....................................................................................11
          Depository....................................................................................11
          Depository Institution........................................................................11
          Depository Participant........................................................................12
          Determination Date............................................................................12
          Directly Operate..............................................................................12
          Disqualified Organization.....................................................................12
          Distribution Account..........................................................................12
          Distribution Date.............................................................................13
          DOL     ......................................................................................13
          DOL Regulations...............................................................................13
          Due Date......................................................................................13
          Due Period....................................................................................13
          Eligible Account..............................................................................13
          ERISA   ......................................................................................13
          Estate in Real Property.......................................................................13
          Excess Bankruptcy Loss........................................................................13
          Excess Fraud Loss.............................................................................13
          Excess Loss...................................................................................13
          Excess Special Hazard Loss....................................................................13
          Extraordinary Loss............................................................................13
          Extraordinary Trust Fund Expenses.............................................................14
          Fannie Mae....................................................................................14
          FDIC    ......................................................................................14


                                                    ii

<PAGE>


SECTION                                                                                               PAGE
-------                                                                                               ----

          Final Recovery Determination..................................................................14
          Fraud Loss....................................................................................14
          Fraud Loss Amount.............................................................................15
          Freddie Mac...................................................................................15
          Independent...................................................................................15
          Independent Contractor........................................................................15
          Insurance Proceeds............................................................................15
          Interest Accrual Period.......................................................................16
          Interest Determination Date...................................................................16
          Interest Distribution Amount..................................................................16
          Late Collections..............................................................................16
          Liquidation Event.............................................................................16
          Liquidation Proceeds..........................................................................17
          Loan-to-Value Ratio...........................................................................17
          London Business Day...........................................................................17
          Master Servicer...............................................................................17
          Master Servicer Event of Default..............................................................17
          Master Servicer Remittance Date...............................................................17
          Monthly Payment...............................................................................17
          Mortgage......................................................................................17
          Mortgage File.................................................................................17
          Mortgage Loan.................................................................................18
          Mortgage Loan Purchase Agreement..............................................................18
          Mortgage Loan Remittance Rate.................................................................18
          Mortgage Loan Schedule........................................................................18
          Mortgage Note.................................................................................19
          Mortgage Pool.................................................................................19
          Mortgage Rate.................................................................................19
          Mortgaged Property............................................................................20
          Mortgagor.....................................................................................20
          Net Mortgage Rate.............................................................................20
          New Lease.....................................................................................20
          Non-Class PO Percentage.......................................................................20
          Nonrecoverable P&I Advance....................................................................20
          Non-United States Person......................................................................20
          Notional Amount...............................................................................20
          Officers' Certificate.........................................................................20
          One-Month LIBOR...............................................................................20
          Opinion of Counsel............................................................................21
          Original Mortgage Loan........................................................................21
          Overcollateralization.........................................................................21
          Ownership Interest............................................................................21
          Pass-Through Rate.............................................................................21
          Percentage Interest...........................................................................22


                                                    iii

<PAGE>


SECTION                                                                                               PAGE
-------                                                                                               ----

          Permitted Investments.........................................................................22
          Permitted Transferee..........................................................................23
          Person  ......................................................................................23
          P&I Advance...................................................................................23
          Plan    ......................................................................................23
          Prepayment Assumption.........................................................................23
          Prepayment Interest Shortfall.................................................................23
          Prepayment Period.............................................................................23
          Primary Mortgage Insurance Policy.............................................................24
          Prime Rate....................................................................................24
          Principal Prepayment..........................................................................24
          Purchase Price................................................................................24
          Qualified Insurer.............................................................................24
          Qualified Substitute Mortgage Loan............................................................25
          Rate/Term Refinancing.........................................................................25
          Rating Agency.................................................................................25
          Realized Loss.................................................................................25
          Record Date...................................................................................26
          Reference Banks...............................................................................26
          Refinanced Mortgage Loan......................................................................27
          Regular Certificate...........................................................................27
          Regular Interest..............................................................................27
          Relief Act....................................................................................27
          Relief Act Interest Shortfall.................................................................27
          REMIC   ......................................................................................27
          REMIC I ......................................................................................27
          REMIC I Regular Interest......................................................................27
          REMIC I Regular Interest LT1..................................................................28
          REMIC I Regular Interest LT2..................................................................28
          REMIC I Regular Interest LTIO.................................................................28
          REMIC I Regular Interest LTPO.................................................................28
          REMIC I Remittance Rate.......................................................................28
          REMIC II......................................................................................28
          REMIC II Certificate..........................................................................28
          REMIC Provisions..............................................................................28
          Remittance Report.............................................................................28
          Rents from Real Property......................................................................29
          REO Account...................................................................................29
          REO Disposition...............................................................................29
          REO Imputed Interest..........................................................................29
          REO Property..................................................................................29
          Request for Release...........................................................................29
          Reserve Interest Rate.........................................................................29
          Residential Dwelling..........................................................................29


                                                    iv

<PAGE>


SECTION                                                                                               PAGE
-------                                                                                               ----

          Residual Certificate..........................................................................29
          Residual Interest.............................................................................29
          Responsible Officer...........................................................................29
          Scheduled Principal Balance...................................................................30
          Seller  ......................................................................................30
          Senior Certificate............................................................................30
          Senior Percentage.............................................................................30
          Senior Prepayment Percentage..................................................................31
          Senior Principal Distribution Amount..........................................................31
          Servicing Account.............................................................................33
          Servicing Advances............................................................................33
          Servicing Fee.................................................................................33
          Servicing Fee Rate............................................................................33
          Servicing Officer.............................................................................33
          Single Certificate............................................................................33
          Special Hazard Amount.........................................................................34
          Special Hazard Loss...........................................................................34
          S&P     ......................................................................................34
          Startup Day...................................................................................34
          Stated Principal Balance......................................................................34
          Stayed Funds..................................................................................35
          Stripped Interest Rate........................................................................35
          Subordinate Certificate.......................................................................35
          Subordinate Percentage........................................................................35
          Subordinate Prepayment Percentage.............................................................35
          Subordinate Principal Distribution Amount.....................................................35
          Sub-Servicer..................................................................................37
          Sub-Servicing Account.........................................................................37
          Sub-Servicing Agreement.......................................................................37
          Tax Returns...................................................................................37
          Telerate Page 3750............................................................................37
          Termination Price.............................................................................37
          Trailing Recoveries...........................................................................37
          Transfer......................................................................................37
          Transferee....................................................................................38
          Transferor....................................................................................38
          Trust Administrator...........................................................................38
          Trust Fund....................................................................................38
          Trustee ......................................................................................38
          Uncertificated Balance........................................................................38
          Uncertificated Interest.......................................................................38
          Uncertificated LTPO Percentage................................................................38
          PO Principal Distribution Amount..............................................................38
          Uncertificated Notional Amount................................................................40


                                                     v

<PAGE>


SECTION                                                                                               PAGE
-------                                                                                               ----

          Uncertificated Principal Distribution Amount..................................................40
          Uninsured Cause...............................................................................40
          United States Person..........................................................................40
          Value   ......................................................................................40
          Voting Rights.................................................................................40
          Weighted Average Stripped Interest Rate.......................................................41
1.02.     Allocation of Certain Interest Shortfalls.....................................................41

                                                ARTICLE II

                                       CONVEYANCE OF MORTGAGE LOANS;
                                     ORIGINAL ISSUANCE OF CERTIFICATES

2.01.     Conveyance of Mortgage Loans..................................................................42
2.02.     Acceptance of REMIC I by the Trustee..........................................................45
2.03.     Repurchase or Substitution of Mortgage Loans by the Seller or the Depositor...................46
2.04.     Representations and Warranties of the Depositor...............................................49
2.05.     Representations, Warranties and Covenants of the Master Servicer..............................51
2.06.     Issuance of Class R-I Certificates............................................................53
2.07.     Conveyance of REMIC I Regular Interests; Acceptance of REMIC II
          by the Trustee................................................................................53
2.08.     Issuance of REMIC II Certificates.............................................................53

                                                ARTICLE III

                                       ADMINISTRATION AND SERVICING
                                           OF THE MORTGAGE LOANS

3.01.     Master Servicer to Act as Master Servicer.....................................................54
3.02.     Sub-Servicing Agreements Between the Master Servicer and Sub-Servicers........................55
3.03.     Successor Sub-Servicers.......................................................................56
3.04.     Liability of the Master Servicer..............................................................57
3.05.     No Contractual Relationship Between Sub-Servicers
          and Trustee or Certificateholders.............................................................57
3.06.     Assumption or Termination of Sub-Servicing Agreements by Trustee..............................57
3.07.     Collection of Certain Mortgage Loan Payments..................................................58
3.08.     Sub-Servicing Accounts........................................................................58
3.09.     Collection of Taxes, Assessments and Similar Items; Servicing Accounts........................59
3.10.     Collection Account and Distribution Account...................................................60
3.11.     Withdrawals from the Collection Account and Distribution Account..............................62
3.12.     Investment of Funds in the Collection Account and the Distribution Account....................64
3.13.     Maintenance of the Primary Mortgage Insurance Policies;
          Collections Thereunder........................................................................66
3.14.     Maintenance of Hazard Insurance and Errors and Omissions


                                                    vi

<PAGE>


SECTION                                                                                               PAGE
-------                                                                                               ----

          and Fidelity Coverage.........................................................................67
3.15.     Enforcement of Due-On-Sale Clauses; Assumption Agreements.....................................68
3.16.     Realization Upon Defaulted Mortgage Loans.....................................................69
3.17.     Trustee to Cooperate; Release of Mortgage Files...............................................71
3.18.     Servicing Compensation........................................................................72
3.19.     Reports to the Trustee; Collection Account Statements.........................................73
3.20.     Statement as to Compliance....................................................................73
3.21.     Independent Public Accountants' Servicing Report..............................................73
3.22.     Access to Certain Documentation...............................................................74
3.23.     Title, Management and Disposition of REO Property.............................................74
3.24.     Obligations of the Master Servicer in Respect
          of Prepayment Interest Shortfalls.............................................................78
3.25.     Obligations of the Master Servicer in Respect of Monthly Payments.............................78
3.26.     Advance Facility..............................................................................78

                                                ARTICLE IV

                                      PAYMENTS TO CERTIFICATEHOLDERS

4.01.     Distributions.................................................................................80
4.02.     Statements to Certificateholders..............................................................84
4.03.     Remittance Reports; P&I Advances..............................................................87
4.04.     Allocation of Extraordinary Trust Fund Expenses and Realized Losses...........................89
4.05.     Compliance with Withholding Requirements......................................................90
4.06.     Distributions on the REMIC I Regular Interests................................................90
4.07.     Commission Reporting..........................................................................91

                                                 ARTICLE V

                                             THE CERTIFICATES

5.01.     The Certificates..............................................................................92
5.02.     Registration of Transfer and Exchange of Certificates.........................................94
5.03.     Mutilated, Destroyed, Lost or Stolen Certificates.............................................98
5.04.     Persons Deemed Owners.........................................................................99
5.05.     Certain Available Information.................................................................99

                                                ARTICLE VI

                                   THE DEPOSITOR AND THE MASTER SERVICER

6.01.     Liability of the Depositor and the Master Servicer...........................................100
6.02.     Merger or Consolidation of the Depositor or the Master Servicer..............................100
6.03.     Limitation on Liability of the Depositor, the Master Servicer and Others.....................100


                                                    vii

<PAGE>


SECTION                                                                                               PAGE
-------                                                                                               ----

6.04.     Limitation on Resignation of the Master Servicer.............................................101
6.05.     Rights of the Depositor in Respect of the Master Servicer....................................102

                                                ARTICLE VII

                                                  DEFAULT

7.01.     Master Servicer Events of Default............................................................103
7.02.     Trustee to Act; Appointment of Successor.....................................................105
7.03.     Notification to Certificateholders...........................................................107
7.04.     Waiver of Master Servicer Events of Default..................................................107

                                               ARTICLE VIII

                            CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

8.01.     Duties of Trustee and Trust Administrator....................................................108
8.02.     Certain Matters Affecting the Trustee and the Trust Administrator............................109
8.03.     Neither Trustee nor Trust Administrator Liable for
          Certificates or Mortgage Loans...............................................................110
8.04.     Trustee and Trust Administrator May Own Certificates.........................................111
8.05.     Trustee's and Trust Administrator's Fees and Expenses........................................111
8.06.     Eligibility Requirements for Trustee and Trust Administrator.................................112
8.07.     Resignation and Removal of the Trustee and the Trust Administrator...........................112
8.08.     Successor Trustee or Trust Administrator.....................................................114
8.09.     Merger or Consolidation of Trustee or Trust Administrator....................................114
8.10.     Appointment of Co-Trustee or Separate Trustee................................................114
8.11.     [intentionally omitted]......................................................................116
8.12.     Appointment of Office or Agency..............................................................116
8.13.     Representations and Warranties...............................................................116
8.14.     Rights and Indemnification of Co-Trustee.....................................................117

                                                ARTICLE IX

                                                TERMINATION

9.01      Termination Upon Repurchase or Liquidation
          of the REMIC I Regular Interests.............................................................118
9.02      Additional Termination Requirements..........................................................120



                                                   viii

<PAGE>


SECTION                                                                                               PAGE
-------                                                                                               ----

                                                 ARTICLE X

                                             REMIC PROVISIONS

10.01.    REMIC Administration.........................................................................121
10.02.    Prohibited Transactions and Activities.......................................................124
10.03.    Master Servicer, Trustee and Trust Administrator Indemnification.............................124

                                                ARTICLE XI

                                         MISCELLANEOUS PROVISIONS

11.01.    Amendment....................................................................................125
11.02.    Recordation of Agreement; Counterparts.......................................................126
11.03.    Limitation on Rights of Certificateholders...................................................126
11.04.    Governing Law................................................................................127
11.05.    Notices......................................................................................127
11.06.    Severability of Provisions...................................................................128
11.07.    Notice to Rating Agency......................................................................128
11.08.    Article and Section References...............................................................129
11.09.    Grant of Security Interest...................................................................129
</TABLE>



                                       ix

<PAGE>



Exhibits
--------

Exhibit A-1   Form of Class A-1 Certificate
Exhibit A-2   Form of Class A-2 Certificate
Exhibit A-3   Form of Class IO Certificate
Exhibit A-4   Form of Class PO Certificate
Exhibit A-5   Form of Class B-1 Certificate
Exhibit A-6   Form of Class B-2 Certificate
Exhibit A-7   Form of Class B-3 Certificate
Exhibit A-8   Form of Class B-4 Certificate
Exhibit A-9   Form of Class B-5 Certificate
Exhibit A-10  Form of Class B-6 Certificate
Exhibit A-11  Form of Class R-I Certificate
Exhibit A-12  Form of Class R-II Certificate
Exhibit B     [Reserved]
Exhibit C-1   Form of Trustee's Initial Certification
Exhibit C-2   Form of Trustee's Final Certification
Exhibit D     Form of Mortgage Loan Purchase Agreement
Exhibit E-1   Request for Release
Exhibit E-2   Request for Release Mortgage Loans paid in full
Exhibit F-1   Form of Transferor Representation Letter and Form of Transferee
              Representation Letter in Connection with Transfer of Class B-4
              Certificates, Class B-5 Certificates, Class B-6 Certificates and
              Residual Certificates Pursuant to Rule 144A Under the 1933 Act
Exhibit F-2   Form of Transfer Affidavit and Agreement and Form of Transferor
              Affidavit in Connection with Transfer of Residual Certificates
Exhibit G     Form of Certification with respect to ERISA and the Code
Exhibit H     Form of Omnibus Assignment
Exhibit I     Form of Report Pursuant to Section 4.07
Schedule 1    Mortgage Loan Schedule
Schedule      2 Mortgage Loan Schedule with respect to Mortgage
              Loans with Loan-to-Value Ratios in excess of 80% that
              have Primary Mortgage Insurance



                                        x

<PAGE>



                   This Pooling and Servicing Agreement, is dated and effective
as of March 1, 2000, among SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., as
Depositor, CITICORP MORTGAGE, INC., as Master Servicer and Trust Administrator,
U.S. BANK TRUST NATIONAL ASSOCIATION, as Co-Trustee and U.S. BANK NATIONAL
ASSOCIATION, as Trustee.

                             PRELIMINARY STATEMENT:

                   The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest in
REMIC I created hereunder.

                   As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement as a REMIC (as defined herein) for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC I". The Class R-I Certificates will be the sole class of
"residual interests" in REMIC I for purposes of the REMIC Provisions (as defined
herein). The following table irrevocably sets forth the designation, the REMIC I
Remittance Rate, the initial Uncertificated Balance and, solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC I Regular Interests (as defined herein).
None of the REMIC I Regular Interests will be certificated.


<TABLE>
<CAPTION>
                                                                                        Latest Possible
Designation            REMIC I Remittance Rate    Initial Uncertificated Balance       Maturity Date(1)
-----------            -----------------------    ------------------------------       ----------------
<S>                    <C>                        <C>                                  <C>
   LT1                    9.00% per annum                 $1,648,708.35                 March 25, 2022

   LT2                    9.00% per annum                $77,657,158.00                 March 25, 2022

  LTIO                      Variable(2)                  $82,393,708.61(3)              March 25, 2022

  LTPO                         0.00%(4)                   $3,087,842.26                 March 25, 2022
</TABLE>
-----------------------------

(1)   Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
      regulations, the Distribution Date immediately following the maturity date
      for the Mortgage Loan with the latest maturity date has been designated as
      the "latest possible maturity date" for each REMIC I Regular Interest.

(2)   Calculated in accordance with the definition of "REMIC I Remittance Rate"
      herein.

(3)   Initial Uncertificated Notional Amount. As provided herein, REMIC I
      Regular Interest LTIO is entitled solely to distributions of interest
      accrued on the Uncertificated Notional Amount of such REMIC I Regular
      Interest LTIO.

(4)   REMIC I Regular Interest LTPO is not entitled to distributions of
      interest.


                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II". The Class R-II Certificates will be the sole class of
"residual interests" in REMIC II for purposes of the REMIC Provisions under
federal income tax law. The following table irrevocably sets forth the
designation, the Pass-Through Rate, the initial Certificate Principal Balance
and, solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the Classes
of Certificates.

<PAGE>

<TABLE>
<CAPTION>
                                                   Initial Aggregate Certificate        Latest Possible
Designation                Pass-Through Rate             Principal Balance             Maturity Date(1)
-----------                -----------------             -----------------             ----------------
<S>                        <C>                     <C>                                 <C>
Class A-1                     Variable(2)                 $77,657,158.00                March 25, 2022

Class A-2                     Variable(2)                 $77,657,158.00(3)             March 25, 2022

Class PO                        0.00%(4)                   $3,087,842.26                March 25, 2022

Class IO                      Variable(2)                 $82,393,708.61(3)             March 25, 2022

Class B-1                   9.00% per annum                  $618,000.00                March 25, 2022

Class B-2                   9.00% per annum                  $206,000.00                March 25, 2022

Class B-3                   9.00% per annum                  $206,000.00                March 25, 2022

Class B-4                   9.00% per annum                  $330,000.00                March 25, 2022

Class B-5                   9.00% per annum                  $123,000.00                March 25, 2022

Class B-6                   9.00% per annum                  $165,708.35                March 25, 2022
</TABLE>
-----------------------------

(1)   Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
      regulations, the Distribution Date immediately following the maturity date
      for the Mortgage Loan with the latest maturity date has been designated as
      the "latest possible maturity date" for each Class of Certificates.

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

(3)   Initial Notional Amount. As provided herein, the Class A-2 Certificates
      and the Class IO Certificates entitle the Holders thereof solely to
      distributions of interest accrued on the related Notional Amount of such
      Certificates.

(4)   The Class PO Certificates are not entitled to distributions of interest.





                                       -2-



<PAGE>



                  As of the Cut-off Date, the Original Mortgage Loans had an
aggregate Scheduled Principal Balance equal to $82,393,708.61.

                  As of the Closing Date, the REMIC I Regular Interests have an
aggregate Uncertificated Balance equal to $82,393,708.61.

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


                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01. Defined Terms.

                  Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months.

                  "Administration Fee": The amount payable to the Trustee on
each Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal one twelfth of the product of (i) the Administration Fee
Rate, multiplied by (ii) the aggregate Scheduled Principal Balance of the
Mortgage Loans and any REO Properties as of the second preceding Due Date (or,
in the case of the initial Distribution Date, as of the Cut-off Date). The fees
payable to each of the Trust Administrator and the Co-Trustee for all services
rendered by it in the exercise and performance of any of its respective powers
and duties hereunder will be paid by the Trustee out of the Administration Fee.

                  "Administration Fee Rate": 0.03125% per annum. The portion of
the Administration Fee accruing at a rate of 0.0125% per annum is payable to the
Trust Administrator.

                  "Advancing Person": As defined in Section 3.26 hereof.

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

                  "Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.


                                       -3-



<PAGE>



                  "Allocated Realized Loss Amount": With respect to any
Distribution Date and any Class of Certificates, the sum of (i) any Realized
Losses allocated to such Class of Certificates on any Distribution Date and (ii)
the amount of any Allocated Realized Loss Amount for such Class of Certificates
remaining unpaid from the prior Distribution Date.

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

                  "Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the Collection Account and Distribution Account as of the
close of business on the related Determination Date, (b) the aggregate of any
amounts received in respect of an REO Property withdrawn from any REO Account
and deposited in the Distribution Account for such Distribution Date pursuant to
Section 3.23, (c) the aggregate of any amounts deposited in the Distribution
Account by the Master Servicer in respect of Prepayment Interest Shortfalls for
such Distribution Date pursuant to Section 3.24, (d) the aggregate of any P&I
Advances made by the Master Servicer for such Distribution Date pursuant to
Section 4.03, (e) the aggregate amount of any Trailing Recoveries received or
collected during the related Prepayment Period and (f) the aggregate of any
advances made by the Trustee for such Distribution Date pursuant to Section
7.02, reduced (to not less than zero) by (2) the sum of (x) the portion of the
amount described in clause (1)(a) above that represents (i) Monthly Payments on
the Mortgage Loans received from a Mortgagor on or prior to the Determination
Date but due during any Due Period subsequent to the related Due Period, (ii)
Principal Prepayments on the Mortgage Loans received after the related
Prepayment Period (together with any interest payments received with such
Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds, Insurance Proceeds and Trailing
Recoveries received in respect of the Mortgage Loans after the related
Prepayment Period, (iv) amounts reimbursable or payable to the Depositor, the
Master Servicer, the Trustee, the Trust Administrator, the Seller or any
Sub-Servicer pursuant to Section 3.11(a) or Section 3.12 or otherwise payable in
respect of Extraordinary Trust Fund Expenses, (v) Stayed Funds, (vi) the portion
of the Administration Fee payable to the Trustee from the Distribution Account
pursuant to Section 8.05 and the portion of the Administration Fee payable to
the Trust Administrator from the Distribution Account pursuant to Section 8.05,
if the Master Servicer is not the Trust Administrator, (vii) the portion of the
Administration Fee payable to the Trust Administrator from the Collection
Account pursuant to Section 3.11(a)(x), if the Master Servicer is the Trust
Administrator) and (viii) amounts deposited in the Collection Account or the
Distribution Account in error, and (y) amounts reimbursable to the Trustee for
an advance made pursuant to Section 7.02(b), which advance the Trustee has
determined to be nonrecoverable from the Stayed Funds in respect of which it was
made.

                  "Bankruptcy Amount": As of any date of determination, an
amount equal to the excess, if any, of (A) $100,000 over (B) the aggregate
amount of Bankruptcy Losses allocated solely to the Subordinate Certificates in
accordance with Section 4.04.


                                       -4-



<PAGE>



                  "Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.

                  "Bankruptcy Loss": With respect to any Mortgage Loan, a
Realized Loss resulting from a Deficient Valuation or Debt Service Reduction.

                  "Book-Entry Certificate": Any Certificate registered in the
name of the Depository or its nominee. Initially, the Book-Entry Certificates
will be the Class A Certificates of each Class, the Class B-1 Certificates, the
Class B-2 Certificates and the Class B-3 Certificates.

                  "Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.

                  "Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the State of California
or the State of New York, or in the city in which the Corporate Trust Office of
the Trustee is located, are authorized or obligated by law or executive order to
be closed.

                  "Cash-out Refinancing": A Refinanced Mortgage Loan the
proceeds of which were in excess of the principal balance of any existing first
mortgage on the related Mortgaged Property and related closing costs, and were
used to pay any such existing first mortgage, related closing costs and
subordinate mortgages on the related Mortgaged Property.

                  "Certificate": Any one of the Mortgage Pass-Through
Certificates, Series 2000-1, issued under this Agreement.

                  "Certificate Factor": With respect to any Class of
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance or Notional Amount of such Class of Certificates on such
Distribution Date (after giving effect to any distributions of principal and
allocations of Realized Losses and Extraordinary Trust Fund Expenses in
reduction of the Certificate Principal Balance or Notional Amount of such Class
of Certificates to be made on such Distribution Date), and the denominator of
which is the initial aggregate Certificate Principal Balance or Notional Amount
of such Class of Certificates as of the Closing Date.

                  "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Master Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee and the Trust Administrator may
conclusively rely upon a certificate of the Depositor or the Master Servicer in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository


                                       -5-



<PAGE>



and participating members thereof, except as otherwise specified herein;
provided, however, that the Trustee and the Trust Administrator shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.

                  "Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.

                  "Certificate Principal Balance": With respect to any
Certificate, other than a Class IO Certificate or a Class A-2 Certificate, as of
any date of determination, the Certificate Principal Balance of such Certificate
on the Distribution Date immediately prior to such date of determination,
reduced by the aggregate of (a) all distributions of principal made thereon on
such immediately prior Distribution Date and (b) without duplication of amounts
described in clause (a) above, reductions in the Certificate Principal Balance
thereof in connection with allocations thereto of Realized Losses on the
Mortgage Loans and Extraordinary Trust Fund Expenses on such immediately prior
Distribution Date (or, in the case of any date of determination up to and
including the initial Distribution Date, the initial Certificate Principal
Balance of such Certificate, as stated on the face thereof); provided, however,
that the Certificate Principal Balance of each Subordinate Certificate of the
Class of Subordinate Certificates outstanding with the highest numerical
designation at any given time shall not be greater than the Percentage Interest
evidenced by such Certificate multiplied by the excess, if any, of (A) the then
aggregate Stated Principal Balance of the Mortgage Loans over (B) the then
aggregate Certificate Principal Balances of all other Classes of Certificates
then outstanding. The Class IO Certificates and the Class A-2 Certificates shall
not have Certificate Principal Balances and shall not be entitled to any
distributions of principal.

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

                  "Class": Collectively, all of the Certificates bearing the
same class designation.

                  "Class A Certificate": Any Class A-1 Certificate or Class A-2
Certificate.

                  "Class A-1 Certificate": Any one of the Class A-1 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-1 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.

                  "Class A-2 Certificate": Any one of the Class A-2 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-2 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions. The Class A-2 Certificates shall not have a
Certificate Principal Balance and shall not be entitled to any distributions of
principal.


                                       -6-



<PAGE>



                  "Class B Percentage": Any one of the Class B-1 Percentage, the
Class B-2 Percentage, the Class B-3 Percentage, the Class B-4 Percentage, the
Class B-5 Percentage or the Class B-6 Percentage.

                  "Class B-1 Certificate": Any one of the Class B-1 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-5 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.

                  "Class B-1 Percentage": With respect to any Distribution Date,
a fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-1
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-1 Certificates on such date pursuant to
Section 4.01(b)(ii)(Z), and the denominator of which is the sum of (i) the
aggregate of the Non-Class PO Percentage of the Scheduled Principal Balance of
each of the Mortgage Loans, plus (ii) the aggregate of the Non-Class PO
Percentage of the Scheduled Principal Balance of each of the REO Properties, in
each case before reduction for any Realized Losses on such Distribution Date.

                  "Class B-2 Certificate": Any one of the Class B-2 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-6 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.

                  "Class B-2 Percentage": With respect to any Distribution Date,
a fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-2
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-2 Certificates on such date pursuant to
Section 4.01(b)(ii)(Z), and the denominator of which is the sum of (i) the
aggregate of the Non-Class PO Percentage of the Scheduled Principal Balance of
each of the Mortgage Loans, plus (ii) the aggregate of the Non-Class PO
Percentage of the Scheduled Principal Balance of each of the REO Properties, in
each case before reduction for any Realized Losses on such Distribution Date.

                  "Class B-3 Certificate": Any one of the Class B-3 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-7 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.

                  "Class B-3 Percentage": With respect to any Distribution Date,
a fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-3
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-3 Certificates on such date pursuant to
Section 4.01(b)(ii)(Z), and the denominator of which is the sum of (i) the
aggregate of the Non-Class PO Percentage of the Scheduled Principal Balance of
each of the Mortgage Loans, plus (ii) the aggregate of the Non-Class PO
Percentage of the Scheduled Principal Balance of each of the REO Properties, in
each case before reduction for any Realized Losses on such Distribution Date.


                                       -7-



<PAGE>



                  "Class B-4 Certificate": Any one of the Class B-4 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-8 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.

                  "Class B-4 Percentage": With respect to any Distribution Date,
a fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-4
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-4 Certificates on such date pursuant to
Section 4.01(b)(ii)(Z), and the denominator of which is the sum of (i) the
aggregate of the Non-Class PO Percentage of the Scheduled Principal Balance of
each of the Mortgage Loans, plus (ii) the aggregate of the Non-Class PO
Percentage of the Scheduled Principal Balance of each of the REO Properties, in
each case before reduction for any Realized Losses on such Distribution Date.

                  "Class B-5 Certificate": Any one of the Class B-5 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-9 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.

                  "Class B-5 Percentage": With respect to any Distribution Date,
a fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-5
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-5 Certificates on such date pursuant to
Section 4.01(b)(ii)(Z), and the denominator of which is the sum of (i) the
aggregate of the Non-Class PO Percentage of the Scheduled Principal Balance of
each of the Mortgage Loans, plus (ii) the aggregate of the Non-Class PO
Percentage of the Scheduled Principal Balance of each of the REO Properties, in
each case before reduction for any Realized Losses on such Distribution Date.

                  "Class B-6 Certificate": Any one of the Class B-6 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-10 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.

                  "Class B-6 Percentage": With respect to any Distribution Date,
a fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-6
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-6 Certificates on such date pursuant to
Section 4.01(b)(ii)(Z), and the denominator of which is the sum of (i) the
aggregate of the Non-Class PO Percentage of the Scheduled Principal Balance of
each of the Mortgage Loans, plus (ii) the aggregate of the Non-Class PO
Percentage of the Scheduled Principal Balance of each of the REO Properties, in
each case before reduction for any Realized Losses on such Distribution Date.

                  "Class IO Certificate": Any one of the Class IO Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-3 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions. The Class IO Certificates shall not have a
Certificate Principal Balance and shall not be entitled to any distributions of
principal.


                                       -8-



<PAGE>



                  "Class IO Mortgage Loan": Each Mortgage Loan with a Net
Mortgage Rate equal to or greater than 9.00% per annum.

                  "Class PO Certificate": Any one of the Class PO Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-4 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions. The Class PO Certificates shall have a
Pass-Through Rate of 0% per annum and shall not be entitled to any distributions
of interest.

                  "Class PO Mortgage Loan": Each Mortgage Loan with a Net
Mortgage Rate below 9.00% per annum.

                  "Class PO Percentage": With respect to each Class PO Mortgage
Loan, the quotient of (i) 9.00% per annum minus the related Net Mortgage Rate
divided by (ii) 9.00% per annum. With respect to each Class IO Mortgage Loan, 0%
per annum.

                  "Class PO Principal Distribution Amount": For any Distribution
Date, an amount equal to the aggregate of:

                  (a) the sum of the following:

                         (i) the related Class PO Percentage of the principal
                  portion of each Monthly Payment due during the related Due
                  Period in respect of each Class PO Mortgage Loan whether or
                  not received;

                        (ii) the related Class PO Percentage of the principal
                  portion of all Insurance Proceeds, Trailing Recoveries and
                  Liquidation Proceeds (other than amounts described in clause
                  (c) below) received in respect of each Class PO Mortgage Loan
                  during the related Prepayment Period (other than any such
                  Class PO Mortgage Loan that was purchased, sold or replaced
                  pursuant to or as contemplated by Section 2.03, Section
                  3.16(c) or Section 9.01 during the related Prepayment Period),
                  net of any portion thereof that represents a recovery of
                  principal for which an advance was made by the Master Servicer
                  pursuant to Section 4.03 in respect of a preceding
                  Distribution Date;

                       (iii) the related Class PO Percentage of the Stated
                  Principal Balance (calculated immediately prior to such
                  Distribution Date) of each Class PO Mortgage Loan that was
                  purchased, sold or replaced pursuant to or as contemplated by
                  Section 2.03, Section 3.16(c) or Section 9.01 during the
                  related Prepayment Period;

                        (iv) [reserved]; and

                         (v) in connection with the substitution of one or more
                  Qualified Substitute Mortgage Loans for one or more Deleted
                  Mortgage Loans which were Class PO Mortgage Loans pursuant to
                  Section 2.03 during the related Prepayment Period, the


                                       -9-



<PAGE>



                  excess, if any, of (A) the related Class PO Percentage of the
                  aggregate of the Stated Principal Balances (calculated as of
                  the respective dates of substitution) of such Deleted Mortgage
                  Loans, net of the aggregate of the related Class PO Percentage
                  of the principal portions of the Monthly Payments due during
                  the related Prepayment Period (to the extent received from the
                  related Mortgagor or advanced by the Master Servicer and
                  distributed pursuant to Section 4.01 on the Distribution Date
                  in the related Prepayment Period) in respect of each such
                  Deleted Mortgage Loan that was replaced prior to the
                  Distribution Date in the related Prepayment Period, over (B)
                  the related Class PO Percentage of the Stated Principal
                  Balances (calculated as of the respective dates of
                  substitution) of such Qualified Substitute Mortgage Loans;

                  (b) the related Class PO Percentage of all Principal
         Prepayments received in respect of each Class PO Mortgage Loan during
         the related Prepayment Period;

                  (c) with respect to any Class PO Mortgage Loan which was the
         subject of a Final Recovery Determination in the related Prepayment
         Period, the related Class PO Percentage of the Stated Principal Balance
         of such Mortgage Loan at the time of such Final Recovery Determination
         (net of the principal portion of any Realized Loss allocated to the
         Class PO Certificates) to the extent of the principal portion of all
         Liquidation Proceeds with respect to such Class PO Mortgage Loan; and

                  (d) in the case of any Distribution Date subsequent to the
         initial Distribution Date, an amount equal to the excess, if any, of
         the Class PO Principal Distribution Amount for the immediately
         preceding Distribution Date, over the aggregate distributions of
         principal made in respect of the Class PO Certificates on such
         immediately preceding Distribution Date pursuant to Section 4.01 to the
         extent that any such amounts are not attributable to Realized Losses
         which were allocated to the Subordinate Certificates pursuant to
         Section 4.04.

                  "Class R-I Certificate": Any one of the Class R-I Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-11 and evidencing the Residual Interest in REMIC I
for purposes of the REMIC Provisions.

                  "Class R-II Certificate": Any one of the Class R-II
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-12 and evidencing the Residual Interest
in REMIC II for purposes of the REMIC Provisions.

                  "Closing Date": March 30, 2000.

                  "Co-Trustee": U.S. Bank Trust National Association, or its
successor in interest.

                  "Code":  The Internal Revenue Code of 1986.

                  "Collection Account": The account or accounts created and
maintained by the Master Servicer pursuant to Section 3.10(a), which shall be
entitled, "Citicorp Mortgage, Inc., as Master


                                      -10-



<PAGE>



Servicer for U.S. Bank National Association, as Trustee, in trust for the
registered holders of Salomon Brothers Mortgage Securities VII, Inc., Mortgage
Pass-Through Certificates, Series 2000- 1." The Collection Account must be an
Eligible Account.

                  "Commission": The Securities and Exchange Commission.

                  "Corporate Trust Office": The principal corporate trust office
of the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 180 East Fifth Street, St.
Paul, Minnesota 55101, or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor, the Trust
Administrator and the Master Servicer.

                  "Cut-off Date": With respect to each Original Mortgage Loan,
March 1, 2000. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.

                  "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.

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

                  "Definitive Certificates":  As defined in Section 5.01(b).

                  "Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.

                  "Depositor": Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation, or its successor in interest.

                  "Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. 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 and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.

                  "Depository Institution": Any depository institution or trust
company, including the Trustee, that (a) is incorporated under the laws of the
United States of America or any State thereof,


                                      -11-



<PAGE>



(b) is subject to supervision and examination by federal or state banking
authorities and (c) has outstanding unsecured commercial paper or other
short-term unsecured debt obligations that are rated A-1 by S&P (or a comparable
rating if S&P is not the Rating Agency).

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

                  "Determination Date": With respect to each Distribution Date,
the 18th day of the calendar month in which such Distribution Date occurs or, if
such 18th day is not a Business Day, the Business Day immediately preceding such
18th day.

                  "Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by REMIC I, other than
through an Independent Contractor; provided, however, that the Trustee (or the
Master Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Master Servicer on
behalf of the Trustee) establishes rental terms, chooses tenants, enters into or
renews leases, deals with taxes and insurance, or makes decisions as to repairs
or capital expenditures with respect to such REO Property.

                  "Disqualified Organization": Any of the following: (i) the
United States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all of its activities are
subject to tax and, except for Freddie Mac, a majority of its board of directors
is not selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an "electing
large partnership" and (vi) any other Person so designated by the Trustee based
upon an Opinion of Counsel that the holding of an Ownership Interest in a
Residual Certificate by such Person may cause either REMIC I or REMIC II or any
Person having an Ownership Interest in any Class of Certificates (other than
such Person) to incur a liability for any federal tax imposed under the Code
that would not otherwise be imposed but for the Transfer of an Ownership
Interest in a Residual Certificate to such Person. The terms "United States,"
"State" and "international organization" shall have the meanings set forth in
Section 7701 of the Code or successor provisions.

                  "Distribution Account": The trust account or accounts created
and maintained by the Trustee pursuant to Section 3.10(b) which shall be
entitled "U.S. Bank National Association, as Trustee, in trust for the
registered holders of Salomon Brothers Mortgage Securities VII, Inc., Mortgage
Pass-Through Certificates, Series 2000-1." The Distribution Account must be an
Eligible Account.


                                      -12-



<PAGE>



                  "Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in April 2000.

                  "DOL": The United States Department of Labor or any successor
in interest.

                  "DOL Regulations": The regulations promulgated by the DOL at
29 C.F.R. ss.2510.3- 101.

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

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

                  "Eligible Account": Any of (i) an account or accounts
maintained with a federal or state chartered depository institution or trust
company the short-term unsecured debt obligations of which are rated A-1 by S&P
(or comparable rating S&P is not the Rating Agency) at the time any amounts are
held on deposit therein, (ii) an account or accounts the deposits in which are
fully insured by the FDIC or (iii) a trust account or accounts maintained with
the corporate trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity. Eligible Accounts
may bear interest.

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

                  "Estate in Real Property": A fee simple estate in a parcel of
land.

                  "Excess Bankruptcy Loss": Any Bankruptcy Loss, or portion
thereof, which exceeds the then applicable Bankruptcy Amount.

                  "Excess Fraud Loss": Any Fraud Loss, or portion thereof, which
exceeds the then applicable Fraud Loss Amount.

                  "Excess Loss": Any Excess Bankruptcy Loss, Excess Special
Hazard Loss, Excess Fraud Loss or Extraordinary Loss.

                  "Excess Special Hazard Loss": Any Special Hazard Loss, or
portion thereof, that exceeds the then applicable Special Hazard Amount.

                  "Extraordinary Loss": Any Realized Loss or portion thereof
caused by or resulting from:

            (i)   nuclear or chemical reaction or nuclear radiation or
                  radioactive or chemical contamination, all whether controlled
                  or uncontrolled and whether such loss be direct


                                      -13-



<PAGE>



                  or indirect, proximate or remote or be in whole or in part
                  caused by, contributed to or aggravated by a peril covered by
                  the definition of the term "Special Hazard Loss";

           (ii)   hostile or warlike action in time of peace or war, including
                  action in hindering, combating or defending against an actual,
                  impending or expected attack by any government or sovereign
                  power, DE JURE or DE FACTO, or by any authority maintaining or
                  using military, naval or air forces, or by military, naval or
                  air forces, or by an agent of any such government, power,
                  authority or forces;

          (iii)   any weapon of war employing atomic fission or radioactive
                  forces whether in time of peace or war, and

           (iv)   insurrection, rebellion, revolution, civil war, usurped power
                  or action taken by governmental authority in hindering,
                  combating or defending against such an occurrence, seizure or
                  destruction under quarantine or customs regulations,
                  confiscation by order of any government or public authority,
                  or risks of contraband or illegal transactions or trade.

              "Extraordinary Trust Fund Expenses": Any amounts reimbursable to
the Master Servicer or the Depositor pursuant to Section 6.03, any amounts
payable from the Distribution Account in respect of taxes pursuant to Section
10.01(g)(iii), any amounts reimbursable to the Trustee or the Trust
Administrator from the Trust Fund pursuant to Section 8.05 and any other costs,
expenses, liabilities and losses borne by the Trust Fund (exclusive of any cost,
expense, liability or loss that is specific to a particular Mortgage Loan or REO
Property and is taken into account in calculating a Realized Loss in respect
thereof) for which the Trust Fund has not and, in the reasonable good faith
judgment of the Trustee, shall not, obtain reimbursement or indemnification from
any other Person.

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

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

              "Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Seller, the Depositor or the Master Servicer pursuant to or as
contemplated by Section 2.03, Section 3.16(c) or Section 9.01), a determination
made by the Master Servicer that all Liquidation Proceeds have been recovered.
The Master Servicer shall maintain records of each Final Recovery Determination
made thereby.

              "Fraud Loss": Any Realized Loss or portion thereof sustained by
reason of a default arising from intentional fraud, dishonesty or
misrepresentation in connection with the related Mortgage Loan, including by
reason of the denial of coverage under any related Primary Mortgage Insurance
Policy.


                                      -14-



<PAGE>



              "Fraud Loss Amount": As of any date of determination after the
Cut-off Date, an amount equal to: (X) prior to the third anniversary of the
Cut-off Date, 1.00% of the aggregate Stated Principal Balance of the Original
Mortgage Loans as of the Cut-off Date (initially $823,937) minus the aggregate
amount of Fraud Losses allocated solely to the Subordinate Certificates in
accordance with Section 4.04 since the Cut-off Date up to such date of
determination and (Y) from the third to the fifth anniversary of the Cut-off
Date, an amount equal to (1) the lesser of (a) the Fraud Loss Amount as of the
most recent anniversary of the Cut-off Date and (b) 0.50% of the aggregate
outstanding principal balance of the Mortgage Loans as of the most recent
anniversary of the Cut-off Date minus (2) the Fraud Losses allocated solely to
the Subordinate Certificates in accordance with Section 4.04 since the most
recent anniversary of the Cut-off Date up to such date of determination.
On and after the fifth anniversary of the Cut-off Date the Fraud Loss Amount
shall be zero.

              "Freddie Mac": Freddie Mac, formally known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.

              "Independent": When used with respect to any specified Person, any
such Person who (a) is in fact independent of the Depositor, the Master Servicer
and their respective Affiliates, (b) does not have any direct financial interest
in or any material indirect financial interest in the Depositor, the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor,
the Master Servicer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor, the Master Servicer or any Affiliate thereof merely because such
Person is the beneficial owner of 1% or less of any class of securities issued
by the Depositor or the Master Servicer or any Affiliate thereof, as the case
may be.

              "Independent Contractor": Either (i) any Person (other than the
Master Servicer) that would be an "independent contractor" with respect to REMIC
I within the meaning of Section 856(d)(3) of the Code if REMIC I were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly,
35% or more of any Class of Certificates), so long as REMIC I does not receive
or derive any income from such Person and provided that the relationship between
such Person and REMIC I is at arm's length, all within the meaning of Treasury
Regulation Section 1.856-4(b)(5), or (ii) any other Person (including the Master
Servicer) if the Trustee has received an Opinion of Counsel to the effect that
the taking of any action in respect of any REO Property by such Person, subject
to any conditions therein specified, that is otherwise herein contemplated to be
taken by an Independent Contractor will not cause such REO Property to cease to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code (determined without regard to the exception applicable for purposes of
Section 860D(a) of the Code), or cause any income realized in respect of such
REO Property to fail to qualify as Rents from Real Property.


              "Insurance Proceeds": Proceeds of any Primary Mortgage Insurance
Policy, title policy, hazard policy or other insurance policy covering a
Mortgage Loan, to the extent such proceeds are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with the procedures that the Master Servicer would follow in
servicing mortgage loans

                                      -15-



<PAGE>



held for its own account, subject to the terms and conditions of the related
Mortgage Note and Mortgage.

              "Interest Accrual Period": With respect to any Distribution Date
and any Class of Certificates (other than the Class A Certificates), the
one-month period ending on the last day of the calendar month preceding the
month in which such Distribution Date occurs. With respect to any Distribution
Date and the Class A Certificates, the period commencing on the Distribution
Date of the month immediately preceding the month in which such Distribution
Date occurs (or, in the case of the first Distribution Date, commencing on March
25, 2000) and ending on the day preceding such Distribution Date.

              "Interest Determination Date": With respect to the Class A
Certificates and any Interest Accrual Period therefor (other than the initial
Interest Accrual Period), the second London Business Day preceding the
commencement of such Interest Accrual Period.

              "Interest Distribution Amount": With respect to any Class of
Certificates (other than the Class PO Certificates) for any Distribution Date,
an amount equal to one month's interest accrued during the most recently ended
Interest Accrual Period at the applicable Pass-Through Rate on the Certificate
Principal Balance or Notional Amount thereof immediately prior to such
Distribution Date. The Class PO Certificates are not entitled to distributions
in respect of interest and, accordingly, will not accrue interest. The Interest
Distribution Amount for any Class of Certificates (a) will also include, in the
case of any Distribution Date subsequent to the initial Distribution Date, the
excess, if any, of the Interest Distribution Amount in respect of such
Certificates for the immediately preceding Distribution Date, over the aggregate
distributions of interest made in respect of such Certificates pursuant to
Section 4.01(a) on such immediately preceding Distribution Date, and (b) will be
reduced, in the case of any Distribution Date, by the amount of any Prepayment
Interest Shortfalls (to the extent not covered by payments by the Master
Servicer pursuant to Section 3.24) and Relief Act Interest Shortfalls that were
allocated to such Certificates on such Distribution Date pursuant to Section
1.02. The Interest Distribution Amount for any Class of Certificates will be
based on a 360 day year consisting of twelve 30 day Interest Accrual Periods.

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

              "Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from REMIC I by reason of its being purchased, sold or replaced pursuant
to or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01. With
respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from REMIC I by reason of its being purchased pursuant to
Section 9.01.

                                      -16-



<PAGE>



              "Liquidation Proceeds": The amount (including any Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the Master Servicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section
9.01.

              "Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date and the denominator of which
is the Value of the related Mortgaged Property.

              "London Business Day": Any day on which banks in the City of
London are open and conducting transactions in United States dollars.

              "Master Servicer": Citicorp Mortgage, Inc. or any successor master
servicer appointed as herein provided, in its capacity as Master Servicer
hereunder.

              "Master Servicer Event of Default": One or more of the events
described in Section 7.01.

              "Master Servicer Remittance Date": With respect to any
Distribution Date, 3:00 p.m. New York time on the 24th day of the calendar month
in which such Distribution Date occurs or, if such 24th day is not a Business
Day, the Business Day immediately preceding such 24th day; provided, however,
that if such immediately preceding Business Day is the Determination Date, the
Master Servicer Remittance Date shall be the next succeeding Business Day.

              "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Section 3.07; and (c) on the assumption that all
other amounts, if any, due under such Mortgage Loan are paid when due.

              "Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on, or first priority security interest in, a Mortgaged
Property securing a Mortgage Note.

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


                                      -17-



<PAGE>



              "Mortgage Loan": Each mortgage loan transferred and assigned to
the Trustee pursuant to Section 2.01 or Section 2.03(d) of this Agreement, as
from time to time held as a part of REMIC I, the Mortgage Loans so held being
identified in the Mortgage Loan Schedule.

              "Mortgage Loan Purchase Agreement": The agreement between the
Depositor and the Seller regarding the transfer of the Mortgage Loans by the
Seller to or at the direction of the Depositor, substantially in the form of
Exhibit D annexed hereto.

              "Mortgage Loan Remittance Rate": With respect to any Mortgage Loan
or REO Property, as of any date of determination, the then applicable Net
Mortgage Rate in respect thereof plus the Administration Fee Rate.

              "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, attached hereto as Schedule 1. The
Mortgage Loan Schedule shall set forth the following information with respect to
each Mortgage Loan:

            (i)   the Master Servicer's Mortgage Loan identifying number;

           (ii)   the Mortgagor's first and last name;

          (iii)   the street address of the Mortgaged Property including the
                  state and zip code;

           (iv)   a code indicating whether the Mortgaged Property is
                  owner-occupied;

            (v)   the type of Residential Dwelling constituting the Mortgaged
                  Property;

           (vi)   the original months to maturity;

          (vii)   the original date of the mortgage;

         (viii)   the Loan-to-Value Ratio at origination;

           (ix)   the Mortgage Rate;

            (x)   the date on which the first Monthly Payment was due on the
                  Mortgage Loan;

           (xi)   the stated maturity date;

          (xii)   the amount of the Monthly Payment at origination;

         (xiii)   the amount of the Monthly Payment as of the Cut-off Date;

          (xiv)   the last Due Date on which a Monthly Payment was actually
                  applied to the unpaid Stated Principal Balance;


                                      -18-



<PAGE>



           (xv)   the original principal amount of the Mortgage Loan;

          (xvi)   the Scheduled Principal Balance of the Mortgage Loan as of the
                  close of business on the Cut-off Date;

         (xvii)   a code indicating the purpose of the Mortgage Loan (I.E.,
                  purchase financing, Rate/Term Refinancing, Cash-Out
                  Refinancing);

         (xviii)  a code indicating the documentation style (i.e., full,
                  alternative or reduced);

          (xix)   a code indicating if the Mortgage Loan is subject to a Primary
                  Mortgage Insurance Policy;

           (xx)   the Value of the Mortgaged Property;

          (xxi)   the sale price of the Mortgaged Property, if applicable;

         (xxii)   the actual unpaid principal balance of the Mortgage Loan as of
                  the Cut-off Date;

         (xxiii)  the Servicing Fee; and

         (xxiv)   the Class PO Percentage.

                  The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage Loans in the aggregate as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current principal
balance of the Mortgage Loans; (3) the weighted average Mortgage Rate of the
Mortgage Loans; (4) the weighted average maturity of the Mortgage Loans; (5) the
Scheduled Principal Balance of the Mortgage Loans as of the close of business on
the Cut-off Date (not taking into account any Principal Prepayments received on
the Cut-off Date); and (6) the amount of the Monthly Payment as of the Cut-off
Date. The Mortgage Loan Schedule shall be amended from time to time by the
Depositor in accordance with the provisions of this Agreement. With respect to
any Qualified Substitute Mortgage Loan, Cut-off Date shall refer to the related
Cut-off Date for such Mortgage Loan, determined in accordance with the
definition of Cut-off Date herein.

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

                  "Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 from time to time, and any REO Properties acquired in respect
thereof.

                  "Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, without regard to
any reduction thereof as a result of a Debt Service Reduction or operation of
the Relief Act.


                                      -19-



<PAGE>



                  "Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling.

                  "Mortgagor":  The obligor on a Mortgage Note.

                  "Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus
the sum of the Servicing Fee Rate and the Administration Fee Rate.

                  "New Lease": Any lease of REO Property entered into on behalf
of REMIC I, including any lease renewed or extended on behalf of REMIC I, if
REMIC I has the right to renegotiate the terms of such lease.

                  "Non-Class PO Percentage": With respect to each Class IO
Mortgage Loan, 100%. With respect to each Class PO Mortgage Loan, 100% less the
Class PO Percentage.

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

                  "Non-United States Person": Any Person other than a United
States Person.

                  "Notional Amount": For any Distribution Date, (a) with respect
to the Class IO Certificates, the Uncertificated Notional Amount of REMIC I
Regular Interest LTIO for such Distribution Date and (b) with respect to the
Class A-2 Certificates, the Uncertificated Balance of REMIC I Regular Interest
LT2 for such Distribution Date.

                  "Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Seller or the Depositor, as
applicable; with respect to the Master Servicer, any officer who is authorized
to act for the Master Servicer in matters relating to this Agreement, and whose
action is binding upon the Master Servicer, initially including those
individuals whose names appear on the list of authorized officers delivered at
the closing.

                  "One-Month LIBOR": With respect to the Class A Certificates
and the initial Interest Accrual Period, 5.8800% per annum. With respect to the
Class A Certificates and any Interest Accrual Period therefor (other than the
initial Interest Accrual Period), the rate determined by the Trust Administrator
on the related Interest Determination Date on the basis of the offered rate for
one-month U.S. dollar deposits, as such rate appears on Telerate Page 3750 as of
11:00 a.m. (London time) on such Interest Determination Date; provided that if
such rate does not appear on Telerate Page 3750, the rate for such date will be
determined on the basis of the offered rates of the Reference

                                      -20-



<PAGE>



Banks for one-month U.S. dollar deposits, as of 11:00 a.m. (London time) on such
Interest Determination Date. In such event, the Trust Administrator will request
the principal London office of each of the Reference Banks to provide a
quotation of its rate. If on such Interest Determination Date, two or more
Reference Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole multiple of 1/16%). If on
such Interest Determination Date, fewer than two Reference Banks provide such
offered quotations, One-Month LIBOR for the related Interest 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. Notwithstanding
the foregoing, if, under the priorities described above, One-Month LIBOR for an
Interest Determination Date would be based on One-Month LIBOR for the previous
Interest Determination Date for the third consecutive Interest Determination
Date, the Trust Administrator shall select an alternative comparable index (over
which the Trust Administrator has no control), used for determining one- month
Eurodollar lending rates that is calculated and published (or otherwise made
available) by an independent party.

                  "Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor, the Master Servicer
or the Trust Administrator acceptable to the Trustee, except that any opinion of
counsel relating to (a) the qualification of either REMIC I or REMIC II as a
REMIC or (b) compliance with the REMIC Provisions must be an opinion of
Independent counsel.

                  "Original Mortgage Loan": Any of the Mortgage Loans included
in REMIC I as of the Closing Date.

                  "Overcollateralization": With respect to any Distribution
Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties immediately following such Distribution Date
over (b) the sum of the aggregate Certificate Principal Balances of the
Certificates at the time of the allocation of any Realized Loss or Extraordinary
Trust Expense.

                  "Ownership Interest": As to any Certificate, any ownership or
security 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, as owner or as pledgee.

                  "Pass-Through Rate": With respect to any Class of Certificates
(other than the Class A Certificates, the Class IO Certificates, the Class PO
Certificates and the Residual Certificates) for any Distribution Date, 9.00% per
annum. With respect to the Class A-1 Certificates for any Distribution Date, a
per annum rate equal to One-Month LIBOR plus 0.60% per annum, subject to a
maximum rate of 9.00% per annum and a minimum rate of 0.60% per annum. With
respect to the Class A-2 Certificates for any Distribution Date, a per annum
rate equal to 8.40% per annum minus One-Month LIBOR, subject to a maximum rate
of 8.40% per annum and a minimum rate of 0.00% per annum. With respect to the
Class IO Certificates, for any Distribution Date, the Weighted Average Stripped
Interest Rate for such Distribution Date which shall equal 100% of the interest
on REMIC I Regular Interest LTIO. The Class PO Certificates shall have a
Pass-Through Rate of 0% per annum and shall not be entitled to any distributions
of interest.

                                      -21-



<PAGE>



                  "Percentage Interest": With respect to any Class of
Certificates, the portion of the respective Class evidenced by such Certificate,
expressed as a percentage, the numerator of which is the initial Certificate
Principal Balance or Notional Amount represented by such Certificate, and the
denominator of which is the initial aggregate Certificate Principal Balance or
Notional Amount of all of the Certificates of such Class. The Book-Entry
Certificates are issuable only in Percentage Interests corresponding to initial
Certificate Principal Balances or Notional Amounts of $100,000 and integral
multiples of $1.00 in excess thereof. The Class PO Certificates, Class IO
Certificates, the Class B-4 Certificates, the Class B-5 Certificates and the
Class B-6 Certificates are issuable only in Percentage Interests corresponding
to the initial Certificate Principal Balances or Notional Amounts of $100,000
and integral multiples of $1,000 in excess thereof; provided, however, that a
single Certificate of each such Class of Certificates may be issued having a
Percentage Interest corresponding to the remainder of the aggregate initial
Certificate Principal Balance or Notional Amount of such Class or to an
otherwise authorized denomination for such Class plus such remainder. The
Residual Certificates are issuable only in Percentage Interests of 20% and
multiples thereof.

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

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

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

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

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

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

                           (vi) units of money market funds, including money
         market funds advised by the Trustee or an Affiliate thereof, that have
         been rated "AAA" by S & P; and

                                      -22-



<PAGE>



                           (viii) if previously confirmed in writing to the
         Trustee, any other demand, money market or time deposit, or any other
         obligation, security or investment, as may be acceptable to the Rating
         Agency as a permitted investment of funds backing securities having
         ratings equivalent to its highest initial rating of the Senior
         Certificates;

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

                  "Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.

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

                  "P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the Master Servicer in respect of any Distribution Date pursuant
to Section 4.03.

                  "Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
Keogh plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA and Section 4975 of the Code.

                  "Prepayment Assumption": A prepayment rate for the Mortgage
Loans of 20% CPR. The Prepayment Assumption is used solely for determining the
accrual of original issue discount on the Certificates for federal income tax
purposes. A CPR (or Constant Prepayment Rate) represents an annualized constant
assumed rate of prepayment each month of a pool of mortgage loans relative to
its outstanding principal balance for the life of such pool.

                  "Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was during the related Prepayment
Period the subject of a Principal Prepayment in full or in part that was applied
by the Master Servicer to reduce the outstanding principal balance of such loan
on a date preceding the Due Date in the succeeding Prepayment Period, an amount
equal to interest at the applicable Mortgage Loan Remittance Rate on the amount
of such Principal Prepayment for the number of days commencing on the date on
which the prepayment is applied and ending on the last day of the related
Prepayment Period. The obligations of the Master Servicer in respect of any
Prepayment Interest Shortfall are set forth in Section 3.24.

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


                                      -23-



<PAGE>



                  "Primary Mortgage Insurance Policy": Each primary policy of
mortgage guaranty insurance in effect as represented in the Mortgage Loan
Purchase Agreement and as so indicated on the Mortgage Loan Schedule, or any
replacement policy therefor obtained by the Master Servicer or any Sub-Servicer
pursuant to Section 3.13. Any Mortgage Loan which has a Primary Mortgage
Insurance Policy is set forth on Schedule 2 attached hereto.

                  "Prime Rate": The lesser of (i) the per annum rate of
interest, publicly announced from time to time by Chase Manhattan Bank at its
principal office in the City of New York, as its prime or base lending rate (any
change in such rate of interest to be effective on the date such change is
announced by Chase Manhattan Bank) and (ii) the maximum rate permissible under
applicable usury or similar laws limiting interest rates.

                  "Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.

                  "Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, and as confirmed by an Officers' Certificate from the
Master Servicer to the Trustee, an amount equal to the sum of: (i) 100% of the
Stated Principal Balance thereof as of the date of purchase (or such other price
as provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Mortgage Loan
Remittance Rate in effect from time to time from the Due Date as to which
interest was last covered by a payment by the Mortgagor or an advance by the
Master Servicer, which payment or advance had as of the date of purchase been
distributed pursuant to Section 4.01, through the end of the calendar month in
which the purchase is to be effected, and (y) an REO Property, the sum of (1)
accrued interest on such Stated Principal Balance at the applicable Mortgage
Loan Remittance Rate in effect from time to time from the Due Date as to which
interest was last covered by a payment by the Mortgagor or an advance by the
Master Servicer through the end of the calendar month immediately preceding the
calendar month in which such REO Property was acquired, plus (2) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such purchase is to be effected, minus the total of all
net rental income, Insurance Proceeds, Liquidation Proceeds and P&I Advances
that as of the date of purchase had been distributed as or to cover REO Imputed
Interest pursuant to Section 4.01; (iii) any unreimbursed Servicing Advances and
P&I Advances and any unpaid Servicing Fees allocable to such Mortgage Loan or
REO Property; (iv) any amounts previously withdrawn from the Collection Account
in respect of such Mortgage Loan or REO Property pursuant to Sections
3.11(a)(ix) and Section 3.16(b); and (v) in the case of a Mortgage Loan required
to be purchased pursuant to Section 2.03, expenses reasonably incurred or to be
incurred by the Master Servicer or the Trustee in respect of the breach or
defect giving rise to the purchase obligation.

                  "Qualified Insurer": Any insurer which meets the requirements
of Fannie Mae and Freddie Mac.


                                      -24-



<PAGE>



                  "Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the Scheduled
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) be covered under a Primary Mortgage
Insurance Policy if such Qualified Substitute Mortgage Loan has a Loan-to-Value
Ratio in excess of 80% and the Deleted Mortgage Loan was covered by a Primary
Mortgage Insurance Policy, (iv) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan,
(v) have the same Due Date as the Due Date on the Deleted Mortgage Loan, (vi)
have a Loan-to-Value Ratio as of the date of substitution equal to or lower than
the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (vii)
[intentionally omitted]; and (viii) conform to each representation and warranty
set forth in Section 6 of the Mortgage Loan Purchase Agreement applicable to the
Deleted Mortgage Loan. In the event that one or more mortgage loans are
substituted for one or more Deleted Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on the basis of aggregate principal
balances, the Mortgage Rates described in clause (ii) hereof shall be determined
on the basis of weighted average Mortgage Rates, the Net Mortgage Rates
described in clause (iii) hereof shall be satisfied as to each such mortgage
loan, the terms described in clause (iv) shall be determined on the basis of
weighted average remaining terms to maturity, the Loan-to-Value Ratios described
in clause (vi) hereof shall be satisfied as to each such mortgage loan and,
except to the extent otherwise provided in this sentence, the representations
and warranties described in clause (viii) hereof must be satisfied as to each
Qualified Substitute Mortgage Loan or in the aggregate, as the case may be.

                  "Rate/Term Refinancing": A Refinanced Mortgage Loan, the
proceeds of which are not in excess of the existing first mortgage loan on the
related Mortgaged Property and related closing costs, and were used exclusively
to satisfy the then existing first mortgage loan of the Mortgagor on the related
Mortgaged Property and to pay related closing costs.

                  "Rating Agency": S&P or its successor. If such agency or its
successor is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating agency, or other comparable Person, designated by
the Depositor, written notice of which designation shall be given to the
Trustee, the Trust Administrator and the Master Servicer.

                  "Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued interest from the Due Date as to which interest was last
paid by the Mortgagor through the end of the calendar month in which such Final
Recovery Determination was made, calculated in the case of each calendar month
during such period (A) at an annual rate equal to the annual rate at which
interest was then accruing on such Mortgage Loan and (B) on a principal amount
equal to the Stated Principal Balance of such Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, plus (iii) any
amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan pursuant to

                                      -25-



<PAGE>



Section 3.11(a)(ix) and Section 3.16(b), minus (iv) the proceeds, if any,
received in respect of such Mortgage Loan prior to the date such Final Recovery
Determination was made, net of amounts that are payable therefrom to the Master
Servicer with respect to such Mortgage Loan pursuant to Section 3.11(a)(iii).

                  With respect to any REO Property as to which a Final Recovery
Determination has been made an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the calendar month in which such
Final Recovery Determination was made, calculated in the case of each calendar
month during such period (A) at an annual rate equal to the annual rate at which
interest was then accruing on the related Mortgage Loan and (B) on a principal
amount equal to the Stated Principal Balance of the related Mortgage Loan as of
the close of business on the Distribution Date during such calendar month, plus
(iii) any amounts previously withdrawn from the Collection Account in respect of
the related Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b),
minus (iv) the aggregate of all P&I Advances and Servicing Advances made by the
Master Servicer in respect of such REO Property or the related Mortgage Loan and
any unpaid Servicing Fees for which the Master Servicer has been or, in
connection with such Final Recovery Determination, will be reimbursed pursuant
to Section 3.11(a)(iii) or Section 3.23 out of rental income, Insurance Proceeds
and Liquidation Proceeds received in respect of such REO Property, minus (v) the
total of all net rental income, Insurance Proceeds and Liquidation Proceeds
received in respect of such REO Property that has been, or in connection with
such Final Recovery Determination, will be transferred to the Distribution
Account pursuant to Section 3.23.

                  With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.

                  With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.

                  "Record Date": With respect to each Distribution Date and any
Class A Certificate in book-entry form, the Business Day immediately preceding
such Distribution Date. With respect to each Distribution Date and any other
Certificates, including any Definitive Certificates, the last Business Day of
the month immediately preceding the month in which such Distribution Date
occurs.

                  "Reference Banks": Bankers Trust Company, Barclay's Bank PLC,
The Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors
in interest; provided, however, that if any of the foregoing banks are not
suitable to serve as a Reference Bank, then any leading banks selected by the
Trust Administrator which are engaged in transactions in Eurodollar

                                      -26-



<PAGE>



deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with the Depositor or any Affiliate thereof and (iii) which have
been designated as such by the Trust Administrator.

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

                  "Regular Certificate": Any Senior Certificate or Subordinate
Certificate.

                  "Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.

                  "Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.

                  "Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
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.

                  "REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto, and together with all collections thereon
and proceeds thereof; (ii) any REO Property, together with all collections
thereon and proceeds thereof; (iii) the Trustee's rights with respect to the
Mortgage Loans under all insurance policies required to be maintained pursuant
to this Agreement and any proceeds thereof; (iv) the Depositor's rights under
the Mortgage Loan Purchase Agreement (including any security interests created
thereby and excluding Section 17 thereof); and (v) the Collection Account, the
Distribution Account and any REO Account and such assets that are deposited
therein from time to time and any investments thereof, together with any and all
income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, however, REMIC I specifically excludes all payments and other
collections of principal and interest due on the Mortgage Loans on or before the
Cut-off Date.

                  "REMIC I Regular Interest": Any of the four separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC I. Each REMIC I Regular Interest
(other than REMIC I Regular Interest LTPO) shall accrue interest at the related
REMIC I Remittance Rate in effect from time to time, and shall be entitled to
distributions of principal (other than REMIC I Regular Interest LTIO), subject
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance or Uncertificated Notional Amount as set forth in the
Preliminary Statement hereto. The designations for the respective REMIC I
Regular Interests are set forth in the Preliminary Statement hereto.


                                      -27-



<PAGE>



                  "REMIC I Regular Interest LT1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I which shall accrue interest at the
REMIC I Remittance Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary statement hereto.

                  "REMIC I Regular Interest LT2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I which shall accrue interest at the
REMIC I Remittance Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary statement hereto.

                  "REMIC I Regular Interest LTIO": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I which shall accrue interest at the
REMIC I Remittance Rate on its Uncertificated Notional Amount in effect from
time to time, but which shall not be entitled to any distributions of principal.
The initial Uncertificated Notional Amount is as set forth in the Preliminary
statement hereto.

                  "REMIC I Regular Interest LTPO": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I which shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary statement hereto. REMIC I Regular Interest LTPO shall not be
entitled to distributions of interest.

                  "REMIC I Remittance Rate": With respect to REMIC I Regular
Interest LT1 and REMIC I Regular Interest LT2, 9.00% per annum. With respect to
REMIC I Regular Interest LTIO, the Weighted Average Stripped Interest Rate for
such Distribution Date. REMIC I Regular Interest LTPO shall have a REMIC I
Remittance Rate of 0% per annum and shall not be entitled to any distribution of
interest.

                  "REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee for the benefit
of the REMIC II Certificateholders pursuant to Section 2.07, with respect to
which a separate REMIC election is to be made.

                  "REMIC II Certificate": Any Regular Certificate or Class R-II
Certificate.

                  "REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G 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.

                  "Remittance Report": A report in form and substance acceptable
to the Trust Administrator and the Trustee prepared by the Master Servicer
pursuant to Section 4.03 with such additions, deletions and modifications as
agreed to by the Trustee, the Trust Administrator and the Master Servicer.

                                      -28-



<PAGE>



                  "Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."

                  "REO Account": The account or accounts maintained by the
Master Servicer in respect of an REO Property pursuant to Section 3.23.

                  "REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.

                  "REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Mortgage Loan Remittance Rate on the
Stated Principal Balance of such REO Property (or, in the case of the first such
calendar month, of the related Mortgage Loan if appropriate) as of the close of
business on the Distribution Date in such calendar month.

                  "REO Property": A Mortgaged Property acquired by the Master
Servicer on behalf of REMIC I through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.23.

                  "Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E-1 or Exhibit E-2 attached hereto.

                  "Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trust Administrator determines
to be either (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 1/16%) of the one-month U.S. dollar lending rates
which New York City banks selected by the Trust Administrator are quoting on the
relevant Interest Determination Date to the principal London offices of leading
banks in the London interbank market or (ii) in the event that the Trust
Administrator can determine no such arithmetic mean, the lowest one-month U.S.
dollar lending rate which New York City banks selected by the Trust
Administrator are quoting on such Interest Determination Date to leading
European banks.

                  "Residential Dwelling": Any one of the following: (i) an
attached or detached one- family dwelling, (ii) a detached two- to four-family
dwelling, (iii) a one-family dwelling unit in a Fannie Mae eligible condominium
project, or (iv) a detached one-family dwelling in a planned unit development,
none of which is a co-operative, mobile or manufactured home (as defined in 42
United States Code, Section 5402(6)).

                  "Residual Certificate": Any one of the Class R-I Certificates
or Class R-II Certificates.

                  "Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.

                  "Responsible Officer": When used with respect to the Trustee,
the Co-Trustee or the Trust Administrator, the Chairman or Vice Chairman of the
Board of Directors or Trustees, the

                                      -29-



<PAGE>



Chairman or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any vice president, any assistant vice president, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, the Cashier, any
assistant cashier, any trust officer or assistant trust officer, the Controller
and any assistant controller or any other officer of the Trustee, the Co-Trustee
or the Trust Administrator, as the case may be, customarily performing functions
similar to those performed by any of the above designated officers and, with
respect to a particular matter, to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.

                  "Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cut-off Date, the outstanding principal balance of such
Mortgage Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such date; (b) as of any Due Date
subsequent to the Cut-off Date up to and including the Due Date in the calendar
month in which a Liquidation Event occurs with respect to such Mortgage Loan,
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion of each Monthly Payment due on or
before such Due Date but subsequent to the Cut-off Date, whether or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal of such Mortgage Loan
not yet due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and (c)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such Mortgage Loan, zero. With respect to any REO Property: (a) as of
any Due Date subsequent to the date of its acquisition on behalf of REMIC I up
to and including the Due Date in the calendar month in which a Liquidation Event
occurs with respect to such REO Property, an amount (not less than zero) equal
to the Scheduled Principal Balance of the related Mortgage Loan as of the Due
Date in the calendar month in which such REO Property was acquired; and (b) as
of any Due Date subsequent to the occurrence of a Liquidation Event with respect
to such REO Property, zero.

                  "Seller": Salomon Brothers Realty Corp. or its successor in
interest, in its capacity as seller under the Mortgage Loan Purchase Agreement.

                  "Senior Certificate": Any Class A Certificate, Class PO
Certificate or Class IO Certificate.

                  "Senior Percentage": With respect to any Distribution Date,
the lesser of (a) 100% and (b) a fraction, expressed as a percentage, the
numerator of which is the excess, if any, of the aggregate Certificate Principal
Balance of the Class A-1 Certificates for such Distribution Date over the
aggregate amount, if any, payable to the Holders of the Class A Certificates on
such date pursuant to clause (d) of the definition of "Senior Principal
Distribution Amount," and the denominator of which is the sum of (i) the
aggregate of the Non-Class PO Percentage of the

                                      -30-



<PAGE>



Scheduled Principal Balance of each of the Mortgage Loans, plus (ii) the
aggregate of the Non-Class PO Percentage of the Scheduled Principal Balance of
each of the REO Properties, in each case before reduction for any Realized
Losses on such Distribution Date.

                  "Senior Prepayment Percentage": With respect to any
Distribution Date within the range indicated below, the percentage as indicated
below:


<TABLE>
<CAPTION>
                Distribution Date                                        Senior Prepayment Percentage
-------------------------------------------------       --------------------------------------------------------------
<S>                                                     <C>
April 2000 through March 2005                           100%

April 2005 through March 2006                           Senior Percentage, plus 70% of the Subordinate
                                                        Percentage

April 2006 through March 2007                           Senior Percentage, plus 60% of the Subordinate
                                                        Percentage

April 2007 through March 2008                           Senior Percentage, plus 40% of the Subordinate
                                                        Percentage

April 2008 through March 2009                           Senior Percentage, plus 20% of the Subordinate
                                                        Percentage

April 2009 and thereafter                               Senior Percentage;
</TABLE>

provided, however, no reduction to the Senior Prepayment Percentage described
above shall be made as of any Distribution Date unless (i) the outstanding
principal balance of the Mortgage Loans delinquent 60 days or more (including
REO Properties and Mortgage Loans in foreclosure) averaged over the last six
months does not exceed 50% of the sum of the then current Certificate Principal
Balances of the Subordinate Certificates and (ii) Realized Losses on the
Mortgage Loans to date are less than the then applicable Trigger Amount. The
"Trigger Amount" for any Distribution Date occurring after the first five years
will be as follows: for any Distribution Date during the sixth year after the
Closing Date, 30% of the initial sum of the Certificate Principal Balances of
the Subordinate Certificates; for any Distribution Date during the seventh year
after the Closing Date, 35% of the initial sum of the Certificate Principal
Balances of the Subordinate Certificates; for any Distribution Date during the
eighth year after the Closing Date, 40% of the initial sum of the Certificate
Principal Balances of the Subordinate Certificates; for any Distribution Date
during the ninth year after the Closing Date, 45% of the initial sum of the
Certificate Principal Balances of the Subordinate Certificates; and for any
Distribution Date during the tenth year (or any year thereafter) after the
Closing Date, 50% of the initial sum of the Certificate Principal Balances of
the Subordinate Certificates. Notwithstanding the foregoing, upon a reduction of
the Certificate Principal Balances of the Senior Certificates to zero, the
Senior Prepayment Percentage will equal 0%. In addition, on any Distribution
Date on which the Senior Percentage exceeds the initial Senior Percentage, the
Senior Prepayment Percentage shall be 100%.

                  "Senior Principal Distribution Amount": For any Distribution
Date, an amount equal to the sum of:


                                      -31-



<PAGE>



                  (a) the product of (x) the then-applicable Senior Percentage
         and (y) the sum of the following:

                         (i) the related Non-Class PO Percentage of the
                  aggregate of the principal portions of all Monthly Payments
                  due during the related Due Period in respect of the Mortgage
                  Loans whether or not received;

                        (ii) the related Non-Class PO Percentage of the
                  principal portion of all Insurance Proceeds, Trailing
                  Recoveries and Liquidation Proceeds (other than amounts
                  described in clause (c) below) received in respect of the
                  Mortgage Loans during the related Prepayment Period (other
                  than any such Mortgage Loan that was purchased, sold or
                  replaced pursuant to or as contemplated by Section 2.03,
                  Section 3.16(c) or Section 9.01 during the related Prepayment
                  Period), net of any portion thereof that represents a recovery
                  of principal for which an advance was made by the Master
                  Servicer pursuant to Section 4.03 in respect of a preceding
                  Distribution Date;

                       (iii) the related Non-Class PO Percentage of the Stated
                  Principal Balance (calculated immediately prior to such
                  Distribution Date) of each Mortgage Loan that was purchased,
                  sold or replaced pursuant to or as contemplated by Section
                  2.03, Section 3.16(c) or Section 9.01 during the related
                  Prepayment Period;

                        (iv) [reserved]; and

                         (v) in connection with the substitution of one or more
                  Qualified Substitute Mortgage Loans for one or more Deleted
                  Mortgage Loans pursuant to Section 2.03 during the related
                  Prepayment Period, the excess, if any, of (A) the aggregate of
                  the related Non-Class PO Percentage of the Stated Principal
                  Balances (calculated as of the respective dates of
                  substitution) of such Deleted Mortgage Loans, net of the
                  aggregate of the related Non-Class PO Percentage of the
                  principal portions of the Monthly Payments due during the
                  related Prepayment Period (to the extent received from the
                  related Mortgagor or advanced by the Master Servicer and
                  distributed pursuant to Section 4.01 on the Distribution Date
                  in the related Prepayment Period) in respect of each such
                  Deleted Mortgage Loan that was replaced prior to the
                  Distribution Date in the related Prepayment Period, over (B)
                  the aggregate of the related Non-Class PO Percentage of the
                  Stated Principal Balances (calculated as of the respective
                  dates of substitution) of such Qualified Substitute Mortgage
                  Loans;

                  (b) the product of (x) the then-applicable Senior Prepayment
         Percentage and (y) the related Non-Class PO Percentage of all Principal
         Prepayments received in respect of the Mortgage Loans during the
         related Prepayment Period;

                  (c) with respect to any Mortgage Loan which was the subject of
         a Final Recovery Determination in the related Prepayment Period, the
         least of (a) the then-applicable Senior Prepayment Percentage of the
         Non-Class PO Percentage multiplied by the net Liquidation Proceeds and
         Insurance Proceeds allocable to principal in respect of such Mortgage
         Loans,

                                      -32-



<PAGE>



         (b) the then-applicable Senior Percentage of the Non-Class PO
         Percentage multiplied by the Scheduled Principal Balance of such
         Mortgage Loan at the time of such Final Recovery Determination; and (c)
         the principal portion of all amounts collected in connection with such
         a Final Recovery Determination to the extent not distributed to the
         Class PO Certificates; and

                  (d) in the case of any Distribution Date subsequent to the
         initial Distribution Date, an amount equal to the excess, if any, of
         the Senior Principal Distribution Amount for the immediately preceding
         Distribution Date, over the aggregate distributions of principal made
         in respect of the Class A Certificates on such immediately preceding
         Distribution Date pursuant to Section 4.01 to the extent that any such
         amounts are not attributable to Realized Losses which were allocated to
         the Subordinate Certificates pursuant to Section 4.04.

                  "Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.

                  "Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Master Servicer in connection with a default,
delinquency or other unanticipated event by the Master Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
in respect of a particular Mortgage Loan, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property,
and (iv) the performance of its obligations under Section 3.01, Section 3.09,
Section 3.13, Section 3.14, Section 3.16 and Section 3.23. The Master Servicer
shall not be required to make any Servicing Advance in respect of a Mortgage
Loan or REO Property that, in the good faith business judgment of the Master
Servicer, would not be ultimately recoverable from related Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.

                  "Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one month's interest (or in the event of
any payment of interest which accompanies a Principal Prepayment in full made by
the Mortgagor during such calendar month, interest for the number of days
covered by such payment of interest) at the applicable Servicing Fee Rate on the
same principal amount on which interest on such Mortgage Loan accrues for such
calendar month. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.

                  "Servicing Fee Rate": 0.25% per annum.

                  "Servicing Officer": Any employee of the Master Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans, whose name appear on a list of Servicing Officers furnished by
the Master Servicer to the Trustee, the Trust Administrator and the Depositor on
the Closing Date, as such list may from time to time be amended.

                  "Single Certificate": With respect to any Class of
Certificates (other than the Residual Certificates), a hypothetical Certificate
of such Class evidencing a Percentage Interest for such Class corresponding to
an initial Certificate Principal Balance or Notional Amount of $1,000.

                                      -33-



<PAGE>



With respect to the Residual Certificates, a hypothetical Certificate of such
Class evidencing a 20% Percentage Interest in such Class.

                  "Special Hazard Amount": Initially, an amount equal to
$1,430,689. As of each anniversary of the Cut-off Date, an amount equal to the
lesser of (a) the Special Hazard Amount as of the immediately preceding
anniversary of the Cut-off Date minus the aggregate amount of Special Hazard
Losses allocated solely to the Subordinate Certificates in accordance with
Section 4.04 since such immediately preceding anniversary and (b) the Adjustment
Amount (as defined below) as most recently calculated. For each anniversary of
the Cut-off Date, the Adjustment Amount shall be equal to the greatest of (i)
the product of 1.00% multiplied by the outstanding principal balance of the
Mortgage Loans on the Distribution Date immediately preceding such anniversary,
(ii) the aggregate outstanding principal balance (as of the immediately
preceding Distribution Date) of the Mortgage Loans secured by Mortgaged
Properties located in the same zip code area in the State of California and
(iii) twice the aggregate outstanding principal balance (as of the immediately
preceding Distribution Date) of the largest Mortgage Loan.

                  "Special Hazard Loss": Any Realized Loss or portion thereof
not in excess of the lesser of the cost of repair or replacement of a Mortgaged
Property suffered by such Mortgaged Property by reason of damage caused by
certain hazards (including earthquakes, mudflows, and, to a limited extent,
floods) not insured against under the hazard insurance policies or fire or flood
insurance policies required to be maintained in respect of such Mortgaged
Property pursuant to Section 3.14, or by reason of the application of any
co-insurance provision. Special Hazard Losses shall not include any
Extraordinary Loss or any of the following:

                (i)        wear and tear, deterioration, rust or corrosion,
                           mold, wet or dry rot; inherent vice or latent defect;
                           animals, birds, vermin, insects;

               (ii)        smog, smoke, vapor, liquid or dust discharge from
                           agricultural or industrial operations; pollution;
                           contamination;

              (iii)        settling, subsidence, cracking, shrinkage, bulging or
                           expansion of pavements, foundations, walls, floors,
                           roofs or ceilings; and

               (iv)        errors in design, faulty workmanship or faulty
                           materials, unless the collapse of the property or a
                           part thereof ensues and then only for the ensuing
                           loss.

                  "S&P": Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc., or its successor in interest.

                  "Startup Day": With respect to each of REMIC I and REMIC II,
the day designated as such pursuant to Section 10.01(b) hereof.

                  "Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the Scheduled Principal

                                      -34-



<PAGE>



Balance of such Mortgage Loan as of the Cut-off Date, as shown in the Mortgage
Loan Schedule, minus the sum of (i) the principal portion of each Monthly
Payment due on a Due Date subsequent to the Cut-off Date, to the extent received
from the Mortgagor or advanced by the Master Servicer and distributed pursuant
to Section 4.01 on or before such date of determination, (ii) all Principal
Prepayments received after the Cut-off Date, to the extent distributed pursuant
to Section 4.01 on or before such date of determination, (iii) all Liquidation
Proceeds and Insurance Proceeds applied by the Master Servicer as recoveries of
principal in accordance with the provisions of Section 3.16, to the extent
distributed pursuant to Section 4.01 on or before such date of determination,
and (iv) any Realized Loss incurred with respect thereto as a result of a
Deficient Valuation made during or prior to the Prepayment Period for the most
recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of REMIC I, minus, if such REO Property was acquired before the Distribution
Date in any calendar month, the principal portion of the Monthly Payment due on
the Due Date in the calendar month of acquisition, to the extent advanced by the
Master Servicer and distributed pursuant to Section 4.01 on or before such date
of determination, to the extent distributed pursuant to Section 4.01 on or
before such date of determination; and (b) as of any date of determination
coinciding with or subsequent to the Distribution Date on which the proceeds, if
any, of a Liquidation Event with respect to such REO Property would be
distributed, zero.

                  "Stayed Funds": If the Master Servicer is the subject of a
proceeding under the federal Bankruptcy Code and the making of a Remittance (as
defined in Section 7.02(b)) is prohibited by Section 362 of the federal
Bankruptcy Code, funds which are in the custody of the Master Servicer, a
trustee in bankruptcy or a federal bankruptcy court and should have been the
subject of such Remittance absent such prohibition.

                  "Stripped Interest Rate": With respect to any Mortgage Loan or
related REO Property, the excess, if any, of the Net Mortgage Rate minus 9.00%
per annum.

                  "Subordinate Certificate": Any Class B-1 Certificate, Class
B-2 Certificate, Class B-3 Certificate, Class B-4 Certificate, Class B-5
Certificate or Class B-6 Certificate.

                  "Subordinate Percentage": With respect to any Distribution
Date, a percentage equal to 100% minus the Senior Percentage for such
Distribution Date.

                  "Subordinate Prepayment Percentage": With respect to any
Distribution Date, a percentage equal to 100% minus the Senior Prepayment
Percentage.

                  "Subordinate Principal Distribution Amount": For any
Distribution Date, an amount equal to the sum of:


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<PAGE>



                  (a) the product of (x) the then-applicable Subordinate
         Percentage and (y) the sum of the following:

                         (i) the related Non-Class PO Percentage of the
                  aggregate of the principal portions of all Monthly Payments
                  due during the related Due Period in respect of the Mortgage
                  Loans whether or not received;

                        (ii) the related Non-Class PO Percentage of the
                  principal portion of all Insurance Proceeds, Trailing
                  Recoveries and Liquidation Proceeds (other than amounts
                  described in clause (c) below) received in respect of the
                  Mortgage Loans during the related Prepayment Period (other
                  than any such Mortgage Loan that was purchased, sold or
                  replaced pursuant to or as contemplated by Section 2.03,
                  Section 3.16(c) or Section 9.01 during the related Prepayment
                  Period), net of any portion thereof that represents a recovery
                  of principal for which an advance was made by the Master
                  Servicer pursuant to Section 4.03 in respect of a preceding
                  Distribution Date;

                       (iii) the related Non-Class PO Percentage of the Stated
                  Principal Balance (calculated immediately prior to such
                  Distribution Date) of each Mortgage Loan that was purchased,
                  sold or replaced pursuant to or as contemplated by Section
                  2.03, Section 3.16(c) or Section 9.01 during the related
                  Prepayment Period;

                        (iv) [reserved]; and

                         (v) in connection with the substitution of one or more
                  Qualified Substitute Mortgage Loans for one or more Deleted
                  Mortgage Loans pursuant to Section 2.03 during the related
                  Prepayment Period, the excess, if any, of (A) the aggregate of
                  the related Non-Class PO Percentage of the Stated Principal
                  Balances (calculated as of the respective dates of
                  substitution) of such Deleted Mortgage Loans, net of the
                  aggregate of the related Non-Class PO Percentage of the
                  principal portions of the Monthly Payments due during the
                  related Prepayment Period (to the extent received from the
                  related Mortgagor or advanced by the Master Servicer and
                  distributed pursuant to Section 4.01 on the Distribution Date
                  in the related Prepayment Period) in respect of each such
                  Deleted Mortgage Loan that was replaced prior to the
                  Distribution Date in the related Prepayment Period, over (B)
                  the aggregate of the related Non-Class PO Percentage of the
                  Stated Principal Balances (calculated as of the respective
                  dates of substitution) of such Qualified Substitute Mortgage
                  Loans;

                  (b) the product of (x) the then-applicable Subordinate
         Prepayment Percentage and (y) related Non-Class PO Percentage of all
         Principal Prepayments received in respect of the Mortgage Loans during
         the related Prepayment Period;

                  (c) with respect to any Mortgage Loans which were the subject
         of a Final Recovery Determination in the related Prepayment Period, the
         amount, if any, by which the net Liquidation Proceeds and Insurance
         Proceeds allocable to principal in respect of such Mortgage Loans
         exceed the amount distributable to the Class A-1 Certificates and the
         Class

                                      -36-



<PAGE>



         PO Certificates pursuant to clause (c) of the definition of "Senior
         Principal Distribution Amount" and clause (c) of the definition of
         "Class PO Principal Distribution Amount"; and

                  (d) in the case of any Distribution Date subsequent to the
         initial Distribution Date, an amount equal to the excess, if any, of
         the Subordinate Principal Distribution Amount for the immediately
         preceding Distribution Date, over the aggregate distributions of
         principal made in respect of the Subordinate Certificates on such
         immediately preceding Distribution Date pursuant to Section 4.01 to the
         extent that any such amounts are not attributable to Realized Losses
         that were allocated to the Subordinate Certificates pursuant to Section
         4.04.

                  "Sub-Servicer": Any Person with which the Master Servicer has
entered into a Sub- Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.

                  "Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the Master Servicer.

                  "Sub-Servicing Agreement": The written contract between the
Master Servicer and a Sub-Servicer relating to servicing and administration of
certain Mortgage Loans as provided in Section 3.02.

                  "Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of each of REMIC I or REMIC II due to its classification
as a REMIC under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.

                  "Telerate Page 3750": The display designated as page "3750" on
the Dow Jones Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).

                  "Termination Price":  As defined in Section 9.01.

                  "Trailing Recoveries": Any Insurance Proceeds, Liquidation
Proceeds and other payments or recoveries on a Mortgage Loan received or
collected by the Master Servicer after a Final Recovery Determination has been
made with respect to such Mortgage Loan or related REO Property.

                  "Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.


                                      -37-



<PAGE>



                  "Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.

                  "Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.

                  "Trust Administrator": Citicorp Mortgage, Inc., or its
successor in interest, or any successor trust administrator appointed as herein
provided.

                  "Trust Fund": Collectively, all of the assets of REMIC I and
REMIC II.

                  "Trustee": U.S. Bank National Association, or its successor in
interest, or any successor trustee appointed as herein provided.

                  "Uncertificated Balance": The amount of any REMIC I Regular
Interest outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest (other than REMIC I
Regular Interest LTIO) shall equal the amount set forth in the Preliminary
Statement hereto as its initial uncertificated amount. On each Distribution
Date, the Uncertificated Balance of each REMIC I Regular Interest (other than
REMIC I Regular Interest LTIO) shall be reduced by all distributions of
principal deemed to have been made on such REMIC I Regular Interest on such
Distribution Date pursuant to Section 4.06 and, if and to the extent necessary
and appropriate, shall be further reduced on such Distribution Date as provided
in Section 4.06.

                  "Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the related REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance or Uncertificated
Notional Amount of such REMIC I Regular Interest outstanding immediately prior
to such Distribution Date. Uncertificated Interest in respect of any REMIC I
Regular Interest shall accrue on the basis of a 360-day year consisting of
twelve 30-day Interest Accrual Periods. Uncertificated Interest with respect to
each Distribution Date, as to any REMIC I Regular Interest shall be reduced by
an amount equal to the portion allocable to such Regular Interest pursuant to
Section 1.02 hereof of the sum of (a) the aggregate Prepayment Interest
Shortfall, if any, for such Distribution Date to the extent not covered by
payments pursuant to Section 3.24 and (b) the aggregate amount of any Relief Act
Interest Shortfall, if any, for such Distribution Date.

                  "Uncertificated LTPO Percentage": With respect to each Class
PO Mortgage Loan, the quotient of (i) 9.00% per annum minus the related Net
Mortgage Rate divided by (ii) 9.00% per annum. With respect to each Class IO
Mortgage Loan, 0% per annum.

                  "Uncertificated LTPO Principal Distribution Amount": For any
Distribution Date, an amount equal to the aggregate of:

                  (a) the sum of the following:


                                      -38-



<PAGE>



                         (i) the related Uncertificated LTPO Percentage of the
                  principal portion of each Monthly Payment due during the
                  related Due Period in respect of each Class PO Mortgage Loan
                  whether or not received;

                        (ii) the related Uncertificated LTPO Percentage of the
                  principal portion of all Insurance Proceeds, Trailing
                  Recoveries and Liquidation Proceeds (other than amounts
                  described in clause (c) below) received in respect of each
                  Class PO Mortgage Loan during the related Prepayment Period
                  (other than any such Class PO Mortgage Loan that was
                  purchased, sold or replaced pursuant to or as contemplated by
                  Section 2.03, Section 3.16(c) or Section 9.01 during the
                  related Prepayment Period), net of any portion thereof that
                  represents a recovery of principal for which an advance was
                  made by the Master Servicer pursuant to Section 4.03 in
                  respect of a preceding Distribution Date;

                       (iii) the related Uncertificated LTPO Percentage of the
                  Stated Principal Balance (calculated immediately prior to such
                  Distribution Date) of each Class PO Mortgage Loan that was
                  purchased, sold or replaced pursuant to or as contemplated by
                  Section 2.03, Section 3.16(c) or Section 9.01 during the
                  related Prepayment Period;

                        (iv) [reserved]; and

                         (v) in connection with the substitution of one or more
                  Qualified Substitute Mortgage Loans for one or more Deleted
                  Mortgage Loans which were Class PO Mortgage Loans pursuant to
                  Section 2.03 during the related Prepayment Period, the excess,
                  if any, of (A) the related Uncertificated LTPO Percentage of
                  the aggregate of the Stated Principal Balances (calculated as
                  of the respective dates of substitution) of such Deleted
                  Mortgage Loans, net of the aggregate of the related
                  Uncertificated LTPO Percentage of the principal portions of
                  the Monthly Payments due during the related Prepayment Period
                  (to the extent received from the related Mortgagor or advanced
                  by the Master Servicer and distributed pursuant to Section
                  4.01 on the Distribution Date in the related Prepayment
                  Period) in respect of each such Deleted Mortgage Loan that was
                  replaced prior to the Distribution Date in the related
                  Prepayment Period, over (B) the related Uncertificated LTPO
                  Percentage of the Stated Principal Balances (calculated as of
                  the respective dates of substitution) of such Qualified
                  Substitute Mortgage Loans;

                  (b) the related Uncertificated LTPO Percentage of all
         Principal Prepayments received in respect of each Class PO Mortgage
         Loan during the related Prepayment Period;

                  (c) with respect to any Class PO Mortgage Loan which was the
         subject of a Final Recovery Determination in the related Prepayment
         Period, the related Uncertificated LTPO Percentage of the Stated
         Principal Balance of such Mortgage Loan at the time of such Final
         Recovery Determination (net of the principal portion of any Realized
         Loss allocated to the

                                      -39-



<PAGE>



         REMIC I Regular Interest LTPO ) to the extent of the principal portion
         of all Liquidation Proceeds with respect to such Class PO Mortgage
         Loan; and

                  (d) in the case of any Distribution Date subsequent to the
         initial Distribution Date, an amount equal to the excess, if any, of
         the Uncertificated LTPO Principal Distribution Amount for the
         immediately preceding Distribution Date, over the aggregate
         distributions of principal made in respect of REMIC I Regular Interest
         LTPO on such immediately preceding Distribution Date pursuant to
         Section 4.01 to the extent that any such amounts are not attributable
         to Realized Losses which were allocated to the Subordinate Certificates
         pursuant to Section 4.04.

                  "Uncertificated Notional Amount": With respect to REMIC I
Regular Interest LTIO, the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date.

         "Uncertificated Principal Distribution Amount": With respect to REMIC I
Regular Interest LT1, the Senior Principal Distribution Amount (other than the
portion that relates to the Class A-1 Certificates) and the Subordinate
Principal Distribution Amount. With respect to REMIC I Regular Interest LT2, the
portion of the Senior Principal Distribution Amount that relates to the Class
A-1 Certificates. With respect to REMIC I Regular Interest LTPO, the
Uncertificated LTPO Principal Distribution Amount. REMIC I Regular Interest LTIO
is not entitled to any payments of principal.

                  "Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.

                  "United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof
(except, in the case of a partnership, to the extent provided in regulations),
or an estate whose income is subject to United 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 the trust and one or
more United States Persons have the authority to control all substantial
decisions of the trust. The term "United States" shall have the meaning set
forth in Section 7701 of the Code.

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

                  "Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. At all times during the
term of this Agreement, (i) 97% of all of the Voting Rights shall be allocated
to the Regular Certificates, other than the Class A-2 Certificates and

                                      -40-



<PAGE>



the Class IO Certificates, in proportion to their then outstanding Certificate
Principal Balances, (ii) 1% of all of the Voting Rights shall be allocated to
the Class IO Certificates, in proportion to their then outstanding Notional
Amounts, (iii) 1% of all of the Voting Rights shall be allocated to the Class
A-2 Certificates, in proportion to their then outstanding Notional Amounts and
(iv) 1/2 of 1% of all Voting Rights will be allocated among the holders of each
Class of Residual Certificates, in proportion to their Percentage Interests in
each such Class. All Voting Rights allocated to any Class of Certificates shall
be allocated among such Certificates PRO RATA in accordance with the respective
Percentage Interests evidenced thereby.

                  "Weighted Average Stripped Interest Rate": With respect to any
Distribution Date, the weighted average of the Stripped Interest Rates in effect
during the most recently ended calendar month for the Mortgage Loans and REO
Properties based on the respective Scheduled Principal Balances thereof as of
the Due Date in such most recently ended calendar month (or, in the case of the
initial Distribution Date, as of the Cut-off Date).

                  SECTION 1.02. Allocation of Certain Interest Shortfalls.

                  The aggregate amount of any Prepayment Interest Shortfalls (to
the extent not covered by payments by the Master Servicer pursuant to Section
3.24) and any Relief Act Interest Shortfall incurred in respect of the Mortgage
Loans for any Distribution Date shall be allocated among the Certificates (other
than the Class PO Certificates), PRO RATA in accordance with, and to the extent
of one month's interest at the Pass-Through Rate on the respective Certificate
Principal Balance or Notional Amount of such Certificate immediately prior to
such Distribution Date.

                  The aggregate amount of any Prepayment Interest Shortfalls (to
the extent not covered by payments by the Master Servicer pursuant to Section
3.24) and any Relief Act Interest Shortfall allocated to the Class A
Certificates shall be deemed allocated to REMIC I Regular Interest LT2, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Master Servicer pursuant to Section 3.24) and any
Relief Act Interest Shortfall allocated to the Class IO Certificates shall be
deemed allocated to REMIC I Regular Interest LTIO and the aggregate amount of
any Prepayment Interest Shortfalls (to the extent not covered by payments by the
Master Servicer pursuant to Section 3.24) and any Relief Act Interest Shortfall
allocated to any Class of Subordinate Certificates shall be deemed allocated to
REMIC I Regular Interest LT1.




                                      -41-



<PAGE>




                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

                  SECTION 2.01. Conveyance of Mortgage Loans.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Mortgage Loans
identified on the Mortgage Loan Schedule, the rights of the Depositor under the
Mortgage Loan Purchase Agreement (except Section 17 thereof), and all other
assets included or to be included in REMIC I. Such assignment includes all
interest and principal received by the Depositor or the Master Servicer on or
with respect to the Mortgage Loans (other than payments of principal and
interest due on such Mortgage Loans on or before the Cut-off Date). The
Depositor herewith delivers to the Trustee an executed copy of the Mortgage Loan
Purchase Agreement.

                  In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Trustee, the following documents
or instruments with respect to each Mortgage Loan so transferred and assigned (a
"Mortgage File"):

                         (i) the original Mortgage Note, endorsed in one of the
                  following forms: (i) in the name of the Co-Trustee or (ii) in
                  blank, in each case, with all prior and intervening
                  endorsements showing a complete chain of endorsement from the
                  originator to the Person so endorsing to the Co-Trustee;

                        (ii) the original Mortgage with evidence of recording
                  thereon. If in connection with any Mortgage Loan, the
                  Depositor has not caused the original recorded Mortgage to be
                  delivered to the Trustee because of a delay caused by the
                  public recording office where such Mortgage has been delivered
                  for recordation or because such Mortgage has been lost or
                  because such public recording office retains the original
                  recorded Mortgage, the Mortgage File shall include, in lieu of
                  such Mortgage, a photocopy of such Mortgage, together with (a)
                  in the case of a delay caused by the public recording office,
                  an Officer's Certificate of the title insurer insuring the
                  Mortgage stating that such Mortgage has been delivered to the
                  appropriate public recording office for recordation and that
                  the original recorded Mortgage or a copy of such Mortgage
                  certified by such public recording office to be a true and
                  complete copy of the original recorded Mortgage will be
                  promptly delivered to the Trustee upon receipt by the
                  Depositor; or (b) in the case where a public recording office
                  retains the original recorded Mortgage or in the case where a
                  Mortgage is lost after recordation in a public recording
                  office, a copy of such Mortgage with the recording information
                  thereon certified by such public recording office to be a true
                  and complete copy of the original recorded Mortgage;

                                      -42-



<PAGE>



                         (iii) an original Assignment of the Mortgage to the
                  Co-Trustee in recordable form;

                        (iv) the original recorded Assignment or Assignments of
                  the Mortgage showing a complete chain of assignment from the
                  originator to the Person assigning the Mortgage to the
                  Co-Trustee as contemplated by the immediately preceding clause
                  (iii), or if any such intervening assignment has not been
                  returned from the applicable public recording office or has
                  been lost or if such public recording office retains the
                  original recorded Assignments of Mortgage, the Mortgage File
                  shall include a photocopy of such intervening assignment,
                  together with (a) in the case of a delay caused by the public
                  recording, an Officer's Certificate of the title insurer
                  insuring the Mortgage stating that such intervening Assignment
                  of Mortgage has been delivered to the appropriate public
                  recording office for recordation and that such original
                  recorded intervening Assignment of Mortgage or a copy of such
                  intervening Assignment of Mortgage certified by the
                  appropriate public recording office to be a true and complete
                  copy of the original recorded intervening Assignment of
                  Mortgage will be promptly delivered to the Trustee upon
                  receipt thereof by the Depositor; or (b) in the case of an
                  intervening Assignment of Mortgage where a public recording
                  office retains the original recorded intervening Assignment of
                  Mortgage or in the case where an intervening Assignment of
                  Mortgage is lost after recordation in a public recording
                  office, a copy of such intervening Assignment with recording
                  information thereon certified by such public recording office
                  to be a true and complete copy of the original recorded
                  intervening Assignment of Mortgage;

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

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

                         (vii) with respect to any Mortgage Loan listed on
                  Schedule 2 attached hereto, the original Primary Mortgage
                  Insurance Policy or certificate;

                         (viii) the original mortgagee title insurance policy;

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

                         (x) the original power of attorney, if applicable.

                  To the extent not already recorded, the Trustee, at the
expense of the Depositor shall promptly (and in no event later than five
Business Days following the later of the Closing Date and the date of receipt by
the Trustee of the recording information for a Mortgage) submit or cause to be
submitted for recording, at no expense to REMIC I or the Trustee, in the
appropriate public office for real property records, each Assignment delivered
to it pursuant to Sections 2.01(iii) and (iv)

                                      -43-



<PAGE>



above. In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Trustee, at the expense of the Depositor, shall
promptly prepare or cause to be prepared a substitute Assignment or cure or
cause to be cured such defect, as the case may be, and thereafter cause each
such Assignment to be duly recorded.

                  All right, title and interest in and to each Mortgage Loan,
including but not limited to the related Mortgage and Mortgage Note, was
conveyed to the Trustee for the benefit of the Certificateholders pursuant to an
omnibus assignment in the form attached hereto as Exhibit H (the "Omnibus
Assignment"). For purposes of the following paragraph, U.S. Bank Trust National
Association (formerly known as First Trust National Association) hereby agrees
to act as co-trustee (the "Co-Trustee") for the benefit of Certificateholders.
The Co-Trustee hereby acknowledges that, notwithstanding any endorsements or
assignments in the related Mortgage Files indicating ownership of such Mortgage
Loans by the Co-Trustee in its capacity as trustee for the holders of
certificates of prior series set forth on Exhibit 1 to the Omnibus Assignment,
the Co-Trustee is holding such Mortgage Loans for the benefit of the registered
holders of Salomon Brothers Mortgage Securities VII, Inc., Series 2000-1
pursuant to this Agreement. To the extent necessary to enforce the rights of
such Certificateholders hereunder and in furtherance of the purposes of the
Omnibus Assignment, the Co-Trustee hereby agrees to execute and deliver, or
cause to be executed and delivered, such reasonable and appropriate additional
documents, instruments or agreements as may be requested by the Master Servicer,
the Depositor or the Trustee and are necessary or appropriate with respect to
such Mortgage Loans (including the recording of the Omnibus Assignment and any
additional assignments as may be necessary to record) and any such actions taken
by the Co-Trustee with respect to such Mortgage Loans shall be subject to the
provisions of Article VIII hereof as if the Co-Trustee were the Trustee
hereunder. The costs of recording the Omnibus Assignment or any additional
assignments shall be borne by the Depositor.

                  With respect to a maximum of approximately 0.5% of the
Original Mortgage Loans, by outstanding principal balance of the Original
Mortgage Loans as of the Cut-off Date, if any original Mortgage Note referred to
in Section 2.01(i) above cannot be located, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon delivery to the
Trustee of a photocopy of such Mortgage Note, if available, with a lost note
affidavit. If any of the original Mortgage Notes for which a lost note affidavit
was delivered to the Trustee is subsequently located, such original Mortgage
Note shall be delivered to the Trustee within three Business Days.

                  The Depositor shall deliver or cause to be delivered to the
Trustee promptly upon receipt thereof any other original documents constituting
a part of a Mortgage File received with respect to any Mortgage Loan, including,
but not limited to, any original documents evidencing an assumption,
modification, consolidation or extension of any Mortgage Loan.

                  All original documents relating to the Mortgage Loans that are
not delivered to the Trustee are and shall be held by or on behalf of the
Seller, the Depositor or the Master Servicer, as the case may be, in trust for
the benefit of the Trustee on behalf of the Certificateholders. In the event
that any such original document is required pursuant to the terms of this
Section to be a part of a Mortgage File, such document shall be delivered
promptly to the Trustee. Any such original

                                      -44-



<PAGE>



document delivered to or held by the Depositor that is not required pursuant to
the terms of this Section to be a part of a Mortgage File, shall be delivered
promptly to the Master Servicer.

                  SECTION 2.02. Acceptance of REMIC I by the Trustee.

                  Subject to the provisions of Section 2.01 and subject to any
exceptions noted on the exception report described in the next paragraph below,
the Trustee acknowledges receipt of the documents referred to in Section 2.01
(other than such documents described in Section 2.01(v)) above and all other
assets included in the definition of "REMIC I" under clauses (i), (iii), (iv)
and (v) (to the extent of amounts deposited into the Distribution Account) and
declares that it holds and will hold such documents and the other documents
delivered to it constituting the Mortgage File, and that it holds or will hold
all such assets and such other assets included in the definition of "REMIC I" in
trust for the exclusive use and benefit of all present and future
Certificateholders.

                  The Trustee agrees, for the benefit of the Certificateholders,
to review each Mortgage File on or before the Closing Date and to certify in
substantially the form attached hereto as Exhibit C-1 that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in the exception report
annexed thereto as not being covered by such certification), (i) all documents
constituting part of such Mortgage File (other than such documents described in
Section 2.01(v)) required to be delivered to it pursuant to this Agreement are
in its possession, (ii) such documents have been reviewed by it and are not
torn, mutilated, defaced or otherwise altered (except if initialed by the
obligor) and relate to such Mortgage Loan, (iii) based on its examination and
only as to the foregoing, the information set forth in the Mortgage Loan
Schedule that corresponds to items (i) through (iii), (vi), (vii), (ix), (x),
(xi) and (xv) of the definition of "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. It is herein acknowledged that, in
conducting such review, the Trustee is under no duty or obligation (i) to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine whether they are genuine, enforceable, or appropriate
for the represented purpose or whether they have actually been recorded or that
they are other than what they purport to be on their face, or (ii) to determine
whether any Mortgage File should include any of the documents specified in
clause (v) of Section 2.01.

                  Prior to the first anniversary date of this Agreement the
Trustee shall deliver to the Depositor and the Master Servicer a final
certification in the form annexed hereto as Exhibit C-2 evidencing the
completeness of the Mortgage Files, with any applicable exceptions noted
thereon.

                  If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trustee finds any document or documents constituting a part of a Mortgage File
to be missing or defective in any material respect, at the conclusion of its
review the Trustee shall so notify the Depositor, the Trust Administrator and
the Master Servicer. In addition, upon the discovery by the Depositor, the
Master Servicer, the Trust Administrator or the Trustee of a breach of any of
the representations and warranties made by the Seller in the Mortgage Loan
Purchase Agreement in respect of any Mortgage Loan which materially adversely
affects such Mortgage Loan or the interests of the related Certificateholders in
such

                                      -45-



<PAGE>



Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties.

                  The Trustee shall, at the written request and expense of any
Certificateholder, provide a written report to such Certificateholder of all
Mortgage Files released to the Master Servicer for servicing purposes.

                  SECTION 2.03. Repurchase or Substitution of Mortgage Loans by
                                the Seller or the Depositor.

                  (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Trustee shall promptly notify the Seller,
the Trust Administrator and the Master Servicer of such defect, missing document
or breach and request that the Seller deliver such missing document or cure such
defect or breach within 60 days from the date the Seller was notified of such
missing document, defect or breach, and if the Seller does not deliver such
missing document or cure such defect or breach in all material respects during
such period, the Master Servicer shall enforce the obligations of the Seller
under the Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from
REMIC I at the Purchase Price within 60 days after the date on which the Seller
was notified (subject to Section 2.03(e)) of such missing document, defect or
breach, if and to the extent that the Seller is obligated to do so under the
Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account, and the Trustee,
upon receipt of written certification from the Master Servicer of such deposit,
shall release to the Seller the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as the Seller shall furnish to it and as shall be necessary to vest in
the Seller any Mortgage Loan released pursuant hereto, and the Trustee shall
have no further responsibility with regard to such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as provided above, if so provided in the
Mortgage Loan Purchase Agreement, the Seller may cause such Mortgage Loan to be
removed from REMIC I (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute Mortgage Loans in the manner and
subject to the limitations set forth in Section 2.03(d).
It is understood and agreed that the obligation of the Seller to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a constituent document exists or as to which such
a breach has occurred and is continuing shall constitute the sole remedy
respecting such omission, defect or breach available to the Trustee on behalf of
the Certificateholders.

                  (b) Subject to Section 2.03(e), within 60 days of the earlier
of discovery by the Depositor or receipt of notice by the Depositor of the
breach of any representation or warranty of the Depositor set forth in Section
2.04 with respect to any Mortgage Loan, which materially adversely affects the
value of such Mortgage Loan or the interest therein of the Certificateholders,
the Depositor shall (i) cure such breach in all material respects, (ii)
repurchase the Mortgage Loan from REMIC I at the Purchase Price or (iii) remove
such Mortgage Loan from REMIC I (in which case

                                      -46-



<PAGE>



it shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans in the manner and subject to the limitations set forth
in Section 2.03(d). If any such breach is a breach of any of the representations
and warranties included in Section 2.04(a)(iv), and the Depositor is unable to
cure such breach, the Depositor shall repurchase or substitute the smallest
number of Mortgage Loans as shall be required to make such representation or
warranty true and correct. The Purchase Price for any repurchased Mortgage Loan
shall be delivered to the Master Servicer for deposit in the Collection Account,
and the Trustee, upon receipt of written certification from the Master Servicer
of such deposit, shall at the Depositor's direction release to the Depositor the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment furnished by the Depositor, in each case without recourse, as the
Depositor shall furnish to it and as shall be necessary to vest in the Depositor
any Mortgage Loan released pursuant hereto.

                  (c) Within 60 days of the earlier of discovery by the Master
Servicer or receipt of notice by the Master Servicer of the breach of any
representation, warranty or covenant of the Master Servicer set forth in Section
2.05 which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the Master Servicer shall cure such
breach in all material respects.

                  (d) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a), in the case of the
Seller, or Section 2.03(b), in the case of the Depositor, must be effected prior
to the date which is two years after the Startup Day for REMIC I.

                  As to any Deleted Mortgage Loan for which the Seller or the
Depositor substitutes a Qualified Substitute Mortgage Loan or Loans, such
substitution shall be effected by the Seller or the Depositor, as the case may
be, delivering to the Trustee, for such Qualified Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Qualified Substitute Mortgage Loan satisfies the definition thereof
and specifying the Substitution Shortfall Amount (as described below), if any,
in connection with such substitution. The Trustee shall acknowledge receipt for
such Qualified Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, review such documents in the manner specified in Section 2.02 and
deliver to the Depositor and the Master Servicer, with respect to such Qualified
Substitute Mortgage Loan or Loans, a certification substantially in the form
attached hereto as Exhibit C-1, with any applicable exceptions noted thereon.
Within one year of the date of substitution, the Trustee shall deliver to the
Depositor and the Master Servicer a certification substantially in the form of
Exhibit C-2 hereto with respect to such Qualified Substitute Mortgage Loan or
Loans, with any applicable exceptions noted thereon.
Monthly Payments due with respect to Qualified Substitute Mortgage Loans in the
month of substitution are not part of REMIC I and will be retained by the
Depositor or the Seller, as the case may be. For the month of substitution,
distributions to Certificateholders will reflect the Monthly Payment due on such
Deleted Mortgage Loan on or before the Due Date in the month of substitution,
and the Depositor or the Seller, as the case may be, shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Mortgage Loan. The Depositor shall give or cause to be given written notice to
the Certificateholders that such substitution has taken place, shall amend

                                      -47-



<PAGE>



the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan
from the terms of this Agreement and the substitution of the Qualified
Substitute Mortgage Loan or Loans and shall deliver a copy of such amended
Mortgage Loan Schedule to the Trustee. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool and
shall be subject in all respects to the terms of this Agreement and, in the case
of a substitution effected by the Seller, the Mortgage Loan Purchase Agreement,
including, in the case of a substitution effected by the Seller, all applicable
representations and warranties thereof included in the Mortgage Loan Purchase
Agreement, and in the case of a substitution effected by the Depositor, all
applicable representations and warranties thereof set forth in Section 2.04, in
each case as of the date of substitution.

                  For any month in which the Depositor or the Seller substitutes
one or more Qualified Substitute Mortgage Loans for one or more Deleted Mortgage
Loans, the Master Servicer will determine the amount (the "Substitution
Shortfall Amount"), if any, by which the aggregate Purchase Price of all such
Deleted Mortgage Loans exceeds the aggregate of, as to each such Qualified
Substitute Mortgage Loan, the Scheduled Principal Balance thereof as of the date
of substitution, together with one month's interest on such Scheduled Principal
Balance at the applicable Mortgage Loan Remittance Rate. On the date of such
substitution, the Depositor or the Seller, as the case may be, will deliver or
cause to be delivered to the Master Servicer for deposit in the Collection
Account an amount equal to the Substitution Shortfall Amount, if any, and the
Trustee, upon receipt of the related Qualified Substitute Mortgage Loan or Loans
and certification by the Master Servicer of such deposit, shall release to the
Depositor or the Seller, as the case may be, the related Mortgage File or Files
and shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as the Depositor or the Seller, as the case may be,
shall deliver to it and as shall be necessary to vest therein any Deleted
Mortgage Loan released pursuant hereto.

                  In addition, the Depositor or the Seller, as the case may be,
shall obtain at its own expense and deliver to the Trustee an Opinion of Counsel
to the effect that such substitution will not cause (a) any federal tax to be
imposed on either REMIC I or REMIC II, including without limitation, any federal
tax imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or
on "contributions after the startup date" under Section 860G(d)(1) of the Code,
or (b) either REMIC I or REMIC II to fail to qualify as a REMIC at any time that
any Certificate is outstanding.

                  (e) Upon discovery by the Depositor, the Seller, the Master
Servicer, the Trust Administrator 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 within two Business Days give
written notice thereof to the other parties. In connection therewith, the Seller
or the Depositor shall repurchase or, subject to the limitations set forth in
Section 2.03(d), substitute one or more Qualified Substitute Mortgage Loans for
the affected Mortgage Loan within 60 days of the earlier of discovery or receipt
of such notice with respect to such affected Mortgage Loan. Such repurchase or
substitution shall be made by (i) the Seller, if the affected Mortgage Loan's
status as a non-qualified mortgage is or results from a breach of any
representation, warranty or covenant made by the Seller under the Mortgage Loan
Purchase Agreement, or (ii) the Depositor, if the affected Mortgage Loan's
status as a non-qualified mortgage is a breach of any representation or warranty
of the Depositor set forth in Section 2.04 or if the status as a non-qualified
mortgage is

                                      -48-



<PAGE>



a breach of no representation or warranty. Any such repurchase or substitution
shall be made in the same manner as set forth in Sections 2.03(a), if made by
the Seller, or 2.03(b), if made by the Depositor. The Trustee shall reconvey to
the Depositor or the Seller, as the case may be, 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.

                  SECTION 2.04. Representations and Warranties of the Depositor.

                  (a) The Depositor hereby represents and warrants to the
Trustee for the benefit of the Certificateholders that as of the Closing Date or
as of such other date specifically provided herein:

                         (i) The information set forth in the Mortgage Loan
                  Schedule for the Original Mortgage Loans is complete, true and
                  correct in all material respects at the date or dates
                  respecting which such information is furnished;

                           (ii) Except with respect to approximately 4.47% of
                  the Original Mortgage Loans which the related Mortgagors had
                  not made their February 2000 Monthly Payment as of February
                  29, 2000, by outstanding principal balance of the Original
                  Mortgage Loans as of the Cut-off Date; as of February 29,
                  2000, the Monthly Payment due under each Original Mortgage
                  Loan is not delinquent in payment; except with respect to
                  approximately 2.15% of the Original Mortgage Loans, by
                  outstanding principal balance of the Original Mortgage Loans
                  as of the Cut-off Date, the Monthly Payment due under each
                  Mortgage Loan has not been 30 or more days delinquent in
                  payment more than once in the twelve month period prior to the
                  Cut-off Date (assuming that a "rolling" 30 day Delinquency is
                  considered to be delinquent only once);

                       (iii) Each Original Mortgage Loan had an original term to
                  maturity of not greater than 30 years; each Original Mortgage
                  Loan is a fixed-rate, fully amortizing mortgage loan with
                  payments due on the first day of each month;

                        (iv) (A) no more than approximately 40.13%,
                  approximately 17.18%, approximately 15.50% and approximately
                  3.97% of the Original Mortgage Loans, by outstanding principal
                  balance of the Original Mortgage Loans as of the Cut-off Date,
                  will be secured by Mortgaged Properties located in California,
                  New York, New Jersey and Texas, respectively, and no more than
                  approximately 3.00% of the Original Mortgage Loans, by
                  outstanding principal balance of the Original Mortgage Loans
                  as of the Cut-off Date, will be secured by Mortgaged
                  Properties located in any other single state; (B) as of the
                  Cut-off Date, no more than approximately 1.74% of the Original
                  Mortgage Loans, by outstanding principal balance of the
                  Original Mortgage Loans as of the Cut-off Date, are secured by
                  Mortgaged Properties located in any one California zip code
                  area, and no more than approximately 8.06% of the Original
                  Mortgage Loans, by outstanding principal balance of the
                  Original Mortgage Loans as of the Cut-off Date are secured by
                  units in two- to four-family dwellings,

                                      -49-



<PAGE>



                  condominiums and planned unit developments; and (C) at least
                  approximately 91.94% of the Original Mortgage Loans, by
                  outstanding principal balance of the Original Mortgage Loans
                  as of the Cut-off Date, are secured by real property with a
                  single family residence erected thereon;

                         (v) If the Mortgaged Property securing an Original
                  Mortgage Loan is identified in the Federal Register by the
                  Federal Emergency Management Agency ("FEMA") as having special
                  flood hazards, a flood insurance policy is in effect at the
                  Closing Date which met the requirements of FEMA at the time
                  such policy was issued;

                        (vi) With respect to at least approximately 95.10% of
                  the Original Mortgage Loans, by outstanding principal balance
                  of the Original Mortgage Loans as of the Cut-off Date, the
                  Loan-to-Value Ratio was not more than 80.00% at the
                  origination of such Original Mortgage Loan and with respect to
                  approximately 4.90% of the Original Mortgage Loans, by
                  outstanding principal balance of the Original Mortgage Loans
                  as of the Cut-off Date, the Loan-to-Value Ratio was between
                  80.01% and 83.62% and except with respect to 2.86% of the
                  Original Mortgage Loans, by outstanding principal balance of
                  the Original Mortgage Loans as of the Cut-off Date, each such
                  Mortgage Loan is subject to a Primary Mortgage Insurance
                  Policy, issued by a Qualified Insurer, which insures as to
                  payment defaults that portion of the Mortgage Loan in excess
                  of the portion of the Value of the Mortgaged Property required
                  by Fannie Mae; and

                       (vii) With respect to at least approximately 93.41% of
                  the Original Mortgage Loans, by outstanding principal balance
                  of the Original Mortgage Loans as of the Cut-off Date, at the
                  time that the Mortgage Loan was made, the Mortgagor
                  represented that the Mortgagor would occupy the Mortgaged
                  Property as the Mortgagor's primary residence. With respect to
                  approximately 6.59% of the Original Mortgage Loans, by
                  outstanding principal balance of the Original Mortgage Loans
                  as of the Cut-off Date, at the time that the Mortgage Loan was
                  made, the Mortgagor represented that the Mortgagor would
                  occupy the Mortgaged Property as the Mortgagor's secondary
                  residence or that the Mortgaged Property would be an investor
                  property.

                  (b) It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Certificateholders
notwithstanding any restrictive or qualified endorsement or assignment. Upon
discovery by any of the Depositor, the Master Servicer, the Trust Administrator
or the Trustee of a breach of any of the foregoing representations and
warranties which materially and adversely affects the value of any Mortgage Loan
or the interests therein of the Certificateholders, the party discovering such
breach shall give prompt written notice to the other parties, and in no event
later than two Business Days from the date of such discovery. It is understood
and agreed that the obligations of the Depositor set forth in Section 2.03(b) to
cure, substitute for or repurchase a Mortgage Loan constitute the sole remedies
available to the

                                      -50-



<PAGE>



Certificateholders or to the Trustee on their behalf respecting a breach of the
representations and warranties contained in this Section 2.04.

                  SECTION 2.05. Representations, Warranties and Covenants of the
                                Master Servicer.

                  The Master Servicer hereby represents, warrants and covenants
to the Trust Administrator and the Trustee, for the benefit of each of the
Trustee, the Trust Administrator, the Certificateholders and to the Depositor
that as of the Closing Date or as of such date specifically provided herein:

                         (i) The Master Servicer is a corporation duly
                  organized, validly existing and in good standing under the
                  laws of the State of Delaware and is duly authorized and
                  qualified to transact any and all business contemplated by
                  this Agreement to be conducted by the Master Servicer in any
                  state in which a Mortgaged Property is located or is otherwise
                  not required under applicable law to effect such qualification
                  and, in any event, is in compliance with the doing business
                  laws of any such State, to the extent necessary to ensure its
                  ability to enforce each Mortgage Loan and to service the
                  Mortgage Loans in accordance with the terms of this Agreement;

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

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

                                      -51-



<PAGE>



                  to, bound by, or in breach or violation of any indenture or
                  other agreement or instrument, or subject to or in violation
                  of any statute, order or regulation of any court, regulatory
                  body, administrative agency or governmental body having
                  jurisdiction over it, which materially and adversely affects
                  or, to the Master Servicer's knowledge, would in the future
                  materially and adversely affect, (x) the ability of the Master
                  Servicer to perform its obligations under this Agreement or
                  (y) the business, operations, financial condition, properties
                  or assets of the Master Servicer taken as a whole;

                        (iv) The Master Servicer is an approved seller/servicer
                  for Fannie Mae or Freddie Mac in good standing and is a HUD
                  approved mortgagee pursuant to Section 203 of the National
                  Housing Act;

                         (v) No litigation is pending against the Master
                  Servicer that would materially and adversely affect the
                  execution, delivery or enforceability of this Agreement or the
                  ability of the Master Servicer to service the Mortgage Loans
                  or to perform any of its other obligations hereunder in
                  accordance with the terms hereof;

                        (vi) No consent, approval, authorization or order of any
                  court or governmental agency or body is required for the
                  execution, delivery and performance by the Master Servicer of,
                  or compliance by the Master Servicer with, this Agreement or
                  the consummation of the transactions contemplated by this
                  Agreement, except for such consents, approvals, authorizations
                  or orders, if any, that have been obtained prior to the
                  Closing Date; and

                       (vii) The Master Servicer covenants that its computer and
                  other systems used in servicing the Mortgage Loans operate in
                  a manner such that the Master Servicer can service the
                  Mortgage Loans in accordance with the terms of this Agreement.

                  It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trustee and shall inure to the benefit of the
Trustee, the Trust Administrator, the Depositor and the Certificateholders. Upon
discovery by any of the Depositor, the Master Servicer, the Trust Administrator
or the Trustee of a breach of any of the foregoing representations, warranties
and covenants which materially and adversely affects the value of any Mortgage
Loan or the interests therein of the Certificateholders, the party discovering
such breach shall give prompt written notice (but in no event later than two
Business Days following such discovery) to the Trustee. Subject to Section 7.01,
the obligation of the Master Servicer set forth in Section 2.03(c) to cure
breaches shall constitute the sole remedies against the Master Servicer
available to the Certificateholders, the Depositor, the Trust Administrator or
the Trustee on behalf of the Certificateholders respecting a breach of the
representations, warranties and covenants contained in this Section 2.05.

                                      -52-



<PAGE>




                  SECTION 2.06. Issuance of Class R-I Certificates.

                  The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it of the Mortgage Files, subject to the provisions of
Section 2.01 and Section 2.02, together with the assignment to it of all other
assets included in REMIC I delivered on the date hereof, receipt of which is
hereby acknowledged. Concurrently with such assignment and delivery of such
assets delivered on the date hereof and in exchange therefor, the Trustee,
pursuant to the written request of the Depositor executed by an officer of the
Depositor, has executed, authenticated and delivered to or upon the order of the
Depositor, the Class R-I Certificates in authorized denominations. The interests
evidenced by the Class R-I Certificates, together with the REMIC I Regular
Interests, constitute the entire beneficial ownership interest in REMIC I.

                  SECTION 2.07. Conveyance of REMIC I Regular Interests;
                                Acceptance of REMIC II by the Trustee.

                  The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the REMIC II
Certificateholders. The Trustee acknowledges receipt of the REMIC I Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit of all present and future REMIC II Certificateholders.
The rights of the REMIC II Certificateholders to receive distributions from the
proceeds of REMIC II in respect of the REMIC II Certificates, and all ownership
interests of the REMIC II Certificateholders in and to such distributions, shall
be as set forth in this Agreement.

                  SECTION 2.08. Issuance of REMIC II Certificates.

                  The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the REMIC II Certificates in authorized denominations evidencing
the entire beneficial ownership interest in REMIC II.


                                      -53-



<PAGE>



                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                              OF THE MORTGAGE LOANS

                  SECTION 3.01. Master Servicer to Act as Master Servicer.


         The Master Servicer shall service and administer the Mortgage Loans on
behalf of the Trustee and in the best interests of and for the benefit of the
Certificateholders (as determined by the Master Servicer in its reasonable
judgment) in accordance with the terms of this Agreement and the respective
Mortgage Loans and, to the extent consistent with such terms, in the same manner
in which it services and administers similar mortgage loans for its own
portfolio, giving due consideration to customary and usual standards of practice
of prudent mortgage lenders and loan servicers administering similar mortgage
loans but without regard to:

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

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

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

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

To the extent consistent with the foregoing, the Master Servicer shall also seek
to maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Master
Servicer shall have full power and authority, acting alone or through
Sub-Servicers as provided in Section 3.02, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Master Servicer in its own name or in the name of a Sub-Servicer is hereby
authorized and empowered by the Trustee when the Master Servicer believes it
appropriate in its best judgment in accordance with the servicing standards set
forth above, to execute and deliver, on behalf of the Certificateholders and the
Trustee, and upon notice to the Trustee, any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans and the Mortgaged
Properties and to institute foreclosure proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the ownership of such properties, and to hold or
cause to be held title to such properties, on behalf of the Trustee and
Certificateholders. The Master Servicer shall service and administer the
Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any

                                      -54-



<PAGE>



reports required to be provided to them thereby. The Master Servicer shall also
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under each Primary Mortgage Insurance Policy and
any standard hazard insurance policy. Subject to Section 3.17, the Trustee shall
execute, at the written request of the Master Servicer, and furnish to the
Master Servicer and any Sub-Servicer such documents as are necessary or
appropriate to enable the Master Servicer or any Sub-Servicer to carry out their
servicing and administrative duties hereunder, and the Trustee hereby grants to
the Master Servicer a power of attorney to carry out such duties.
The Trustee shall not be liable for the actions of the Master Servicer or any
Sub-Servicers under such powers of attorney.

                  In accordance with the standards of the preceding paragraph,
the Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the timely payment of taxes and assessments on the
Mortgaged Properties, which advances shall be Servicing Advances reimbursable in
the first instance from related collections from the Mortgagors pursuant to
Section 3.09, and further as provided in Section 3.11. Any cost incurred by the
Master Servicer or by Sub- Servicers in effecting the timely payment of taxes
and assessments on a Mortgaged Property shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit.

                  Notwithstanding anything in this Agreement to the contrary,
the Master Servicer may not make any future advances with respect to a Mortgage
Loan (except as provided in Section 4.03) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan or (ii) permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both (A) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or final,
temporary or proposed Treasury regulations promulgated thereunder) and (B) cause
either REMIC I or REMIC II to fail to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited transactions" or "contributions after the
startup date" under the REMIC Provisions.

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

                  SECTION 3.02. Sub-Servicing Agreements Between the Master
                                Servicer and Sub-Servicers.

                  (a) The Master Servicer may enter into Sub-Servicing
Agreements (provided that such agreements would not result in a withdrawal or a
downgrading by the Rating Agency of the rating on any Class of Certificates)
with Sub-Servicers, for the servicing and administration of the Mortgage Loans.

                  Each Sub-Servicer shall be (i) authorized to transact business
in the state or states in which the related Mortgaged Properties it is to
service are situated, if and to the extent required by

                                      -55-



<PAGE>



applicable law to enable the Sub-Servicer to perform its obligations hereunder
and under the Sub- Servicing Agreement, (ii) an institution approved as a
mortgage loan originator by the Federal Housing Administration or an institution
the deposit accounts of which are insured by the FDIC and (iii) a Freddie Mac or
Fannie Mae approved mortgage servicer. Each Sub-Servicing Agreement must impose
on the Sub-Servicer requirements conforming to the provisions set forth in
Section 3.08 and provide for servicing of the Mortgage Loans consistent with the
terms of this Agreement. The Master Servicer will examine each Sub-Servicing
Agreement and will be familiar with the terms thereof. The terms of any
Sub-Servicing Agreement will not be inconsistent with any of the provisions of
this Agreement. The Master Servicer and the Sub-Servicers may enter into and
make amendments to the Sub-Servicing Agreements or enter into different forms of
Sub-Servicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of this
Agreement, and that no such amendment or different form shall be made or entered
into which could be reasonably expected to be materially adverse to the
interests of the Certificateholders, without the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any variation
without the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights from the provisions set forth in Section 3.08 relating to
insurance or priority requirements of Sub-Servicing Accounts, or credits and
charges to the Sub- Servicing Accounts or the timing and amount of remittances
by the Sub-Servicers to the Master Servicer, are conclusively deemed to be
inconsistent with this Agreement and therefore prohibited. The Master Servicer
shall deliver to the Trustee copies of all Sub-Servicing Agreements, and any
amendments or modifications thereof, promptly upon the Master Servicer's
execution and delivery of such instruments.

                  (b) As part of its servicing activities hereunder, the Master
Servicer (except as otherwise provided in the last sentence of this paragraph),
for the benefit of the Trustee and the Certificateholders, shall enforce the
obligations of each Sub-Servicer under the related Sub-Servicing Agreement and
of the Seller under the Mortgage Loan Purchase Agreement, including, without
limitation, any obligation to make advances in respect of delinquent payments as
required by a Sub- Servicing Agreement, or to purchase a Mortgage Loan on
account of missing or defective documentation or on account of a breach of a
representation, warranty or covenant, as described in Section 2.03(a). Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreements, and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement, to
the extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans, or (ii) from a specific recovery of costs, expenses or
attorneys' fees against the party against whom such enforcement is directed.

                  SECTION 3.03. Successor Sub-Servicers.

                  The Master Servicer shall be entitled to terminate any
Sub-Servicing Agreement and the rights and obligations of any Sub-Servicer
pursuant to any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement. In the event of

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termination of any Sub-Servicer, all servicing obligations of such Sub-Servicer
shall be assumed simultaneously by the Master Servicer without any act or deed
on the part of such Sub-Servicer or the Master Servicer, and the Master Servicer
either shall service directly the related Mortgage Loans or shall enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 3.02.

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

                  SECTION 3.04. Liability of the Master Servicer.

                  Notwithstanding any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a Sub-Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Trustee and the Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section
3.01 without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and conditions
as if the Master Servicer alone were servicing and administering the Mortgage
Loans. The Master Servicer shall be entitled to enter into any agreement with a
Sub- Servicer for indemnification of the Master Servicer by such Sub-Servicer
and nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.

                  SECTION 3.05. No Contractual Relationship Between
                                Sub-Servicers and Trustee or Certificateholders.

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

                  SECTION 3.06. Assumption or Termination of Sub-Servicing
                                Agreements by Trustee.

                  In the event the Master Servicer shall for any reason no
longer be the master servicer (including by reason of the occurrence of a Master
Servicer Event of Default), the Trustee or its designee shall thereupon assume
all of the rights and obligations of the Master Servicer under each
Sub-Servicing Agreement that the Master Servicer may have entered into, unless
the Trustee elects to terminate any Sub-Servicing Agreement in accordance with
its terms as provided in Section 3.03. Upon such assumption, the Trustee, its
designee or the successor servicer for the Trustee appointed

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<PAGE>



pursuant to Section 7.02 shall be deemed, subject to Section 3.03, to have
assumed all of the Master Servicer's interest therein and to have replaced the
Master Servicer as a party to each Sub-Servicing Agreement to the same extent as
if each Sub-Servicing Agreement had been assigned to the assuming party, except
that (i) the Master Servicer shall not thereby be relieved of any liability or
obligations under any Sub-Servicing Agreement and (ii) none of the Trustee, its
designee or any successor Master Servicer shall be deemed to have assumed any
liability or obligation of the Master Servicer that arose before it ceased to be
the Master Servicer.

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

                  SECTION 3.07. Collection of Certain Mortgage Loan Payments.

                  The Master Servicer shall make reasonable efforts to collect
all payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any related Primary Mortgage Insurance Policy
and any other applicable insurance policies, follow such collection procedures
as it would follow with respect to mortgage loans comparable to the Mortgage
Loans and held for its own account. Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive any late payment charge or, if
applicable, penalty interest, only upon determining that the coverage of such
Mortgage Loan by the related Primary Mortgage Insurance Policy, if any, will not
be affected, or (ii) extend the due dates for Monthly Payments due on a Mortgage
Note for a period of not greater than 180 days; provided that any extension
pursuant to clause (ii) above shall not affect the amortization schedule of any
Mortgage Loan for purposes of any computation hereunder, except as provided
below. In the event of any such arrangement pursuant to clause (ii) above, the
Master Servicer shall make timely advances on such Mortgage Loan during such
extension pursuant to Section 4.03 and 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 Master Servicer, such default is
reasonably foreseeable, the Master Servicer, consistent with the standards set
forth in Section 3.01, may also accept payment from the related Mortgagor of an
amount less than the Stated Principal Balance in final satisfaction of such
Mortgage Loan (such payment, a "Short Pay-off") or consent to the postponement
of strict compliance with any such term or otherwise grant indulgence to any
Mortgagor.

                  SECTION 3.08. Sub-Servicing Accounts.

                  In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required
to establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account (which account
must be an Eligible

                                      -58-



<PAGE>



Account) in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than two Business Day after the Sub-Servicer's
receipt thereof, all proceeds of Mortgage Loans received by the Sub- Servicer
less its servicing compensation to the extent permitted by the Sub-Servicing
Agreement, and shall thereafter deposit such amounts in the Sub-Servicing
Account, in no event more than one Business Days after the deposit of such funds
into the clearing account. The Sub-Servicer shall thereafter deposit such
proceeds in the Collection Account or remit such proceeds to the Master Servicer
for deposit in the Collection Account not later than two Business Days after the
deposit of such amounts in the Sub-Servicing Account. For purposes of this
Agreement, the Master Servicer shall be deemed to have received payments on the
Mortgage Loans when the Sub-Servicer receives such payments.

                  SECTION 3.09. Collection of Taxes, Assessments and Similar
                                Items; Servicing Accounts.

                  The Master Servicer shall establish and maintain one or more
accounts (the "Servicing Accounts"), into which all collections from the
Mortgagors (or related advances from Sub-Servicers) for the payment of ground
rents, taxes, assessments, fire and hazard insurance premiums, Primary Mortgage
Insurance Premiums, water charges, sewer rents and comparable items for the
account of the Mortgagors ("Escrow Payments") shall be deposited and retained.
Servicing Accounts shall be Eligible Accounts. The Master Servicer shall deposit
in the clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than two Business Day after the Master Servicer's receipt thereof, all
Escrow Payments collected on account of the Mortgage Loans and shall thereafter
deposit such Escrow Payments in the Servicing Accounts, in no event more than
one Business Days after the deposit of such funds in the clearing account, for
the purpose of effecting the payment of any such items as required under the
terms of this Agreement. Withdrawals of amounts from a Servicing Account may be
made only to (i) effect payment of Escrow Payments; (ii) reimburse the Master
Servicer (or a Sub-Servicer to the extent provided in the related Sub-Servicing
Agreement) out of related collections for any advances made pursuant to Section
3.01 (with respect to taxes and assessments) and Section 3.14 (with respect to
hazard insurance); (iii) refund to Mortgagors any sums as may be determined to
be overages; (iv) pay interest, if required and as described below, to
Mortgagors on balances in the Servicing Account; (v) clear and terminate the
Servicing Account at the termination of the Master Servicer's obligations and
responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Article IX; or (vi) recover amounts deposited in error. As part
of its servicing duties, the Master Servicer or Sub-Servicers shall pay to the
Mortgagors interest on funds in Servicing Accounts, to the extent required by
law and, to the extent that interest earned on funds in the Servicing Accounts
is insufficient, to pay such interest from its or their own funds, without any
reimbursement therefor. To the extent that a Mortgage does not provide for
Escrow Payments, the Master Servicer shall determine whether any such payments
are made by the Mortgagor in a manner and at a time that avoids the loss of the
Mortgaged Property due to a tax sale or the foreclosure of a tax lien. The
Master Servicer assumes full responsibility for the payment of all such bills
and shall effect payments of all such bills irrespective of the Mortgagor's

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<PAGE>



faithful performance in the payment of same or the making of the Escrow Payments
and shall make advances from its own funds to effect such payments.

                  SECTION 3.10. Collection Account and Distribution Account.

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

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

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

                       (iii) all Insurance Proceeds, Trailing Recoveries and
                  Liquidation Proceeds (other than proceeds collected in respect
                  of any particular REO Property and amounts paid by the Master
                  Servicer in connection with a purchase of Mortgage Loans and
                  REO Properties pursuant to Section 9.01);

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

                         (v) any amounts required to be deposited by the Master
                  Servicer pursuant to the second paragraph of Section 3.14(a)
                  in respect of any blanket policy deductibles;

                         (vi) all proceeds of any Mortgage Loan repurchased or
                  purchased in accordance with Section 2.03 or Section 9.01; and

                         (vii) all amounts required to be deposited in
                  connection with shortfalls in principal amount of Qualified
                  Substitute Mortgage Loans pursuant to Section 2.03.


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<PAGE>



For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the date
of substitution.

                  The foregoing requirements for deposit in the Collection
Accounts shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges or assumption fees need not be deposited by the Master Servicer in the
Collection Account. In the event the Master Servicer shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision herein
to the contrary notwithstanding.

                  (b) On behalf of the Trust Fund, the Trustee shall establish
and maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Certificateholders. On behalf of
the Trust Fund, the Master Servicer shall deliver to the Trustee in immediately
available funds for deposit in the Distribution Account on or before 3:00 p.m.
New York time (i) on the Master Servicer Remittance Date, that portion of the
Available Distribution Amount (calculated without regard to the references in
clause (2) of the definition thereof to amounts that may be withdrawn from the
Distribution Account) for the related Distribution Date then on deposit in the
Collection Account and the amount of any funds reimbursable to an Advancing
Person pursuant to Section 3.26, and (ii) on each Business Day as of the
commencement of which the balance on deposit in the Collection Account exceeds
$75,000 following any withdrawals pursuant to the next succeeding sentence, the
amount of such excess, but only if the Collection Account constitutes an
Eligible Account solely pursuant to clause (ii) of the definition of "Eligible
Account." If the balance on deposit in the Collection Account exceeds $75,000 as
of the commencement of business on any Business Day and the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account," the Master Servicer shall, on or before 3:00 p.m. New
York time on such Business Day, withdraw from the Collection Account any and all
amounts payable or reimbursable to the Depositor, the Master Servicer, the
Trustee, the Trust Administrator, the Co-Trustee, the Seller or any Sub-Servicer
pursuant to Section 3.11 and shall pay such amounts to the Persons entitled
thereto.

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

                  (d) Funds held in the Collection Account at any time may be
delivered by the Master Servicer to the Trustee for deposit in an account (which
may be the Distribution Account and must satisfy the standards for the
Distribution Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of the Collection
Account; provided, however, that the Trustee shall have the sole authority to
withdraw any funds held pursuant to this subsection (d). In the event the Master
Servicer shall deliver to the Trustee for deposit in the Distribution Account
any amount not required to be deposited therein, it may at any time request that

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<PAGE>



the Trustee withdraw such amount from the Distribution Account and remit to it
any such amount, any provision herein to the contrary notwithstanding. In
addition, the Master Servicer shall deliver to the Trustee from time to time for
deposit, and upon written notification from the Master Servicer, the Trustee
shall so deposit, in the Distribution Account:

                         (i) any P&I Advances, as required pursuant to Section
                  4.03, unless delivered directly to the Trustee by an Advancing
                  Person;

                         (ii) any amounts required to be deposited pursuant to
                  Section 3.23(d) or (f) in connection with any REO Property;

                         (iii) any amounts to be paid by the Master Servicer in
                  connection with a purchase of Mortgage Loans and REO
                  Properties pursuant to Section 9.01;

                         (iv) any amounts required to be deposited pursuant to
                  Section 3.24 in connection with any Prepayment Interest
                  Shortfalls; and

                         (v) any Stayed Funds, as soon as permitted by the
                  federal bankruptcy court having jurisdiction in such matters.

                  (e) Promptly upon receipt of any Stayed Funds, whether from
the Master Servicer, a trustee in bankruptcy, or federal bankruptcy court or
other source, the Trustee shall deposit such funds in the Distribution Account,
subject to withdrawal thereof pursuant to Section 7.02(b) or as otherwise
permitted hereunder.

                  (f) The Master Servicer shall deposit in the Collection
Account any amounts required to be deposited pursuant to Section 3.12(b) in
connection with losses realized on Permitted Investments with respect to funds
held in the Collection Account.

                  SECTION 3.11. Withdrawals from the Collection Account and
                                Distribution Account.

                  (a) The Master Servicer shall, from time to time, make
withdrawals from the Collection Account for any of the following purposes or as
described in Section 4.03:

                         (i) to remit to the Trustee for deposit in the
                  Distribution Account the amounts required to be so remitted
                  pursuant to Section 3.10(b) or permitted to be so remitted
                  pursuant to the first sentence of Section 3.10(d);

                        (ii) subject to Section 3.16(d), to reimburse the Master
                  Servicer for P&I Advances, but only to the extent of amounts
                  received which represent Late Collections (net of the related
                  Servicing Fees) of Monthly Payments on Mortgage Loans with
                  respect to which such P&I Advances were made in accordance
                  with the provisions of Section 4.03;


                                      -62-



<PAGE>



                       (iii) subject to Section 3.16(d), to pay the Master
                  Servicer or any Sub- Servicer (a) any unpaid Servicing Fees,
                  (b) any unreimbursed Servicing Advances with respect to each
                  Mortgage Loan, but only to the extent of any Liquidation
                  Proceeds, Insurance Proceeds or other amounts as may be
                  collected by the Master Servicer from a Mortgagor, or
                  otherwise received with respect to such Mortgage Loan and (c)
                  any nonrecoverable Servicing Advances following the final
                  liquidation of a Mortgage Loan, but only to the extent that
                  Late Collections, Liquidation Proceeds and Insurance Proceeds
                  received with respect to such Mortgage Loan are insufficient
                  to reimburse the Master Servicer or any Sub-Servicer for
                  Servicing Advances;

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

                         (v) to pay to the Master Servicer, the Depositor or the
                  Seller, as the case may be, with respect to each Mortgage Loan
                  that has previously been purchased or replaced pursuant to
                  Section 2.03 or Section 3.16(c) all amounts received thereon
                  subsequent to the date of purchase or substitution, as the
                  case may be;

                        (vi) to reimburse the Master Servicer for any P&I
                  Advance previously made which the Master Servicer has
                  determined to be a Nonrecoverable P&I Advance in accordance
                  with the provisions of Section 4.03;

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

                      (viii) to reimburse the Master Servicer or the Trustee, as
                  the case may be, for expenses reasonably incurred in respect
                  of the breach or defect giving rise to the purchase obligation
                  under Section 2.03 or Section 2.04 of this Agreement that were
                  included in the Purchase Price of the Mortgage Loan, including
                  any expenses arising out of the enforcement of the purchase
                  obligation;

                       (ix) to pay, or to reimburse the Master Servicer for
                  advances in respect of, expenses incurred in connection with
                  any Mortgage Loan pursuant to Section 3.16(b);

                       (x) if the Master Servicer is the Trust Administrator, to
                  pay to the Trust Administrator the related portion of the
                  Administration Fee; and

                       (xi) to clear and terminate the Collection Account
                  pursuant to Section 9.01.


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<PAGE>



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

                  (b) The Trustee shall, from time to time, make withdrawals
from the Distribution Account, for any of the following purposes, without
priority:

                         (i) to make distributions to Certificateholders in
                  accordance with Section 4.01;

                        (ii) to pay to itself and the Trust Administrator (if
                  the Trust Administrator is not the Master Servicer) amounts to
                  which each is entitled pursuant to Section 8.05 and any other
                  Extraordinary Trust Fund Expenses;

                         (iii) to pay itself any interest income earned on funds
                  deposited in the Distribution Account pursuant to Section
                  3.12(c);

                         (iv) to reimburse itself pursuant to Section 7.02;

                         (v) to pay any amounts in respect of taxes pursuant to
                  10.01(g)(iii);

                         (vi) to pay to an Advancing Person reimbursements for
                  P&I Advances and/or Servicing Advances pursuant to Section
                  3.26;

                       (vii) to reimburse itself for any P&I Advance made by it
                  under Section 7.01 (if not reimbursed by the Master Servicer)
                  to the same extent the Master Servicer would be entitled to
                  reimbursement under Section 3.11(a); and

                         (viii) to clear and terminate the Distribution Account
                  pursuant to Section 9.01.

                  SECTION 3.12. Investment of Funds in the Collection Account
                                and the Distribution Account.

                  (a) The Master Servicer may direct any depository institution
maintaining the Collection Account (for purposes of this Section 3.12, an
"Investment Account"), and the Trustee, in its individual capacity, may direct
any depository institution maintaining the Distribution Account (for purposes of
this Section 3.12, also an "Investment Account"), to invest the funds in such
Investment Account in one or more Permitted Investments bearing interest or sold
at a discount, and maturing, unless payable on demand, (i) no later than the
Business Day immediately preceding the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement, if a Person other
than the Trustee is the obligor thereon, and (ii) no later than the date

                                      -64-



<PAGE>



on which such funds are required to be withdrawn from such account pursuant to
this Agreement, if the Trustee is the obligor thereon. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds in an Investment Account shall be made in the name of the Trustee (in
its capacity as such) or in the name of a nominee of the Trustee. The Trustee
shall be entitled to sole possession (except with respect to investment
direction of funds held in the Collection Account and any income and gain
realized thereon) over each such investment, and any certificate or other
instrument evidencing any such investment shall be delivered directly to the
Trustee or its agent, together with any document of transfer necessary to
transfer title to such investment to the Trustee or its nominee. In the event
amounts on deposit in an Investment Account are at any time invested in a
Permitted Investment payable on demand, the Trustee shall:

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

                  (y)      demand payment of all amounts due thereunder promptly
                           upon determination by a Responsible Officer of the
                           Trustee that such Permitted Investment would not
                           constitute a Permitted Investment in respect of funds
                           thereafter on deposit in the Investment Account.

                  (b) All income and gain realized from the investment of funds
deposited in the Collection Account held by or on behalf of the Master Servicer,
shall be for the benefit of the Master Servicer and shall be subject to its
withdrawal in accordance with Section 3.11. The Master Servicer shall deposit in
the Collection Account the amount of any loss of principal incurred in respect
of any such Permitted Investment made with funds in such accounts immediately
upon realization of such loss.

                  (c) All income and gain realized from the investment of funds
deposited in the Distribution Account held by or on behalf of the Trustee, shall
be for the benefit of the Trustee and shall be subject to its withdrawal at any
time. The Trustee shall deposit in the Distribution Account, the amount of any
loss of principal incurred in respect of any such Permitted Investment made with
funds in such accounts immediately upon realization of such loss.

                  (d) 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(a)(v), upon the request of the Holders of 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.


                                      -65-



<PAGE>



                  SECTION 3.13. Maintenance of the Primary Mortgage Insurance
                                Policies; Collections Thereunder.

                  The Master Servicer will maintain or cause the related
Sub-Servicer, if any, to maintain in full force and effect, if required under
the Mortgage Loan Purchase Agreement and to the extent available, a Primary
Mortgage Insurance Policy with respect to each Mortgage Loan so insured as of
the Closing Date (or, in the case of a Qualified Substitute Mortgage Loan, on
the date of substitution). Such coverage will be maintained with respect to each
such Mortgage Loan for so long as it is outstanding, subject to any applicable
laws or until the related Loan-to-Value Ratio is reduced to less than or equal
to 80% based on Mortgagor payments. The Master Servicer shall cause the premium
for each Primary Mortgage Insurance Policy to be paid on a timely basis and
shall pay such premium out of its own funds if it is not otherwise paid. The
Master Servicer or the related Sub-Servicer, if any, will not cancel or refuse
to renew any such Primary Mortgage Insurance Policy in effect on the Closing
Date (or, in the case of a Qualified Substitute Mortgage Loan, on the date of
substitution) that is required to be kept in force under this Agreement unless a
replacement Primary Mortgage Insurance Policy for such canceled or non-renewed
policy is obtained from and maintained with a Qualified Insurer.

                  The Master Servicer shall not take, or permit any Sub-Servicer
to take, any action which would result in non-coverage under any applicable
Primary Mortgage Insurance Policy of any loss which, but for the actions of the
Master Servicer or Sub-Servicer, would have been covered thereunder. The Master
Servicer will comply in the performance of this Agreement with all reasonable
rules and requirements of each insurer under each Primary Mortgage Insurance
Policy. In connection with any assumption and modification agreement or
substitution of liability agreement entered into or to be entered into pursuant
to Section 3.15, the Master Servicer shall promptly notify the insurer under the
related Primary Mortgage Insurance Policy, if any, of such assumption in
accordance with the terms of such policies and shall take all actions which may
be required by such insurer as a condition to the continuation of coverage under
the Primary Mortgage Insurance Policy. If any such Primary Mortgage Insurance
Policy is terminated as a result of such assumption, the Master Servicer or the
related Sub-Servicer shall obtain a replacement Primary Mortgage Insurance
Policy as provided above.

                  In connection with its activities as administrator and
servicer of the Mortgage Loans, the Master Servicer agrees to prepare and
present, on behalf of itself, the Trustee and the Certificateholders, claims to
the insurer under any Primary Mortgage Insurance Policy in a timely fashion in
accordance with the terms of such policies and, in this regard, to take such
action as shall be necessary to permit recovery under any Primary Mortgage
Insurance Policy respecting a defaulted Mortgage Loan. Any amounts collected by
the Master Servicer under any Primary Mortgage Insurance Policy shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section
3.11; and any amounts collected by the Master Servicer under any Primary
Mortgage Insurance Policy in respect of any REO Property shall be deposited in
the Collection Account, subject to withdrawal pursuant to Section 3.23. In those
cases in which a Mortgage Loan is serviced by a Sub-Servicer, the Sub-Servicer,
on behalf of itself, the Trustee, and the Certificateholders, will present
claims to the insurer under any Primary Mortgage Insurance Policy and all
collections thereunder shall be deposited initially in the Sub-Servicing
Account.

                                      -66-



<PAGE>



                  SECTION 3.14. Maintenance of Hazard Insurance and Errors and
                                Omissions and Fidelity Coverage.

                  (a) The Master Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the least of (i) the current
principal balance of such Mortgage Loan, (ii) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis and (iii) the maximum insurable value of
the improvements which are a part of such Mortgaged Property, in each case in an
amount not less than such amount as is necessary to avoid the application of any
coinsurance clause contained in the related hazard insurance policy. The Master
Servicer shall also cause to be maintained fire insurance with extended coverage
on each REO Property in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding principal balance of the related Mortgage Loan
at the time it became an REO Property, plus accrued interest at the Mortgage
Rate and related Servicing Advances. The Master Servicer will comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any such hazard policies. Any amounts to be collected by the
Master Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or amounts
to be released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing loans held for its own account,
subject to the terms and conditions of the related Mortgage and Mortgage Note)
shall be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.11, if received in respect of a Mortgage Loan, or in the REO Account,
subject to withdrawal pursuant to Section 3.23, if received in respect of an REO
Property. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Master Servicer will
cause to be maintained a flood insurance policy in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (i) the unpaid principal
balance of the related Mortgage Loan and (ii) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).

                  In the event that the Master Servicer shall obtain and
maintain a blanket policy with an insurer having a General Policy Rating of A:X
or better in Best's Key Rating Guide (or such other rating that is comparable to
such rating) insuring against hazard losses on all of the Mortgage Loans, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first two sentences of this Section 3.14, it being understood and agreed
that such policy may contain a deductible clause, in which case the Master
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.14, and there shall have been one or more losses
which would have been covered by such

                                      -67-



<PAGE>



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

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

                  SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
                                Agreements.

                  The Master Servicer will, to the extent it has knowledge of
any conveyance or prospective conveyance of any Mortgaged Property by any
Mortgagor (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains or is to remain liable under the Mortgage Note and/or
the Mortgage), exercise its rights to accelerate the maturity of such Mortgage
Loan under the "due-on-sale" clause, if any, applicable thereto; provided,
however, that the Master Servicer shall not exercise any such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related Primary Mortgage Insurance
Policy, if any. If the Master Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, or if any of the other
conditions set forth in the proviso to the preceding sentence apply, the Master
Servicer will enter into an assumption and modification agreement from or with
the person to whom such property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. The Master Servicer is also authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
the Mortgagor and becomes liable under the Mortgage Note, provided that no such
substitution shall be effective unless such person satisfies the underwriting
criteria of the Master Servicer. In connection with any assumption or
substitution, the Master Servicer shall apply such underwriting standards and
follow such practices and procedures as shall be normal and usual in its general

                                      -68-



<PAGE>



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

                  Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or by the terms of the
Mortgage Note or any assumption which the Master Servicer may be restricted by
law from preventing, for any reason whatever. For purposes of this Section 3.15,
the term "assumption" is deemed to also include a sale (of the Mortgaged
Property) subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.

                  SECTION 3.16. Realization Upon Defaulted Mortgage Loans.

                  (a) The Master Servicer shall, consistent with the servicing
standard set forth in Section 3.01, 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 pursuant to Section 3.07. The Master
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that such costs and expenses will be
recoverable as Servicing Advances by the Master Servicer as contemplated in
Section 3.11 and Section 3.23. The foregoing is subject to the provision that,
in any case in which Mortgaged Property shall have suffered damage from an
Uninsured Cause, the Master Servicer shall not be required to expend its own
funds toward the restoration of such property unless it shall determine in its
discretion that such restoration will increase the proceeds of liquidation of
the related Mortgage Loan after reimbursement to itself for such expenses.

                  (b) Notwithstanding the foregoing provisions of this Section
3.16 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Master Servicer has received actual notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the related
Mortgaged Property, the Master Servicer shall not, on behalf of the Trustee,
either (i) obtain title to such Mortgaged Property as a result of or in lieu of
foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any
other action with respect to, such Mortgaged Property, if, as a result of any
such action, the Trustee, the Co-Trustee, the Trust Fund, the Trust

                                      -69-



<PAGE>



Administrator, the Master Servicer or the Certificateholders would be considered
to hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless the Master Servicer has also
previously determined, based on its reasonable judgment and a report prepared by
a Person who regularly conducts environmental audits using customary industry
standards, that:

                         (1) such Mortgaged Property is in compliance with
                  applicable environmental laws or, if not, that it would be in
                  the best economic interest of the Trust Fund to take such
                  actions as are necessary to bring the Mortgaged Property into
                  compliance therewith; and

                         (2) there are no circumstances present at such
                  Mortgaged Property relating to the use, management or disposal
                  of any hazardous substances, hazardous materials, hazardous
                  wastes, or petroleum-based materials for which investigation,
                  testing, monitoring, containment, clean-up or remediation
                  could be required under any federal, state or local law or
                  regulation, or that if any such materials are present for
                  which such action could be required, that it would be in the
                  best economic interest of the Trust Fund to take such actions
                  with respect to the affected Mortgaged Property.

                  The cost of the environmental audit report contemplated by
this Section 3.23 shall be advanced by the Master Servicer, subject to the
Master Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(a)(ix), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.

                  If the Master Servicer determines, as described above, that it
is in the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(a)(ix), such right of
reimbursement being prior to the rights of Certificateholders to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.

                  (c) The Master Servicer may at its option purchase from REMIC
I any Mortgage Loan that is 90 days or more delinquent, which the Master
Servicer determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee prior to purchase), at a price equal to the Purchase Price. The Purchase
Price for any Mortgage Loan purchased hereunder shall be deposited in the
Collection Account, and the Trustee, upon receipt of written certification from
the Master Servicer of such deposit, shall release

                                      -70-



<PAGE>



or cause to be released to the Master Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as the Master Servicer shall furnish and as shall be
necessary to vest in the Master Servicer title to any Mortgage Loan released
pursuant hereto.

                  (d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Master Servicer or any Sub-Servicer for any related unreimbursed Servicing
Advances and P&I Advances, pursuant to Section 3.11(a)(ii) or (a)(iii); second,
to accrued and unpaid interest on the Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Distribution Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and third, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the amount
of such recovery will be allocated by the Master Servicer as follows: first, to
unpaid Servicing Fees; and second, to the balance of the interest then due and
owing. The portion of the recovery so allocated to unpaid Servicing Fees shall
be reimbursed to the Master Servicer or any Sub-Servicer pursuant to Section
3.11(a)(iii).

                  SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files.

                  (a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Master Servicer of a notification that payment in full shall be
escrowed in a manner customary for such purposes, the Master Servicer will
immediately notify the Trustee by a certification in the form of Exhibit E-2
(which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 3.10 have been or
will be so deposited) of a Servicing Officer and shall request delivery to it of
the Mortgage File. Upon receipt of such certification and request, the Trustee
shall promptly release the related Mortgage File to the Master Servicer. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account.

                  (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Primary Mortgage Insurance Policy or any other insurance policy relating to
the Mortgage Loans, the Trustee shall, upon request of the Master Servicer and
delivery to the Trustee of a Request for Release in the form of Exhibit E-l,
release the related Mortgage File to the Master Servicer, and the Trustee shall,
at the direction of the Master Servicer, execute such documents as shall be
necessary to the prosecution of any such proceedings. Such Request for Release
shall obligate the Master Servicer to return each and every document previously
requested from the Mortgage File to the Trustee when the need therefor by the
Master Servicer no longer exists, unless the Mortgage Loan has been liquidated
and the Liquidation Proceeds relating to the Mortgage Loan have been deposited
in the Collection Account or the Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the

                                      -71-



<PAGE>



Master Servicer has delivered to the Trustee a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a certificate of a Servicing Officer stating that such
Mortgage Loan was liquidated and that all amounts received or to be received in
connection with such liquidation that are required to be deposited into the
Collection Account have been so deposited, or that such Mortgage Loan has become
an REO Property, a copy of the Request for Release shall be released by the
Trustee to the Master Servicer.

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

                  SECTION 3.18. Servicing Compensation.

                  As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Servicing Fee with
respect to each Mortgage Loan payable solely from payments of interest in
respect of such Mortgage Loan, subject to Section 3.24. In addition, the Master
Servicer shall be entitled to recover unpaid Servicing Fees out of Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii)
and out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.23. The right to receive the Servicing Fee may not
be transferred in whole or in part except in connection with the transfer of all
of the Master Servicer's responsibilities and obligations under this Agreement.

                  Additional servicing compensation in the form of assumption
fees, late payment charges and other similar fees and charges shall be retained
by the Master Servicer (subject to Section 3.24) only to the extent such fees or
charges are received by the Master Servicer. The Master Servicer shall also be
entitled pursuant to Section 3.11(a)(iv) to withdraw from the Collection
Account, and pursuant to Section 3.23(b) to withdraw from any REO Account, as
additional servicing compensation, interest or other income earned on deposits
therein, subject to Section 3.12 and Section 3.24. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including premiums due under the Primary Insurance
Policies, if any, premiums for the insurance required by Section 3.14, to the
extent such premiums are not paid by the related Mortgagors or by a
Sub-Servicer, servicing compensation of each Sub-Servicer, and to the extent
provided herein in Section 8.05, the fees and expenses of the Trustee) and shall
not be entitled to reimbursement therefor except as specifically provided
herein.


                                      -72-



<PAGE>



                  SECTION 3.19. Reports to the Trustee; Collection Account
                                Statements.

                  Not later than fifteen days after each Distribution Date, the
Master Servicer shall forward to the Trustee, upon the request of the Trustee, a
statement prepared by the Master Servicer setting forth the status of the
Collection Account as of the close of business on the last day of the calendar
month relating to such Distribution Date and showing, for the period covered by
such statement, the aggregate amount of deposits into and withdrawals from the
Collection Account of each category of deposit specified in Section 3.10(a) and
each category of withdrawal specified in Section 3.11. Such statement may be in
the form of the then current Fannie Mae Monthly Accounting Report for its
Guaranteed Mortgage Pass-Through Program with appropriate additions and changes,
and shall also include information as to the aggregate of the outstanding
principal balances of all of the Mortgage Loans as of the last day of the
calendar month immediately preceding such Distribution Date. 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 Master Servicer to the Trustee.

                  SECTION 3.20. Statement as to Compliance.

                  The Master Servicer will deliver to the Trust Administrator,
the Trustee, the Depositor and the Rating Agency on or before April 15 of each
calendar year commencing in 2001, an Officers' Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Master Servicer
during the preceding year and of performance under this Agreement has been made
under such officers' supervision and (ii) to the best of such officers'
knowledge, based on such review, the Master 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 officer and the nature and status thereof. Copies of any 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 the request and at the expense of the requesting party, provided that such
statement is delivered by the Master Servicer to the Trustee.

                  SECTION 3.21. Independent Public Accountants' Servicing
                                Report.

                  Not later than April 15 of each calendar year commencing in
2001, the Master Servicer, at its expense, shall cause a nationally recognized
firm of independent certified public accountants to furnish to the Master
Servicer a report stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Master Servicer which
includes an assertion that the Master Servicer has complied with certain minimum
residential mortgage loan servicing standards, identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America, with respect to the servicing of residential mortgage
loans during the most recently completed fiscal year and (ii) on the basis of an
examination conducted by such firm in accordance with standards established by
the American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. In rendering its report such firm may
rely, as to matters relating to the direct servicing of residential mortgage
loans by Sub-


                                      -74-

<PAGE>

Servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Sub-Servicers. Immediately upon receipt of such report, the Master
Servicer shall furnish a copy of such report to the Trustee, the Trust
Administrator and the Rating Agency. Copies of such statement shall be provided
by the Trustee to any Certificateholder upon request at the Master Servicer's
expense, provided that such statement is delivered by the Master Servicer to the
Trustee. In the event such firm of independent certified public accountants
requires the Trustee to agree to the procedures performed by such firm, the
Master Servicer shall direct the Trustee in writing to so agree; it being
understood and agreed that the Trustee will deliver such letter of agreement in
conclusive reliance upon the direction of the Master Servicer, and the Trustee
has not made any independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or correctness
of such procedures.

                  SECTION 3.22. Access to Certain Documentation.

                  The Master Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation regarding the Mortgage Loans required by applicable
laws and regulations. Such access shall be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of the
Master Servicer designated by it. In addition, access to the documentation
regarding the Mortgage Loans required by applicable laws and regulations will be
provided to such Certificateholder, the Trustee, the Trust Administrator and to
any Person identified to the Master Servicer as a prospective transferee of a
Certificate, upon reasonable request during normal business hours at the offices
of the Master Servicer designated by it at the expense of the Person requesting
such access.

                  SECTION 3.23. Title, Management and Disposition of REO
                                Property.

                  (a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders. The Master Servicer, on behalf of the Trust Fund, shall
either sell any REO Property within three years after the Trust Fund acquires
ownership of such REO Property for purposes of Section 860G(a)(8) of the Code or
request from the Internal Revenue Service, no later than 60 days before the day
on which the three- year grace period would otherwise expire, an extension of
the three-year grace period, unless the Master Servicer shall have delivered to
the Trustee, the Trust Administrator and the Depositor an Opinion of Counsel,
addressed to the Trustee, the Trust Administrator and the Depositor, to the
effect that the holding by the Trust Fund of such REO Property subsequent to
three years after its acquisition will not result in the imposition on REMIC I
or REMIC II of taxes on "prohibited transactions" thereof, as defined in Section
860F of the Code, or cause REMIC I or REMIC II to fail to qualify as a REMIC
under Federal law at any time that any Certificates are outstanding. The Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by REMIC I or REMIC II of any "income


                                      -74-



<PAGE>



from non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the
Code, or any "net income from foreclosure property" which is subject to taxation
under the REMIC Provisions.

                  (b) The Master Servicer shall segregate and hold all funds
collected and received in connection with the operation of any REO Property
separate and apart from its own funds and general assets and shall establish and
maintain with respect to REO Properties an account held in trust for the Trustee
for the benefit of the Certificateholders (the "REO Account"), which shall be an
Eligible Account. The Master Servicer shall be permitted to allow the Collection
Account to serve as the REO Account, subject to separate ledgers for each REO
Property. The Master Servicer shall be entitled to retain or withdraw any
interest income paid on funds deposited in the REO Account.

                  (c) The Master Servicer shall have full power and authority,
subject only to the specific requirements and prohibitions of this Agreement, to
do any and all things in connection with any REO Property as are consistent with
the manner in which the Master Servicer manages and operates similar property
owned by the Master Servicer or any of its Affiliates, all on such terms and for
such period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than two Business Day after the Master
Servicer's receipt thereof, and shall thereafter deposit in the REO Account, in
no event more than one Business Days after the deposit of such funds into the
clearing account, all revenues received by it with respect to an REO Property
and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of such REO Property including, without limitation:

                         (i) all insurance premiums due and payable in respect
                  of such REO Property;

                         (ii) all real estate taxes and assessments in respect
                  of such REO Property that may result in the imposition of a
                  lien thereon; and

                         (iii) all costs and expenses necessary to maintain such
                  REO Property.

To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Master Servicer shall advance
from its own funds such amount as is necessary for such purposes if, but only
if, the Master Servicer would make such advances if the Master Servicer owned
the REO Property and if in the Master Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.

                  Notwithstanding the foregoing, none of the Master Servicer,
the Trust Administrator or the Trustee shall:


                                      -75-



<PAGE>



                         (i) authorize the Trust Fund to enter into, renew or
                  extend any New Lease with respect to any REO Property, if the
                  New Lease by its terms will give rise to any income that does
                  not constitute Rents from Real Property;

                        (ii) authorize any amount to be received or accrued
                  under any New Lease other than amounts that will constitute
                  Rents from Real Property;

                       (iii) authorize any construction on any REO Property,
                  other than the completion of a building or other improvement
                  thereon, and then only if more than ten percent of the
                  construction of such building or other improvement was
                  completed before default on the related Mortgage Loan became
                  imminent, all within the meaning of Section 856(e)(4)(B) of
                  the Code; or

                        (iv) authorize any Person to Directly Operate any REO
                  Property on any date more than 90 days after its date of
                  acquisition by the Trust Fund;

unless, in any such case, the Master Servicer has obtained an Opinion of
Counsel, provided to the Trust Administrator and the Trustee, to the effect that
such action will not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code at any time that
it is held by the Trust Fund, in which case the Master Servicer may take such
actions as are specified in such Opinion of Counsel.

                  The Master Servicer may contract with any Independent
Contractor for the operation and management of any REO Property, provided that:

                         (i) the terms and conditions of any such contract shall
                  not be inconsistent herewith;

                        (ii) any such contract shall require, or shall be
                  administered to require, that the Independent Contractor pay
                  all costs and expenses incurred in connection with the
                  operation and management of such REO Property, including those
                  listed above and remit all related revenues (net of such costs
                  and expenses) to the Master Servicer as soon as practicable,
                  but in no event later than thirty days following the receipt
                  thereof by such Independent Contractor;

                       (iii) none of the provisions of this Section 3.23(c)
                  relating to any such contract or to actions taken through any
                  such Independent Contractor shall be deemed to relieve the
                  Master Servicer of any of its duties and obligations to the
                  Trustee on behalf of the Certificateholders with respect to
                  the operation and management of any such REO Property; and

                        (iv) the Master Servicer shall be obligated with respect
                  thereto to the same extent as if it alone were performing all
                  duties and obligations in connection with the operation and
                  management of such REO Property.


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The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees.

                  (d) In addition to the withdrawals permitted under Section
3.23(c), the Master Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Sub-Servicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and P&I Advances
made in respect of such REO Property or the related Mortgage Loan. Any income
from the related REO Property received during any calendar months prior to a
Final Recovery Determination, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d), shall be withdrawn by the Master Servicer from
each REO Account maintained by it and deposited into the Distribution Account in
accordance with Section 3.10(d)(ii) on the Master Servicer Remittance Date
relating to a Final Recovery Determination with respect to such Mortgage Loan,
for distribution on the related Distribution Date in accordance with Section
4.01.

                  (e) Subject to the time constraints set forth in Section
3.23(a), and further subject to obtaining the approval of the insurer under any
related Primary Mortgage Insurance Policy (if and to the extent that such
approvals are necessary to make claims under such policies in respect of the
affected REO Property), each REO Disposition shall be carried out by the Master
Servicer at such price and upon such terms and conditions as the Master Servicer
shall deem necessary or advisable, as shall be normal and usual in its general
servicing activities for similar properties.

                  (f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Master Servicer or any
Sub-Servicer as provided above, shall be deposited in the Distribution Account
in accordance with Section 3.10(d)(ii) on the Master Servicer Remittance Date in
the month following the receipt thereof for distribution on the related
Distribution Date in accordance with Section 4.01. Any REO Disposition shall be
for cash only (unless changes in the REMIC Provisions made subsequent to the
Startup Day allow a sale for other consideration).

                  (g) The Master Servicer shall file information returns with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
cancellation of indebtedness income with respect to any Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code, respectively. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.


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<PAGE>



                  SECTION 3.24. Obligations of the Master Servicer in Respect of
                                Prepayment Interest Shortfalls.

                  The Master Servicer shall deliver to the Trustee for deposit
into the Distribution Account on or before 3:00 p.m. New York time on the Master
Servicer Remittance Date from its own funds an amount equal to the lesser of (i)
the aggregate of the Prepayment Interest Shortfalls for the related Distribution
Date resulting from full or partial Principal Prepayments during the related
Prepayment Period and (ii) the amount of its aggregate Servicing Fee for the
most recently ended calendar month.

                  SECTION 3.25. Obligations of the Master Servicer in Respect of
                                Monthly Payments.

                  In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Stated Principal Balances that were made by the Master Servicer
in a manner not consistent with the terms of the related Mortgage Note and this
Agreement, the Master Servicer, upon discovery or receipt of notice thereof,
immediately shall deliver to the Trustee for deposit in the Distribution Account
from its own funds the amount of any such shortfall and shall indemnify and hold
harmless the Trust Fund, the Trustee, the Trust Administrator, the Depositor and
any successor master servicer in respect of any such liability. Such indemnities
shall survive the termination or discharge of this Agreement.

                  SECTION 3.26. Advance Facility.

                  (a) The Master Servicer is hereby authorized to enter into a
facility with any Person which provides that such Person (an "Advancing Person")
may fund P&I Advances and/or Servicing Advances under this Agreement, although
no such facility shall reduce or otherwise affect the Master Servicer's
obligation to fund such P&I Advances and/or Servicing Advances. To the extent
that an Advancing Person funds any P&I Advance or any Servicing Advance and
provides the Trustee with notice acknowledged by the Master Servicer that such
Advancing Person is entitled to reimbursement, such Advancing Person shall be
entitled to receive reimbursement pursuant to this Agreement for such amount to
the extent provided in Section 3.26(b). Such notice from the Advancing Person
must specify the amount of the reimbursement and must specify which Section of
this Agreement permits the applicable P&I Advance or Servicing Advance to be
reimbursed. The Trustee shall have no duty or liability with respect to any
calculation of any reimbursement to be paid to an Advancing Person and shall be
entitled to rely without independent investigation on the Advancing Person's
notice provided pursuant to this Section 3.26. An Advancing Person whose
obligations hereunder are limited to the funding of P&I Advances and/or
Servicing Advances shall not be required to meet the qualifications of a
Sub-Servicer pursuant to Section 3.02 hereof.

                  (b) If an Advancing Person is entitled to reimbursement for
any particular P&I Advance or Servicing Advance, then the Master Servicer shall
not be permitted to reimburse itself therefor under Section 3.11(a)(ii), Section
3.11(a)(iii), Section 3.11(a)(vi) or Section 3.11(a)(ix), but instead the Master
Servicer shall include such amounts in the applicable remittance to the Trustee
made pursuant to Section 3.10(b) to the extent of amounts on deposit in the
Collection Account on

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<PAGE>



the related Master Servicer Remittance Date. The Trustee is hereby authorized to
pay to an Advancing Person, reimbursements for P&I Advances and Servicing
Advances from the Distribution Account to the same extent the Master Servicer
would have been permitted to reimburse itself for such P&I Advances and/or
Servicing Advances in accordance with Section 3.11(a)(ii), Section 3.11(a)(iii),
Section 3.11(a)(vi) or Section 3.11(a)(ix), as the case may be, had the Master
Servicer made such Advance or Servicing Advance.

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<PAGE>



                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

                  SECTION 4.01. Distributions.

                  (a)(i) On each Distribution Date, the Trustee shall withdraw
from the Distribution Account, but only to the extent necessary to make the
distributions described in clauses first through ninth below, the Available
Distribution Amount for such Distribution Date, less any amounts permitted to be
withdrawn from the Distribution Account pursuant to this Agreement, and shall
apply such amounts for the following purposes and in the following order of
priority, in each case to the extent of remaining available funds:

                  first, to distributions of interest in respect of the Class A
                  Certificates and the Class IO Certificates, in an amount
                  (allocable among such Certificates PRO RATA in accordance with
                  the respective amounts payable as to each pursuant to this
                  clause first) equal to the aggregate of the Interest
                  Distribution Amounts in respect of such Certificates for such
                  Distribution Date;

                  second, to the extent of the Class PO Principal Distribution
                  Amount, to distributions of principal to the Class PO
                  Certificates (applied to reduce the Certificate Principal
                  Balances of such Certificates), until the Certificate
                  Principal Balance of such Class has been reduced to zero;

                  third, to the extent of the Senior Principal Distribution
                  Amount, to distributions of principal to the Class A-1
                  Certificates (applied to reduce the Certificate Principal
                  Balance of such Certificates), until the Certificate Principal
                  Balance of such Class has been reduced to zero;

                  fourth, to distributions of interest in respect of the
                  Subordinate Certificates, other than the Class of Subordinate
                  Certificates with the highest numerical designation then
                  outstanding, in an amount (allocable among such Certificates
                  PRO RATA in accordance with the respective amounts payable as
                  to each pursuant to this clause fourth, in the order of
                  priority from the Class of Subordinate Certificates with the
                  lowest numerical designation to the Class of Subordinate
                  Certificates with the highest numerical designation entitled
                  to a distribution of interest pursuant to this clause fourth)
                  equal to the aggregate of the Interest Distribution Amounts in
                  respect of such Certificates for such Distribution Date;

                  fifth, to distributions of principal to the Class PO
                  Certificates (applied to reduce the Certificate Principal
                  Balance of such Certificates) in an amount equal to the
                  excess, if any, of the Class PO Percentage of the Stated
                  Principal Balance of each Class
                  PO
                  Mortgage Loan as to which a Final Liquidation has occurred,
                  over the amount distributed in respect of such Class PO
                  Mortgage Loan to the Class PO Certificates pursuant to clause
                  second above;

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<PAGE>



                  sixth, to distributions in respect of the Class of Subordinate
                  Certificates with the highest numerical designation then
                  outstanding, in an amount equal to the Interest Distribution
                  Amount in respect of such Certificates for such Distribution
                  Date;

                  seventh, to the Holders of the Classes of the Subordinate
                  Certificates, an aggregate amount equal to the Subordinate
                  Principal Distribution Amount for such Distribution Date
                  (applied to reduce the Certificate Principal Balances of such
                  Certificates), allocable among the Classes of Subordinate
                  Certificates PRO RATA in accordance with the respective
                  amounts payable as to each such Class pursuant to the
                  priorities and amounts set forth in Section 4.01(b)(ii);

                  eighth, to the Holders of the Certificates, to reimburse any
                  Allocated Realized Loss Amounts in the following order of
                  priority, in each case, to the extent of any Allocated
                  Realized Loss Amount allocated to such Certificates and to the
                  extent such Certificates are still outstanding: (i) to the
                  Class A-1 Certificates and the Class PO Certificates, on a PRO
                  RATA basis, based on their respective unpaid Allocated
                  Realized Loss Amounts; (ii) to the Class B-1 Certificates;
                  (iii) to the Class B-2 Certificates; (iv) to the Class B-3
                  Certificates; (v) to the Class B-4 Certificates; (vi) to the
                  Class B-5 Certificates; and (vii) to the Class B-6
                  Certificates; and

                  ninth, to the Holders of the Class R-II Certificates, any
                  remaining amounts.

                  (ii) All references above to the Certificate Principal Balance
         of any Class of Certificates shall be to the Certificate Principal
         Balance of such Class prior to the allocation of Extraordinary Trust
         Fund Expenses and Realized Losses, in each case allocated to such Class
         of Certificates, on such Distribution Date pursuant to Section 4.04.

                  (b)(i)   [reserved];

                  (ii) On each Distribution Date, the aggregate distributions of
         principal made on such date in respect of the Subordinate Certificates
         pursuant to Section 4.01(a)(i) seventh above shall be applied among the
         various Classes thereof, in the order of priority from the Class of
         Subordinate Certificates with the lowest numerical designation to the
         Class of Subordinate Certificates with the highest numerical
         designation, in each case to the extent of remaining available funds up
         to the amount allocable to such Class for such Distribution Date and in
         each case until the Certificate Principal Balance of each such Class is
         reduced to zero, in an amount with respect to each such Class equal to
         the sum of (X) the related Class B Percentage of the amounts described
         in clauses (i) through (v) of clause (a) of the definition of
         Subordinate Principal Distribution Amount, (Y) the portion of the
         amounts described in clauses (b) and (c) of the definition of
         Subordinate Principal Distribution Amount allocable to such Class
         pursuant to Section 4.01(b)(iii) below and (Z) the excess, if any, of
         the amount required to be distributed to such Class pursuant to this
         Section 4.01(b)(ii) for the immediately preceding Distribution Date,
         over the aggregate distributions of principal made in respect of such
         Class of Certificates on such immediately preceding Distribution Date
         pursuant to Section 4.01 to the extent that any such excess is not

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<PAGE>



         attributable to Realized Losses which were allocated to Subordinate
         Certificates with a lower priority pursuant to Section 4.04.

                  (iii) On any Distribution Date, the portion of (a) all net
         Liquidation Proceeds and Insurance Proceeds with respect to any
         Mortgage Loans that were the subject of a Final Recovery Determination
         in the related Prepayment Period and (b) all Principal Prepayments
         received in respect of the Mortgage Loans in the related Prepayment
         Period, allocable to principal and not included in the Senior Principal
         Distribution Amount and the Class PO Principal Distribution Amount,
         will be allocated on a PRO RATA basis among the following Classes of
         Subordinate Certificates (each, an "Eligible Class") in proportion to
         the respective outstanding Certificate Principal Balances thereof: (i)
         the Class B-1 Certificates, (ii) the Class B-2 Certificates, if on such
         Distribution Date the aggregate percentage interest in the Trust Fund
         evidenced by the Class B-2 Certificates, the Class B-3 Certificates,
         the Class B-4 Certificates, the Class B-5 Certificates and the Class
         B-6 Certificates equal or exceeds 1.25% before giving effect to
         distributions on such Distribution Date, (iii) the Class B-3
         Certificates, if on such Distribution Date the aggregate percentage
         interest in the Trust Fund evidenced by the Class B-3 Certificates, the
         Class B-4 Certificates, the Class B-5 Certificates and the Class B-6
         Certificates equal or exceeds 1.00% before giving effect to
         distributions on such Distribution Date, (iv) the Class B-4
         Certificates, if on such Distribution Date the aggregate percentage
         interest in the Trust Fund evidenced by the Class B-4 Certificates, the
         Class B-5 Certificates and the Class B-6 Certificates equal or exceeds
         0.75% before giving effect to distributions on such Distribution Date,
         (v) the Class B-5 Certificates, if on such Distribution Date the
         aggregate percentage interest in the Trust Fund evidenced by the Class
         B-5 Certificates and the Class B-6 Certificates equal or exceeds 0.35%
         before giving effect to distributions on such Distribution Date and
         (iii) the Class B-6 Certificates, if on such Distribution Date the
         percentage interest in the Trust Fund evidenced by the Class B-6
         Certificates equals or exceeds 0.20% before giving effect to
         distributions on such Distribution Date. Notwithstanding the foregoing,
         if the application of the foregoing on any Distribution Date as
         provided in Section 4.01 would result in a distribution in respect of
         principal to any Class or Classes of Subordinate Certificates in an
         amount greater than the remaining Certificate Principal Balance thereof
         (any such Class, a "Maturing Class") then: (a) the amount to be
         allocated to each Maturing Class shall be reduced to a level that, when
         applied as described above, would exactly reduce the Certificate
         Principal Balance of such Class to zero and (b) the total amount of the
         reductions pursuant to clause (a) above in the amount to be allocated
         to the Maturing Class or Classes shall be allocated among the remaining
         Eligible Classes on a PRO RATA basis in proportion to the respective
         outstanding Certificate Principal Balances thereof prior to the
         allocation thereto of any of the amounts described in the preceding
         sentence.

                  (c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their

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<PAGE>



respective Certificates, and shall be made by wire transfer of immediately
available funds to the account of any such Holder at a bank or other entity
having appropriate facilities therefor, if such Holder shall have so notified
the Trustee in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and with respect to any Class of
Certificates other than the Residual Certificates is the registered owner of
Certificates having an initial aggregate Certificate Principal Balance or
Notional Amount that is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the initial Certificate Principal Balance or Notional Amount of
such Class of Certificates, or otherwise by check mailed by first class mail to
the address of such Holder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the Corporate Trust Office or
such other location specified in the notice to Certificateholders of such final
distribution.

                  Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the Trust
Administrator, the Depositor or the Master Servicer shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.

                  (d) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the Trust
Administrator, the Trustee or the Master Servicer shall in any way be
responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.

                  (e) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than five days after the related Determination Date, mail on such date to
each Holder of such Class of Certificates a notice to the effect that:

                         (i) the Trustee expects that the final distribution
                  with respect to such Class of Certificates will be made on
                  such Distribution Date, but only upon presentation and
                  surrender of such Certificates at the office of the Trustee
                  therein specified, and

                        (ii) no interest shall accrue on such Certificates from
                  and after the end of the related Interest Accrual Period.

Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust by
the Trustee and credited to the account of the appropriate non- tendering Holder
or Holders. If any Certificates as to which notice has been given pursuant to
this

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<PAGE>



Section 4.01(e) shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall, directly or through an agent, mail a final notice to remaining
non-tendering Certificateholders concerning surrender of their Certificates and
shall continue to hold any remaining funds for the benefit of non-tendering
Certificateholders. The costs and expenses of maintaining the funds in trust and
of contacting such Certificateholders shall be paid out of the assets remaining
in such trust fund. If within one year after the final notice any such
Certificates shall not have been surrendered for cancellation, the Trustee shall
pay to Salomon Smith Barney Inc. all such amounts, and all rights of
non-tendering Certificateholders in or to such amounts shall thereupon cease. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust by the Trustee as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with this
Section 4.01(e).

                  SECTION 4.02. Statements to Certificateholders.

                  On the third Business Day prior to each Distribution Date, the
Trust Administrator shall prepare and forward by telecopy (or by such other
means as the Trust Administrator and the Trustee may agree from time to time) to
the Trustee and on each Distribution Date the Trustee shall forward by mail to
each Holder of the Regular Certificates, a statement as to the distributions
made on such Distribution Date setting forth:

                         (i) the amount of the distribution made on such
                  Distribution Date to the Holders of Certificates of each such
                  Class allocable to principal;

                         (ii) the amount of the distribution made on such
                  Distribution Date to the Holders of Certificates of each such
                  Class allocable to interest;

                       (iii) the aggregate amount of servicing compensation
                  received by the Master Servicer during the related Due Period
                  and such other customary information as the Trust
                  Administrator or the Trustee deems necessary or desirable, or
                  which a Certificateholder reasonably requests, to enable
                  Certificateholders to prepare their tax returns;

                         (iv) the aggregate amount of P&I Advances for such
                  Distribution Date;

                         (v) the aggregate Stated Principal Balance of the
                  Mortgage Loans and any REO Properties at the close of business
                  on such Distribution Date;

                         (vi) the number, aggregate principal balance, weighted
                  average remaining term to maturity and weighted average
                  Mortgage Rate of the Mortgage Loans as of the related Due
                  Date;


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<PAGE>



                       (vii) the number and aggregate unpaid principal balance
                  of Mortgage Loans that are (a) delinquent 30 to 59 days, (b)
                  delinquent 60 to 89 days, (c) delinquent 90 or more days in
                  each case, as of the last day of the preceding calendar month,
                  (d) as to which foreclosure proceedings have been commenced
                  and (e) with respect to which the related Mortgagor has filed
                  for protection under applicable bankruptcy laws, with respect
                  to whom bankruptcy proceedings are pending or with respect to
                  whom bankruptcy protection is in force;

                      (viii) with respect to any Mortgage Loan that became an
                  REO Property during the preceding calendar month, the loan
                  number of such Mortgage Loan, the unpaid principal balance and
                  the Stated Principal Balance of such Mortgage Loan as of the
                  date it became an REO Property;

                        (ix) the book value and the Stated Principal Balance of
                  any REO Property as of the close of business on the last
                  Business Day of the calendar month preceding the Distribution
                  Date;

                         (x) the aggregate amount of Principal Prepayments made
                  during the related Prepayment Period;

                        (xi) the aggregate amount of Realized Losses incurred
                  during the related Prepayment Period (or, in the case of
                  Bankruptcy Losses allocable to interest, during the related
                  Due Period), separately identifying whether such Realized
                  Losses constituted Fraud Losses, Special Hazard Losses or
                  Bankruptcy Losses;

                         (xii) the aggregate amount of Extraordinary Trust Fund
                  Expenses withdrawn from the Collection Account or the
                  Distribution Account for such Distribution Date;

                      (xiii) the aggregate Certificate Principal Balance or
                  Notional Amount of each such Class of Certificates, after
                  giving effect to the distributions, and allocations of
                  Realized Losses and Extraordinary Trust Fund Expenses, made on
                  such Distribution Date, separately identifying any reduction
                  thereof due to allocations of Realized Losses and
                  Extraordinary Trust Fund Expenses;

                         (xiv) the Certificate Factor for each such Class of
                  Certificates applicable to such Distribution Date;

                        (xv) the Interest Distribution Amount in respect of each
                  such Class of Certificates (other than the Class PO
                  Certificates) for such Distribution Date (separately
                  identifying any reductions in the case of Subordinate
                  Certificates resulting from the allocation of Realized Losses
                  allocable to interest and Extraordinary Trust Fund Expenses on
                  such Distribution Date) and the respective portions thereof,
                  if any, remaining unpaid following the distributions made in
                  respect of such Certificates on such Distribution Date;

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<PAGE>



                       (xvi) the aggregate amount of any Prepayment Interest
                  Shortfalls for such Distribution Date, to the extent not
                  covered by payments by the Master Servicer pursuant to Section
                  3.24;

                         (xvii) the aggregate amount of Relief Act Interest
                  Shortfalls for such Distribution Date;

                         (xviii) the then-applicable Bankruptcy Amount, Fraud
                  Loss Amount, and Special Hazard Amount;

                         (xix) the Weighted Average Stripped Interest Rate with
                  respect to the Mortgage Loans for such Distribution Date;

                        (xx) with respect to any Mortgage Loan as to which
                  foreclosure proceedings have been concluded, the loan number
                  and unpaid principal balance of such Mortgage Loan as of the
                  date of such conclusion of foreclosure proceedings;

                       (xxi) with respect to Mortgage Loans as to which a Final
                  Liquidation has occurred, the number of Mortgage Loans, the
                  unpaid principal balance of such Mortgage Loans as of the date
                  of such Final Liquidation and the amount of proceeds
                  (including Liquidation Proceeds and Insurance Proceeds)
                  collected in respect of such Mortgage Loans;

                         (xxii) any Allocated Realized Loss Amount with respect
                  to each Class of Certificates for such Distribution Date; and

                     (xxiii) with respect to the Class A Certificates and the
                  Class IO Certificates, the related Pass-Through Rate for such
                  Distribution Date and the immediately succeeding Distribution
                  Date.

                  In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.

                  Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to the Trustee, and the
Trustee shall forward to each Person who at any time during the calendar year
was a Holder of a Regular Certificate a statement containing the information set
forth in subclauses (i) through (iii) above, aggregated for such calendar year
or applicable portion thereof during which such person was a Certificateholder.
Such obligation of the Trust Administrator and the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Trustee pursuant to any requirements of the Code as
from time to time are in force.

                  On each Distribution Date, the Trustee shall forward to the
Depositor, each Holder of a Residual Certificate and the Master Servicer, a copy
of the reports forwarded to the Regular

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<PAGE>



Certificateholders on such Distribution Date and a statement setting forth the
amounts, if any, actually distributed with respect to the Residual Certificates,
respectively, on such Distribution Date.

                  Within a reasonable period of time after the end of each
calendar year, the Trust Administrator shall furnish to the Trustee and the
Trustee shall forward to each Person who at any time during the calendar year
was a Holder of a Residual Certificate a statement setting forth the amount, if
any, actually distributed with respect to the Residual Certificates, as
appropriate, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the Trust
Administrator and the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be prepared by the
Trustee and furnished to such Holders pursuant to the rules and regulations of
the Code as are in force from time to time.

                  Upon request, the Trust Administrator shall furnish to the
Trustee and the Trustee shall forward to each Certificateholder, during the term
of this Agreement, such periodic, special, or other reports or information,
whether or not provided for herein, as shall be reasonable with respect to the
Certificateholder, or otherwise with respect to the purposes of this Agreement,
all such reports or information to be provided at the expense of the
Certificateholder in accordance with such reasonable and explicit instructions
and directions as the Certificateholder may provide. For purposes of this
Section 4.02, the Trust Administrator's duties are limited to the extent that
the Trust Administrator receives timely reports as required from the Master
Servicer and the Trustee's duties are limited to the extent that the Trustee
receives timely reports as required from the Trust Administrator.

                  On each Distribution Date, the Trust Administrator shall
provide Bloomberg Financial Markets, L.P. ("Bloomberg") cusip level factors for
each class of Certificates as of such Distribution Date, using a format and
media mutually acceptable to the Trust Administrator and Bloomberg.

                  SECTION 4.03. Remittance Reports; P&I Advances.

                  (a) On the second Business Day prior to the related
Distribution Date, the Master Servicer shall deliver to the Trust Administrator
and the Trustee by telecopy (or by such other means as the Master Servicer, the
Trust Administrator and the Trustee may agree from time to time) a Remittance
Report with respect to the related Distribution Date. Such Remittance Report
will include (i) the amount of P&I Advances to be made by the Master Servicer in
respect of the related Distribution Date, the aggregate amount of P&I Advances
outstanding after giving effect to such P&I Advances, and the aggregate amount
of Nonrecoverable P&I Advances in respect of such Distribution Date and (ii)
such other information with respect to the Mortgage Loans as the Trust
Administrator may reasonably require to perform the calculations necessary to
make the distributions contemplated by Section 4.01 and to prepare the
statements to Certificateholders contemplated by Section 4.02; provided,
however, that if the Master Servicer is not the Trust Administrator, the Master
Servicer will forward to the successor trust administrator the information set
forth in clause (i) above on the next Business Day following the related
Determination Date and the information set forth in clause (ii) above on the
fifth Business Day following the last day of the related calendar

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month. The Trustee and the Trust Administrator shall not be responsible to
recompute, recalculate or verify any information provided to it by the Master
Servicer.

                  (b) The amount of P&I Advances to be made by the Master
Servicer for any Distribution Date shall equal, subject to Section 4.03(d), the
sum of (i) the aggregate amount of Monthly Payments (with each interest portion
thereof net of the related Servicing Fee), due on the related Due Date in
respect of the Mortgage Loans, which Monthly Payments were delinquent as of the
close of business on the related Determination Date and (ii) with respect to
each REO Property, which REO Property was acquired during or prior to the
related Prepayment Period and as to which such REO Property an REO Disposition
did not occur during the related Prepayment Period, an amount equal to the
Monthly Payments (with each interest portion thereof net of the related
Servicing Fee) that would have been due on the related Due Date in respect of
the related Mortgage Loans.

                  On or before 3:00 p.m. New York time on the Master Servicer
Remittance Date, the Master Servicer shall remit in immediately available funds
to the Trustee for deposit in the Distribution Account an amount equal to the
aggregate amount of P&I Advances, if any, to be made in respect of the Mortgage
Loans and REO Properties for the related Distribution Date either (i) from its
own funds or (ii) from the Collection Account, to the extent of funds held
therein for future distribution (in which case, it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this Section 4.03, used by the
Master Servicer in discharge of any such P&I Advance) or (iii) in the form of
any combination of (i) and (ii) aggregating the total amount of P&I Advances to
be made by the Master Servicer with respect to the Mortgage Loans and REO
Properties. Any amounts held for future distribution and so used shall be
appropriately reflected in the Master Servicer's records and replaced by the
Master Servicer by deposit in the Collection Account on or before any future
Master Servicer Remittance Date to the extent that the Available Distribution
Amount for the related Distribution Date (determined without regard to P&I
Advances to be made on the Master Servicer Remittance Date) shall be less than
the total amount that would be distributed to the Classes of Certificateholders
pursuant to Section 4.01 on such Distribution Date if such amounts held for
future distributions had not been so used to make P&I Advances. The Trustee will
provide notice to the Master Servicer by telecopy by the close of business on
the Master Servicer Remittance Date in the event that the amount remitted by the
Master Servicer to the Trustee on such Master Servicer Remittance Date is less
than the P&I Advances required to be made by the Master Servicer for the related
Distribution Date.

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

                  (d) Notwithstanding anything herein to the contrary, no P&I
Advance shall be required to be made hereunder by the Master Servicer if such
P&I Advance would, if made, constitute a Nonrecoverable P&I Advance. The
determination by the Master Servicer that it has

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<PAGE>



made a Nonrecoverable P&I Advance or that any proposed P&I Advance, if made,
would constitute a Nonrecoverable P&I Advance, shall be evidenced by an
Officers' Certificate of the Master Servicer delivered to the Depositor, the
Trust Administrator and the Trustee.

                  SECTION 4.04. Allocation of Extraordinary Trust Fund Expenses
                                and Realized Losses.

                  (a) Prior to each Distribution Date, the Master Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii) whether and the
extent to which such Realized Losses constituted Fraud Losses or Special Hazard
Losses; and (iii) the respective portions of such Realized Losses allocable to
interest and allocable to principal. Prior to each Distribution Date, the Master
Servicer shall also determine as to each Mortgage Loan: (A) the total amount of
Realized Losses, if any, incurred in connection with any Deficient Valuations
made during the related Prepayment Period; and (B) the total amount of Realized
Losses, if any, incurred in connection with Debt Service Reductions in respect
of Monthly Payments due during the related Due Period. The information described
in the two preceding sentences that is to be supplied by the Master Servicer
shall be evidenced by an Officers' Certificate delivered to the Trust
Administrator and the Trustee by the Master Servicer prior to the Determination
Date immediately following the end of (x) in the case of Bankruptcy Losses
allocable to interest, the Due Period during which any such Realized Loss was
incurred, and (y) in the case of all other Realized Losses, the Prepayment
Period during which any such Realized Loss was incurred.

                  (b) All Realized Losses on the Mortgage Loans (other than
Excess Losses) shall be allocated by the Trust Administrator on each
Distribution Date as follows: first, to the Class B-6 Certificates; second, to
the Class B-5 Certificates; third, to the Class B-4 Certificates; fourth, to the
Class B-3 Certificates; fifth, to the Class B-2 Certificates; and sixth, to the
Class B-1 Certificates, in each case until the Certificate Principal Balance
thereof has been reduced to zero. Thereafter, upon the reduction of the
Certificate Principal Balances of the Subordinate Certificates to zero, all
Realized Losses shall be allocated among the Senior Certificates as follows: the
related Class PO Percentage of such Realized Losses shall be allocated to the
Class PO Certificates and the related Non-Class PO Percentage of such Realized
Losses shall be allocated to the Class A-1 Certificates. Any Excess Losses
attributable to any Mortgage Loan shall be allocated among all the Certificates
(other than the Class A-2 Certificates and the Class IO Certificates) as
follows: the related Class PO Percentage of such Realized Losses shall be
allocated to the Class PO Certificates and the related Non-Class PO Percentage
of such Realized Losses shall be allocated among the Class A-1 Certificates and
Subordinate Certificates on a PRO RATA basis. Any allocation of a Realized Loss
to a Certificate will be made by reducing the Certificate Principal Balance
thereof by the amount so allocated as of the Distribution Date in the month
following the calendar month in which such Realized Loss was incurred.

                  Extraordinary Trust Fund Expenses shall be allocated by the
Trust Administrator on each Distribution Date as follows: first, to the Class
B-6 Certificates; second, to the Class B-5 Certificates; third, to the Class B-4
Certificates; fourth, to the Class B-3 Certificates; fifth, to the

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<PAGE>



Class B-2 Certificates; and sixth, to the Class B-1 Certificates, in each case
until the Certificate Principal Balance thereof has been reduced to zero.
Thereafter, upon the reduction of the Certificate Principal Balances of the
Subordinate Certificates to zero, such Extraordinary Trust Fund Expenses shall
be allocated among the Senior Certificates (other than the Class A-2
Certificates and the Class IO Certificates) on a PRO RATA basis.

         Notwithstanding the method of allocation of Realized Losses and
Extraordinary Trust Fund Expenses above, if any Overcollateralization exists
when Realized Losses or Extraordinary Trust Fund Expenses are to be allocated,
such Realized Losses or Extraordinary Trust Fund Expenses will be allocated
first to the Overcollateralization, until the Overcollateralization is reduced
to zero, prior to allocating such Realized Losses or Extraordinary Trust Fund
Expenses to the Certificates in accordance with the priorities set forth above.

                  As used herein, an allocation of a Realized Loss or
Extraordinary Trust Fund Expense on a "PRO RATA basis" among two or more
specified Classes of Certificates means an allocation on a PRO RATA basis, among
the various Classes so specified, to each such Class of Certificates on the
basis of their then outstanding Certificate Principal Balances prior to giving
effect to distributions to be made on such Distribution Date. All Realized
Losses and all other losses allocated to a Class of Certificates hereunder will
be allocated among the Certificates of such Class in proportion to the
Percentage Interests evidenced thereby.

                  (c) Notwithstanding anything to the contrary herein, in no
event shall the Certificate Principal Balance of a Class A Certificate be
reduced more than once in respect of any particular amount both (i) allocable to
such Certificate in respect of Realized Losses or Extraordinary Trust Fund
Expenses pursuant to Section 4.04 and (ii) payable to the Holder of such
Certificate pursuant to Section 4.01(a) as a portion of the Senior Principal
Distribution Amount.

                  SECTION 4.05. Compliance with Withholding Requirements.

                  Notwithstanding any other provision of this Agreement, the
Trust Administrator shall comply with all federal withholding requirements
respecting payments to Certificateholders of interest or original issue discount
that the Trust Administrator reasonably believes are applicable under the Code.
The consent of Certificateholders shall not be required for such withholding. In
the event the Trust Administrator does withhold any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trust Administrator shall
indicate the amount withheld to such Certificateholders.

                  SECTION 4.06. Distributions on the REMIC I Regular Interests.

         (a) [reserved].

         (b) On each Distribution Date, the Trustee shall be deemed to
distribute to itself, as the holder of the REMIC I Regular Interests, the
Uncertificated Interest and the Uncertificated Principal Distribution Amount in
the following order of priority to the extent of the Available Distribution
Amount;

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<PAGE>



                (i) Uncertificated Interest on the REMIC I Regular Interests for
         such Distribution Date, plus any Uncertificated Interest thereon
         remaining unpaid from any previous Distribution Date; and

               (ii) the Uncertificated Principal Distribution Amount for such
         Distribution Date.

         (b) Realized Losses allocated to the Certificates (other than the Class
A-1 Certificates and the Class PO Certificates) under Section 4.04 shall be
deemed allocated to REMIC I Regular Interest LT1. Realized Losses allocated to
the Class A-1 Certificates under Section 4.04 shall be deemed allocated to REMIC
I Regular Interest LT2. Realized Losses allocated to the Class PO under Section
4.04 shall be deemed allocated to REMIC I Regular Interest LTPO.

         (c) Notwithstanding the deemed distributions on the REMIC I Regular
Interests described in this Section 4.06, distributions of funds from the
Collection Account shall be made only in accordance with Section 4.01.


                  SECTION 4.07. Commission Reporting.

                  Within 15 days after each Distribution Date, the Trust
Administrator shall file with the Commission via the Electronic Data Gathering
and Retrieval System, a Form 8-K with a copy of the statement to
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2001, the Trust Administrator shall file a Form 15 Suspension
Notification with respect to the Trust Fund, if applicable. Prior to March 30,
2001, the Trust Administrator shall file a Form 10-K, substantially in the form
attached hereto as Exhibit I, with respect to the Trust Fund. The Depositor
hereby grants to the Trust Administrator a limited power of attorney to execute
and file each such document on behalf of the Depositor. Such power of attorney
shall continue until the earlier of (i) receipt by the Trust Administrator from
the Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. At least three Business Days prior to filing any
Form 8-K or Form 10-K pursuant to this Section 4.07, the Trust Administrator
shall deliver a copy of such Form 8-K or Form 10-K, as the case may be, to the
Depositor. The Depositor agrees to promptly furnish to the Trust Administrator,
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 Trust Administrator reasonably deems appropriate to prepare and file all
necessary reports with the Commission.

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<PAGE>





                                    ARTICLE V

                                THE CERTIFICATES

                  SECTION 5.01. The Certificates.

                  (a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I. At the Closing Date, the aggregate Certificate Principal
Balance of the Certificates will equal the aggregate Stated Principal Balance of
the Mortgage Loans.

                  The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-12. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.

                  Upon original issue, the Certificates shall be executed,
authenticated and delivered by the Trustee to or upon the order of the
Depositor. The Certificates shall be executed and attested by manual or
facsimile signature on behalf of the Trustee by an authorized signatory.
Certificates bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. 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 provided herein executed by the Trustee by manual signature, and
such certificate of authentication 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.

                  (b) The Class A Certificates, the Class B-1 Certificates, the
Class B-2 Certificates and the Class B-3 Certificates shall initially be issued
as one or more Certificates held by the Book- Entry Custodian or, if appointed
to hold such Certificates as provided below, the Depository and registered in
the name of the Depository or its nominee and, except as provided below,
registration of such Certificates may not be transferred by the Trustee except
to another Depository that agrees to hold such Certificates for the respective
Certificate Owners with Ownership Interests therein. The Certificate Owners
shall hold their respective Ownership Interests in and to such Certificates
through the book-entry facilities of the Depository and, except as provided
below, shall not be entitled to definitive, fully registered Certificates
("Definitive Certificates") in respect of such Ownership Interests. All
transfers by Certificate Owners of their respective Ownership Interests in the
Book- Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall only transfer the Ownership
Interests in the Book-Entry Certificates of Certificate Owners it represents or
of brokerage firms for which it acts as agent in accordance with the
Depository's

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<PAGE>



normal procedures. The Trustee is hereby initially appointed as the Book-Entry
Custodian and hereby agrees to act as such in accordance herewith and in
accordance with the agreement that it has with the Depository authorizing it to
act as such. The Book-Entry Custodian may, and if it is no longer qualified to
act as such, the Book-Entry Custodian shall, appoint, by a written instrument
delivered to the Depositor, the Master Servicer, the Trust Administrator, the
Trustee (if the Trustee is not the Book-Entry Custodian) and any other transfer
agent (including the Depository or any successor Depository) to act as
Book-Entry Custodian under such conditions as the predecessor Book-Entry
Custodian and the Depository or any successor Depository may prescribe, provided
that the predecessor Book-Entry Custodian shall not be relieved of any of its
duties or responsibilities by reason of any such appointment of other than the
Depository. If the Trustee resigns or is removed in accordance with the terms
hereof, the successor trustee or, if it so elects, the Depository shall
immediately succeed to its predecessor's duties as Book-Entry Custodian. The
Depositor shall have the right to inspect, and to obtain copies of, any
Certificates held as Book-Entry Certificates by the Book-Entry Custodian.

                  The Trustee, the Trust Administrator, the Master Servicer and
the Depositor may for all purposes (including the making of payments due on the
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the Book-Entry
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates with respect
to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trustee may establish a reasonable
record date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.

                  If (i)(A) the Depositor advises the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the Depository
or (iii) after the occurrence of a Master Servicer Event of Default, Certificate
Owners representing in the aggregate not less than 51% of the Ownership
Interests of the Book-Entry Certificates advise the Trustee through the
Depository, in writing, that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Certificate Owners, the
Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Book- Entry Certificates by the Book-Entry Custodian or the Depository, as
applicable, accompanied by registration instructions from the Depository for
registration of transfer, the Trustee shall issue the Definitive Certificates.
Such Definitive Certificates will be issued in minimum denominations of
$100,000, except that any beneficial ownership that was represented by a
Book-Entry Certificate in an amount less than $100,000 immediately prior to the
issuance of a Definitive Certificate shall be issued in a minimum denomination
equal to the amount represented by such Book-Entry Certificate. None of the
Depositor, the Master Servicer, the Trust Administrator nor the Trustee shall be
liable for any delay in the delivery of such instructions and may conclusively
rely on, and shall be protected

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<PAGE>



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

                  SECTION 5.02. Registration of Transfer and Exchange of
                                Certificates.

                  (a) The Trustee shall cause to be kept at one of the offices
or agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register for the Certificates in which, subject 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.

                  (b) No transfer of any Class B-4 Certificate, Class B-5
Certificate or Class B-6 Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of a Class B-4 Certificate, Class B-5 Certificate or
Class B-6 Certificate is to be made without registration or qualification (other
than in connection with the initial transfer of any such Certificate by the
Depositor to an affiliate of the Depositor), the Trustee shall require, receipt
of: (i) if such transfer is purportedly being made in reliance upon Rule 144A
under the 1933 Act, written certifications from the Certificateholder desiring
to effect the transfer and from such Certificateholder's prospective transferee,
substantially in the forms attached hereto as Exhibit F-1; and (ii) in all other
cases, an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration or qualification (which Opinion of Counsel shall not
be an expense of the Depositor, the Trustee, the Trust Administrator, the Master
Servicer, in its capacity as such, or the Trust Fund), together with copies of
the written certification(s) of the Certificateholder desiring to effect the
transfer and/or such Certificateholder's prospective transferee upon which such
Opinion of Counsel is based, if any. Neither the Depositor or the Trustee is
obligated to register or qualify the Class B-4 Certificates, Class B-5
Certificates or the Class B-6 Certificates under the 1933 Act or any other
securities laws or to take any action not otherwise required under this
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Certificateholder desiring to effect the transfer of a Class
B-4 Certificate, Class B-5 Certificate or Class B-6 Certificate shall, and does
hereby agree to, indemnify the Trustee, the Trust Administrator, the Depositor
and the Master Servicer against any liability that may result if the transfer is
not so exempt or is not made in accordance with such federal and state laws.

                  (c) No transfer of a Subordinate Certificate or a Residual
Certificate or any interest therein shall be made to any Plan subject to ERISA
or Section 4975 of the Code, any Person acting, directly or indirectly, on
behalf of any such Plan or any Person acquiring such Certificates with "Plan
Assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") unless the Depositor,
the Trustee, the Trust Administrator and the Master Servicer are provided with
an Opinion of Counsel which establishes to the

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<PAGE>



satisfaction of the Depositor, the Trustee, the Trust Administrator and the
Master Servicer that the purchase of such Certificates is permissible under
applicable law, will not constitute or result in any prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor, the
Master Servicer, the Trustee, the Trust Administrator or the Trust Fund to any
obligation or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Depositor, the Master
Servicer, the Trustee, the Trust Administrator or the Trust Fund. In the case of
the Subordinate Certificates, in lieu of such Opinion of Counsel, any
prospective Transferee of such Certificates may provide a certification (which
in the case of the Class B-1 Certificates, Class B-2 Certificates or Class B-3
Certificates sold in book-entry form, the Transferee will be deemed to have
represented such certification) in the form of Exhibit G to this Agreement (or
other form acceptable to the Depositor, the Trustee, the Trust Administrator and
the Master Servicer), which the Trustee may rely upon without further inquiry or
investigation. An Opinion of Counsel, any certification or a deemed
representation will not be required in connection with the initial transfer of
any such Certificate by the Depositor to an affiliate of the Depositor (in which
case, the Depositor or any affiliate thereof shall have deemed to have
represented that such affiliate is not a Plan or a Person investing Plan Assets)
and the Trustee shall be entitled to conclusively rely upon a representation
(which, upon the request of the Trustee, shall be a written representation) from
the Depositor of the status of such transferee as an affiliate of the Depositor.

         If any Subordinate Certificate or Residual Certificate or any interest
therein is acquired or held in violation of the provisions of the preceding
paragraph, the next preceding permitted beneficial owner will be treated as the
beneficial owner of that Certificate retroactive to the date of transfer to the
purported beneficial owner. Any purported beneficial owner whose acquisition or
holding of any such Certificate or interest therein was effected in violation of
the provisions of the preceding paragraph shall indemnify and hold harmless the
Depositor, the Master Servicer, the Trustee, the Trust Administrator and the
Trust Fund from and against any and all liabilities, claims, costs or expenses
incurred by those parties as a result of that acquisition or holding.

                  (d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of Transfer and to do all other
things necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly subject
to the following provisions:

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

                                    (B) In connection with any proposed Transfer
                           of any Ownership Interest in a Residual Certificate,
                           the Trustee shall require delivery to it and

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<PAGE>



                           shall not register the Transfer of any Residual
                           Certificate until its receipt of an affidavit and
                           agreement (a "Transfer Affidavit and Agreement"), in
                           the form attached hereto as Exhibit F-2, from the
                           proposed Transferee, in form and substance
                           satisfactory to the Trustee, representing and
                           warranting, among other things, that such Transferee
                           is a Permitted Transferee, that it is not acquiring
                           its Ownership Interest in the Residual Certificate
                           that is the subject of the proposed Transfer as a
                           nominee, trustee or agent for any Person that is not
                           a Permitted Transferee, that for so long as it
                           retains its Ownership Interest in a Residual
                           Certificate, it will endeavor to remain a Permitted
                           Transferee, and that it has reviewed the provisions
                           of this Section 5.02(d) and agrees to be bound by
                           them.

                                    (C) Notwithstanding the delivery of a
                           Transfer Affidavit and Agreement by a proposed
                           Transferee under clause (B) above, if a Responsible
                           Officer of the Trustee who is assigned to this
                           transaction has actual knowledge that the proposed
                           Transferee is not a Permitted Transferee, no Transfer
                           of an Ownership Interest in a Residual Certificate to
                           such proposed Transferee shall be effected.

                                    (D) Each Person holding or acquiring any
                           Ownership Interest in a Residual Certificate shall
                           agree (x) to require a Transfer Affidavit and
                           Agreement from any other Person to whom such Person
                           attempts to transfer its Ownership Interest in a
                           Residual Certificate and (y) not to transfer its
                           Ownership Interest unless it provides a transferor
                           affidavit (a "Transferor Affidavit"), in the form
                           attached hereto as Exhibit F-2, to the Trustee
                           stating that, among other things, it has no actual
                           knowledge that such other Person is not a Permitted
                           Transferee.

                                    (E) Each Person holding or acquiring an
                           Ownership Interest in a Residual Certificate, by
                           purchasing an Ownership Interest in such Certificate,
                           agrees to give the Trustee written notice that it is
                           a "pass-through interest holder" within the meaning
                           of temporary Treasury regulation Section 1.67-
                           3T(a)(2)(i)(A) immediately upon acquiring an
                           Ownership Interest in a Residual Certificate, if it
                           is, or is holding an Ownership Interest in a Residual
                           Certificate on behalf of, a "pass-through interest
                           holder."

                        (ii) The Trustee will register the Transfer of any
                  Residual Certificate only if it shall have received the
                  Transfer Affidavit and Agreement and all of such other
                  documents as shall have been reasonably required by the
                  Trustee as a condition to such registration. In addition, no
                  Transfer of a Residual Certificate shall be made unless the
                  Trustee shall have received a representation letter from the
                  Transferee of such Certificate to the effect that such
                  Transferee is a Permitted Transferee.

                       (iii) (A) If any purported Transferee shall become a
                  Holder of a Residual Certificate in violation of the
                  provisions of this Section 5.02(d), then the

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<PAGE>



                  last preceding Permitted Transferee shall be restored, to the
                  extent permitted by law, to all rights as holder thereof
                  retroactive to the date of registration of such Transfer of
                  such Residual Certificate. The Trustee shall be under no
                  liability to any Person for any registration of Transfer of a
                  Residual Certificate that is in fact not permitted by this
                  Section 5.02(d) or for making any payments due on such
                  Certificate to the holder thereof or for taking any other
                  action with respect to such holder under the provisions of
                  this Agreement.

                                    (B) If any purported Transferee shall become
                  a holder of a Residual Certificate in violation of the
                  restrictions in this Section 5.02(d) and to the extent that
                  the retroactive restoration of the rights of the holder of
                  such Residual Certificate as described in clause (iii)(A)
                  above shall be invalid, illegal or unenforceable, then the
                  Trustee shall have the right, without notice to the holder or
                  any prior holder of such Residual Certificate, to sell such
                  Residual Certificate to a purchaser selected by the Trustee on
                  such terms as the Trustee may choose. Such purported
                  Transferee shall promptly endorse and deliver each Residual
                  Certificate in accordance with the instructions of the
                  Trustee. Such purchaser may be the Trustee itself or any
                  Affiliate of the Trustee. The proceeds of such sale, net of
                  the commissions (which may include commissions payable to the
                  Trustee or its Affiliates), expenses and taxes due, if any,
                  will be remitted by the Trustee to such purported Transferee.
                  The terms and conditions of any sale under this clause
                  (iii)(B) shall be determined in the sole discretion of the
                  Trustee, and the Trustee shall not be liable to any Person
                  having an Ownership Interest in a Residual Certificate as a
                  result of its exercise of such discretion.

                        (iv) The Trust Administrator and the Trustee shall make
                  available to the Internal Revenue Service and those Persons
                  specified by the REMIC Provisions all information necessary to
                  compute any tax imposed (A) as a result of the Transfer of an
                  Ownership Interest in a Residual Certificate to any Person who
                  is a Disqualified Organization, including the information
                  described in Treasury regulations sections 1.860D-1(b)(5) and
                  1.860E-2(a)(5) with respect to the "excess inclusions" of such
                  Residual Certificate and (B) as a result of any regulated
                  investment company, real estate investment trust, common trust
                  fund, partnership, trust, estate or organization described in
                  Section 1381 of the Code that holds an Ownership Interest in a
                  Residual Certificate having as among its record holders at any
                  time any Person which is a Disqualified Organization.
                  Reasonable compensation for providing such information may be
                  accepted by the Trust Administrator and the Trustee.

                         (v) The provisions of this Section 5.02(d) set forth
                  prior to this subsection (v) may be modified, added to or
                  eliminated, provided that there shall have been delivered to
                  the Trustee at the expense of the party seeking to modify, add
                  to or eliminate any such provision the following:

                                    (A) written notification from the Rating
                           Agency to the effect that the modification, addition
                           to or elimination of such provisions will not cause

                                      -97-



<PAGE>



                           the Rating Agency to downgrade its then-current
                           ratings of any Class of Certificates; and

                                    (B) an Opinion of Counsel, in form and
                           substance satisfactory to the Trustee, to the effect
                           that such modification of, addition to or elimination
                           of such provisions will not cause either REMIC I or
                           REMIC II to cease to qualify as a REMIC and will not
                           cause (x) either REMIC I or REMIC II, as the case may
                           be, to be subject to an entity-level tax caused by
                           the Transfer of any Residual Certificate to a Person
                           that is not a Permitted Transferee or (y) a Person
                           other than the prospective transferee to be subject
                           to a REMIC-tax caused by the Transfer of a Residual
                           Certificate to a Person that is not a Permitted
                           Transferee.

                  (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.12, the Trustee shall
execute, authenticate and deliver, in the name of the designated Transferee or
Transferees, one or more new Certificates of the same Class of a like aggregate
Percentage Interest.

                  (f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.12. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute, authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Trustee) be duly endorsed by, or be accompanied by
a written instrument of transfer in the form satisfactory to the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing.

                  (g) No service charge to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Trustee may require
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.

                  (h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Trustee in accordance with its customary
procedures.

                  SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
                                Certificates.

                  If (i) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receive evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (ii) there is delivered to the Trustee
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of actual knowledge by the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the same Class and

                                      -98-



<PAGE>



of like denomination and Percentage Interest. Upon the issuance of any new
Certificate under this Section, 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 shall constitute complete and indefeasible evidence of ownership in
the applicable REMIC created hereunder, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.

                  SECTION 5.04. Persons Deemed Owners.

                  The Depositor, the Master Servicer, the Trustee, the Trust
Administrator and any agent of any of them may treat the Person in whose name
any Certificate is registered as the owner of such Certificate for the purpose
of receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Depositor, the Master Servicer, the Trustee, the
Trust Administrator or any agent of any of them shall be affected by notice to
the contrary.

                  SECTION 5.05. Certain Available Information.

                  On or prior to the date of the first sale of any Class B-4
Certificate, Class B-5 Certificate or Class B-6 Certificate to an Independent
third party, the Depositor shall provide to the Trustee ten copies of any
private placement memorandum or other disclosure document used by the Depositor
in connection with the offer and sale of the Class B-4 Certificates, Class B-5
Certificates or Class B-6 Certificates. In addition, if any such private
placement memorandum or disclosure document is revised, amended or supplemented
at any time following the delivery thereof to the Trustee, the Depositor
promptly shall inform the Trustee of such event and shall deliver to the Trustee
ten copies of the private placement memorandum or disclosure document, as
revised, amended or supplemented. The Trustee shall maintain at its Corporate
Trust Office and shall make available free of charge during normal business
hours for review by any Holder of a Certificate or any Person identified to the
Trustee as a prospective transferee of a Certificate, originals or copies of the
following items: (i) in the case of a Holder or prospective transferee of a
Class B-4 Certificate, Class B-5 Certificate or Class B-6 Certificate, the
private placement memorandum or other disclosure document relating to such
Certificates in the form most recently provided to the Trustee; and (ii) in all
cases, (A) this Agreement and any amendments hereof entered into pursuant to
Section 11.01, (B) all monthly statements required to be delivered to
Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trust Administrator since the Closing
Date pursuant to Section 10.01(h), (D) any and all Officers' Certificates
delivered to the Trustee by the Master Servicer since the Closing Date to
evidence the Master Servicer's determination that any P&I Advance was, or if
made, would be a Nonrecoverable P&I Advance and (E) any and all Officers'
Certificates delivered to the Trustee by the Master Servicer since the Closing
Date pursuant to Section 4.04(a). Copies and mailing of any and all of the
foregoing items will be available from the Trustee upon request at the expense
of the person requesting the same.

                                      -99-



<PAGE>



                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

                  SECTION 6.01. Liability of the Depositor and the Master
                                Servicer.

                  The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement and undertaken hereunder by the Depositor and the Master
Servicer herein.

                  SECTION 6.02. Merger or Consolidation of the Depositor or the
                                Master Servicer.

                  Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
the Master Servicer will keep in full effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and its qualification as an approved conventional seller/servicer
for Fannie Mae or Freddie Mac in good standing. The Depositor and the Master
Servicer each will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Agreement, the
Certificates or any of the Mortgage Loans and to perform its respective duties
under this Agreement.

                  The Depositor or the Master Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or the Master Servicer,
shall be the successor of the Depositor or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
Fannie Mae or Freddie Mac; and provided further that the Rating Agency's ratings
of the Senior Certificates in effect immediately prior to such merger or
consolidation will not be qualified, reduced or withdrawn as a result thereof
(as evidenced by a letter to such effect from the Rating Agency).

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

                  None of the Depositor, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor or the Master 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 Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific liability imposed on the Master Servicer
pursuant hereto, or against any liability which would otherwise be imposed by
reason of

                                      -100-



<PAGE>



willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Depositor,
the Master Servicer and any director, officer, employee or agent of the
Depositor or the Master Servicer may rely in good faith on any document of any
kind which, PRIMA FACIE, is properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Master Servicer and
any director, officer, employee or agent of the Depositor or the Master Servicer
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense to
any specific Mortgage Loan or Mortgage Loans (except as any such loss, liability
or expense shall be otherwise reimbursable pursuant to this Agreement) or any
loss, liability or expense 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. Neither the Depositor nor the
Master Servicer shall be under any obligation to appear in, prosecute or defend
any legal action unless such action is related to its respective duties under
this Agreement and, in its opinion, does not involve it in any expense or
liability; provided, however, that each of the Depositor and the Master Servicer
may in its discretion undertake any such action which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, unless the Depositor or the Master Servicer acts without the consent of
Holders of Certificates entitled to at least 51% of the Voting Rights (which
consent shall not be necessary in the case of litigation or other legal action
by either to enforce their respective rights or defend themselves hereunder),
the legal expenses and costs of such action and any liability resulting
therefrom (except any loss, liability or expense 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) shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor (subject to
the limitations set forth above) and the Master Servicer shall be entitled to be
reimbursed therefor from the Collection Account as and to the extent provided in
Section 3.11, any such right of reimbursement being prior to the rights of the
Certificateholders to receive any amount in the Collection Account.

                  SECTION 6.04. Limitation on Resignation of the Master
                                Servicer.

                  The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that its duties
hereunder are no longer permissible under applicable law or (ii) with the
written consent of the Trustee, which consent may not be unreasonably withheld,
with written confirmation from the Rating Agency (which confirmation shall be
furnished to the Depositor, the Trustee and the Trust Administrator) that such
resignation will not cause the Rating Agency to reduce the then current rating
of the Class A Certificates and provided that a qualified successor has agreed
to assume the duties and obligations of the Master Servicer hereunder.
Any such determination pursuant to clause (i) of the preceding sentence
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect obtained at the expense of the Master Servicer
and delivered to the Trustee and the Trust Administrator. No resignation of the
Master Servicer shall become effective until the Trustee or a successor servicer
shall have assumed the Master Servicer's responsibilities, duties, liabilities
(other than those liabilities arising prior to the appointment of such
successor) and obligations under this Agreement.


                                      -101-



<PAGE>



                  Except as expressly provided herein, the Master Servicer shall
not assign nor transfer any of its rights, benefits or privileges hereunder to
any other Person, nor delegate to or subcontract with, nor authorize or appoint
any other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder. If, pursuant to any provision
hereof, the duties of the Master Servicer are transferred to a successor master
servicer, the entire amount of the Servicing Fee and other compensation payable
to the Master Servicer pursuant hereto shall thereafter be payable to such
successor master servicer.

                  SECTION 6.05. Rights of the Depositor in Respect of the Master
                                Servicer.

                  The Master Servicer shall afford (and any Sub-Servicing
Agreement shall provide that each Sub-Servicer shall afford) the Depositor, the
Trustee and the Trust Administrator, upon reasonable notice, during normal
business hours, access to all records maintained by the Master Servicer (and any
such Sub-Servicer) in respect of the Master Servicer's rights and obligations
hereunder and access to officers of the Master Servicer (and those of any such
Sub-Servicer) responsible for such obligations. Upon request, the Master
Servicer shall furnish to the Depositor, the Trustee and the Trust Administrator
its (and any such Sub-Servicer's) most recent financial statements of the parent
company of the Master Servicer and such other information relating to the Master
Servicer's capacity to perform its obligations under this Agreement that it
possesses. To the extent such information is not otherwise available to the
public, the Depositor, the Trustee and the Trust Administrator shall not
disseminate any information obtained pursuant to the preceding two sentences
without the Master Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies,
rating agencies or reinsurers or (ii) pursuant to any law, rule, regulation,
order, judgment, writ, injunction or decree of any court or governmental
authority having jurisdiction over the Depositor, the Trustee, the Trust
Administrator or the Trust Fund, and in either case, the Depositor, the Trustee
or the Trust Administrator, as the case may be, shall use its best efforts to
assure the confidentiality of any such disseminated non-public information. The
Depositor may, but is not obligated to, enforce the obligations of the Master
Servicer under this Agreement and may, but is not obligated to, perform, or
cause a designee to perform, any defaulted obligation of the Master Servicer
under this Agreement or exercise the rights of the Master Servicer under this
Agreement; provided that the Master Servicer shall not be relieved of any of its
obligations under this Agreement by virtue of such performance by the Depositor
or its designee. The Depositor shall not have any responsibility or liability
for any action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.

                                      -102-



<PAGE>



                                   ARTICLE VII

                                     DEFAULT

                  SECTION 7.01. Master Servicer Events of Default.

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

                         (i) any failure by the Master Servicer to remit to the
                  Trustee for distribution to the Certificateholders any payment
                  (other than a P&I Advance required to be made from its own
                  funds on any Master Servicer Remittance Date pursuant to
                  Section 4.03) required to be made under the terms of the
                  Certificates and this Agreement which continues unremedied for
                  a period of one Business Day after the date upon which written
                  notice of such failure, requiring the same to be remedied,
                  shall have been given to the Master Servicer by the Depositor,
                  the Trust Administrator or the Trustee (in which case notice
                  shall be provided by telecopy), or to the Master Servicer, the
                  Depositor, the Trust Administrator and the Trustee by the
                  Holders of Certificates entitled to at least 25% of the Voting
                  Rights; or

                        (ii) any failure on the part of the Master Servicer duly
                  to observe or perform in any material respect any of the
                  covenants or agreements on the part of the Master Servicer
                  contained in the Certificates or in this Agreement which
                  continues unremedied for a period of 30 days after the earlier
                  of (i) the date on which written notice of such failure,
                  requiring the same to be remedied, shall have been given to
                  the Master Servicer by the Depositor, the Trust Administrator
                  or the Trustee, or to the Master Servicer, the Depositor, the
                  Trust Administrator and the Trustee by the Holders of
                  Certificates entitled to at least 25% of the Voting Rights and
                  (ii) actual knowledge of such failure by a Servicing Officer
                  of the Master Servicer; or

                       (iii) a decree or order of a court or agency or
                  supervisory authority having jurisdiction in the premises in
                  an involuntary case under any present or future federal or
                  state bankruptcy, insolvency or similar law or the appointment
                  of a conservator or receiver or liquidator in any insolvency,
                  readjustment of debt, marshalling of assets and liabilities or
                  similar proceeding, or for the winding-up or liquidation of
                  its affairs, shall have been entered against the Master
                  Servicer and if such proceeding is being contested by the
                  Master Servicer in good faith such decree or order shall have
                  remained in force undischarged or unstayed for a period of 60
                  consecutive days or results in the entry of an order for
                  relief or any such adjudication or appointment; or

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


                                      -103-



<PAGE>



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

                        (vi) any failure of the Master Servicer to make any P&I
                  Advance on any Master Servicer Remittance Date required to be
                  made from its own funds pursuant to Section 4.03 which
                  continues unremedied for a period of one Business Day after
                  the date upon which written notice of such failure (which
                  notice the Trustee must provide by 3:00 p.m. New York time on
                  the Business Day following the Master Servicer Remittance
                  Date), requiring the same to be remedied, shall have been
                  given to the Master Servicer by the Trustee.

If a Master Servicer Event of Default described in clauses (i) through (v) of
this Section shall occur, then, and in each and every such case, so long as such
Master Servicer Event of Default shall not have been remedied, the Depositor or
the Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Master Servicer (and to the Depositor if given by the Trustee or
to the Trustee if given by the Depositor), terminate all of the rights and
obligations of the Master Servicer in its capacity as a Master Servicer under
this Agreement, to the extent permitted by law, and in and to the Mortgage Loans
and the proceeds thereof. If a Master Servicer Event of Default described in
clause (vi) hereof shall occur and shall not have been remedied by 1:00 p.m. on
the related Distribution Date, the Trustee shall be obligated to make such P&I
Advance and, then so long as such Master Servicer Event of Default shall not
have been remedied during the applicable time period set forth in clause (vi)
above (including the reimbursement to the Trustee by the Master Servicer, with
interest thereon at the Prime Rate, for any P&I Advance made), the Trustee
shall, by notice in writing to the Master Servicer and the Depositor, terminate
all of the rights and obligations of the Master Servicer in its capacity as a
Master Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof. On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer under this Agreement,
whether with respect to the Certificates (other than as a Holder of any
Certificate) or the Mortgage Loans or otherwise, shall pass to and be vested in
the Trustee pursuant to and under this Section and, without limitation, the
Trustee is hereby authorized and empowered, as attorney-in-fact or otherwise, to
execute and deliver on behalf of and at the expense of the Master Servicer, 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. The Master Servicer
agrees, at its sole cost and expense, promptly (and in any event no later than
ten Business Days subsequent to such notice) to provide the Trustee with all
documents and records requested by it to enable it to assume the Master
Servicer's functions under this Agreement, and to cooperate with the Trustee in
effecting the termination of the Master Servicer's responsibilities and rights
under this Agreement, including, without limitation, the transfer within one
Business Day to the Trustee for administration by it of all cash amounts which
at the time shall be or should have been credited by the Master Servicer to the
Collection Account held by or on behalf of the Master Servicer, the Distribution
Account or any REO Account or Servicing Account held by or on behalf of the
Master Servicer or thereafter be received with respect

                                      -104-



<PAGE>



to the Mortgage Loans or any REO Property serviced by the Master Servicer
(provided, however, that the Master Servicer shall continue to be entitled to
receive all amounts accrued or owing to it under this Agreement on or prior to
the date of such termination, whether in respect of P&I Advances or otherwise,
and shall continue to be entitled to the benefits of Section 6.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of a Master Servicer Event of Default unless a
Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless written notice of
any event which is in fact such a Master Servicer Event of Default is received
by the Trustee and such notice references the Certificates, REMIC I or this
Agreement.

                  SECTION 7.02. Trustee to Act; Appointment of Successor.

                  (a) On and after the time the Master Servicer receives a
notice of termination, the Trustee shall be the successor in all respects to the
Master Servicer in its capacity as Master Servicer under this Agreement, the
Master Servicer shall not have the right to withdraw any funds from the
Collection Account without the consent of the Trustee and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto and arising thereafter placed on the
Master Servicer (except for any representations or warranties of the Master
Servicer under this Agreement, the responsibilities, duties and liabilities
contained in Section 2.03(c) and its obligation to deposit amounts in respect of
losses pursuant to Section 3.12) by the terms and provisions hereof including,
without limitation, the Master Servicer's obligations to make P&I Advances
pursuant to Section 4.03; provided, however, that if the Trustee is prohibited
by law or regulation from obligating itself to make advances regarding
delinquent mortgage loans, then the Trustee shall not be obligated to make P&I
Advances pursuant to Section 4.03; and provided further, that any failure to
perform such duties or responsibilities caused by the Master Servicer's failure
to provide information required by Section 7.01 shall not be considered a
default by the Trustee as successor to the Master Servicer hereunder. As
compensation therefor, the Trustee shall be entitled to the Servicing Fees and
all funds relating to the Mortgage Loans to which the Master Servicer would have
been entitled if it had continued to act hereunder (other than amounts which
were due or would become due to the Master Servicer prior to its termination or
resignation). Notwithstanding the above and subject to the next paragraph, the
Trustee may, if it shall be unwilling to so act, or shall, if it is unable to so
act or if it is prohibited by law from making advances regarding delinquent
mortgage loans, or if the Holders of Certificates entitled to at least 51% of
the Voting Rights so request in writing to the Trustee, promptly appoint or
petition a court of competent jurisdiction to appoint, an established mortgage
loan servicing institution acceptable to the Rating Agency and having a net
worth of not less than $15,000,000 as the successor to the Master Servicer under
this Agreement in the assumption of all or any part of the responsibilities,
duties or liabilities of the Master Servicer under this Agreement. No
appointment of a successor to the Master Servicer under this Agreement shall be
effective until the assumption by the successor of all of the Master Servicer's
responsibilities, duties and liabilities hereunder. In connection with such
appointment and assumption described herein, 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 Master Servicer as such
hereunder. The Depositor, the Trustee and such successor shall take such action,
consistent with this

                                      -105-



<PAGE>



Agreement, as shall be necessary to effectuate any such succession. Pending
appointment of a successor to the Master Servicer under this Agreement, the
Trustee shall act in such capacity as hereinabove provided.

                  Upon removal or resignation of the Master Servicer, the
Trustee, with the cooperation of the Depositor, (x) shall solicit bids for a
successor Master Servicer as described below and (y) pending the appointment of
a successor Master Servicer as a result of soliciting such bids, shall serve as
Master Servicer of the Mortgage Loans serviced by such predecessor Master
Servicer. The Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above (including the Trustee or any affiliate
thereof). Such public announcement shall specify that the successor Master
Servicer shall be entitled to the servicing compensation agreed upon between the
Trustee, the successor Master Servicer and the Depositor; provided, however,
that no such fee shall exceed the related Servicing Fee. Within thirty days
after any such public announcement, the Trustee, with the cooperation of the
Depositor, shall negotiate in good faith and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price they
will pay to obtain such servicing. The Trustee upon receipt of the purchase
price shall pay such purchase price to the Master Servicer being so removed,
after deducting from any sum received by the Trustee from the successor to the
Master Servicer in respect of such sale, transfer and assignment all costs and
expenses of any public announcement and of any sale, transfer and assignment of
the servicing rights and responsibilities reasonably incurred hereunder. After
such deductions, the remainder of such sum shall be paid by the Trustee to the
Master Servicer at the time of such sale.

                  (b) If the Master Servicer fails to remit to the Trustee for
distribution to the Certificateholders any payment required to be made under the
terms of the Certificates and this Agreement (for purposes of this Section
7.02(b), a "Remittance") because the Master Servicer is the subject of a
proceeding under the federal Bankruptcy Code and the making of such Remittance
is prohibited by Section 362 of the federal Bankruptcy Code, the Trustee shall
upon notice of such prohibition, regardless of whether it has received a notice
of termination under Section 7.01, advance the amount of such Remittance by
depositing such amount in the Distribution Account on the related Distribution
Date. The Trustee shall be obligated to make such advance only if (i) such
advance, in the good faith judgment of the Trustee, can reasonably be expected
to be ultimately recoverable from Stayed Funds and (ii) the Trustee is not
prohibited by law from making such advance or obligating itself to do so. Upon
remittance of the Stayed Funds to the Trustee or the deposit thereof in the
Distribution Account by the Master Servicer, a trustee in bankruptcy or a
federal bankruptcy court, the Trustee may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trustee's
rights to recover from the Master Servicer's own funds interest on the amount of
any such advance. If the Trustee at any time makes an advance under this
Subsection which it later determines in its good faith judgment will not be
ultimately recoverable from the Stayed Funds with respect to which such advance
was made, the Trustee shall be entitled to reimburse itself for such advance,
without interest, by withdrawing from the Distribution Account, out of amounts
on deposit therein, an amount equal to the portion of such advance attributable
to the Stayed Funds.


                                      -106-



<PAGE>



                  SECTION 7.03. Notification to Certificateholders.

                  (a) Upon any termination of the Master Servicer pursuant to
Section 7.01 above or any appointment of a successor to the Master Servicer
pursuant to Section 7.02 above, the Trustee shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register.

                  (b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Master Servicer Event of Default or five days after a
Responsible Officer of the Trustee becomes aware of the occurrence of such an
event, the Trustee shall transmit by mail to all Holders of Certificates notice
of each such occurrence, unless such default or Master Servicer Event of Default
shall have been cured or waived.

                  SECTION 7.04. Waiver of Master Servicer Events of Default.

                  Subject to Section 11.09(d), the Holders representing at least
66% of the Voting Rights evidenced by all Classes of Certificates affected by
any default or Master Servicer Event of Default hereunder may waive such default
or Master Servicer Event of Default; provided, however, that a default or Master
Servicer Event of Default under clause (i) or (vi) of Section 7.01 may be waived
only by all of the Holders of the Regular Certificates. Upon any such waiver of
a default or Master Servicer Event of Default, such default or Master Servicer
Event of Default shall cease to exist and shall be deemed to have been remedied
for every purpose hereunder. No such waiver shall extend to any subsequent or
other default or Master Servicer Event of Default or impair any right consequent
thereon except to the extent expressly so waived.

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<PAGE>



                                  ARTICLE VIII

               CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

                  SECTION 8.01. Duties of Trustee and Trust Administrator.

                  Each of the Trustee and the Trust Administrator, prior to the
occurrence of a Master Servicer Event of Default and after the curing of all
Master Servicer Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. During a Master Servicer Event of Default, each of the Trustee and
the Trust Administrator 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. Any permissive right of the Trustee or
the Trust Administrator enumerated in this Agreement shall not be construed as a
duty.

                  Each of the Trustee and the Trust Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to it, which 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, it shall take such action as it deems appropriate to have the
instrument corrected, and if the instrument is not corrected to its
satisfaction, it will provide notice thereof to the Certificateholders.

                  No provision of this Agreement shall be construed to relieve
the Trustee or the Trust Administrator from liability for its own negligent
action, its own negligent failure to act or its own misconduct; provided,
however, that:

                         (i) Prior to the occurrence of a Master Servicer Event
                  of Default, and after the curing of all such Master Servicer
                  Events of Default which may have occurred, the duties and
                  obligations of each of the Trustee and the Trust Administrator
                  shall be determined solely by the express provisions of this
                  Agreement, neither the Trustee nor the Trust Administrator
                  shall be liable 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 or the Trust Administrator and,
                  in the absence of bad faith on the part of the Trustee or the
                  Trust Administrator, as applicable, the Trustee or the Trust
                  Administrator, as the case may be, 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 or the Trust Administrator, as the
                  case may be, that conform to the requirements of this
                  Agreement;

                        (ii) Neither the Trustee nor the Trust Administrator
                  shall be personally liable for any error of judgment made in
                  good faith by a Responsible Officer or Responsible Officers of
                  the it unless it shall be proved that it was negligent in
                  ascertaining the pertinent facts;

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<PAGE>



                       (iii) Neither the Trustee nor the Trust Administrator
                  shall be personally liable with respect to any action taken,
                  suffered or omitted to be taken by it in good faith in
                  accordance with the direction of the Holders of Certificates
                  entitled to at least 25% of the Voting Rights relating to the
                  time, method and place of conducting any proceeding for any
                  remedy available to the it or exercising any trust or power
                  conferred upon it, under this Agreement; and

                        (iv) Neither the Trustee nor the Trust Administrator
                  shall be required to take notice or be deemed to have notice
                  or knowledge of any default unless a Responsible Officer of
                  the Trustee shall have received written notice thereof or a
                  Responsible Officer shall have actual knowledge thereof. In
                  the absence of receipt of such notice or actual knowledge, the
                  Trustee or the Trust Administrator, as the case may be, may
                  conclusively assume there is no default.

                  SECTION 8.02. Certain Matters Affecting the Trustee and the
                                Trust Administrator.

                  (a) Except as otherwise provided in Section 8.01:

                         (i) Each of the Trustee and the Trust Administrator and
                  any director, officer, employee or agent of the Trustee and
                  the Trust Administrator, as the case may be, may request and
                  rely upon and shall be protected in acting or refraining from
                  acting upon any resolution, Officers' Certificate, certificate
                  of auditors or any other certificate, statement, instrument,
                  opinion, report, notice, request, consent, order, appraisal,
                  bond or other paper or document reasonably believed by it to
                  be genuine and to have been signed or presented by the proper
                  party or parties;

                        (ii) Each of the Trustee and the Trust Administrator may
                  consult with counsel 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;

                       (iii) Neither the Trustee nor the Trust Administrator
                  shall be under any obligation to exercise any of the trusts or
                  powers vested in it by this Agreement or to institute, conduct
                  or defend any litigation hereunder or in relation hereto at
                  the request, order or direction of any of the
                  Certificateholders, pursuant to the provisions of this
                  Agreement, unless such Certificateholders shall have offered
                  to the Trustee or the Trust Administrator, as applicable,
                  reasonable security or indemnity against the costs, expenses
                  and liabilities which may be incurred therein or thereby;
                  nothing contained herein shall, however, relieve the Trustee
                  or the Trust Administrator of the obligation, upon the
                  occurrence of a Master Servicer Event of Default (which has
                  not been cured or waived), to exercise such of the rights and
                  powers vested in it by this Agreement, and to use the same
                  degree of care and skill in their exercise as a prudent person
                  would exercise or use under the circumstances in the conduct
                  of such person's own affairs;

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<PAGE>



                        (iv) Neither the Trustee nor the Trust Administrator
                  shall be personally liable for any action taken, suffered or
                  omitted by it in good faith and believed by it to be
                  authorized or within the discretion or rights or powers
                  conferred upon it by this Agreement;

                         (v) Prior to the occurrence of a Master Servicer Event
                  of Default hereunder and after the curing of all Master
                  Servicer Events of Default which may have occurred, neither
                  the Trustee nor the Trust Administrator shall be bound to make
                  any investigation into the facts or matters stated in any
                  resolution, certificate, statement, instrument, opinion,
                  report, notice, request, consent, order, approval, bond or
                  other paper or document, unless requested in writing to do so
                  by the Holders of Certificates entitled to at least 25% of the
                  Voting Rights; provided, however, that if the payment within a
                  reasonable time to the Trustee or the Trust Administrator, as
                  applicable, of the costs, expenses or liabilities likely to be
                  incurred by it in the making of such investigation is, in the
                  opinion of the Trustee or the Trust Administrator, as
                  applicable, not reasonably assured to the Trustee or the Trust
                  Administrator, as applicable, by such Certificateholders, the
                  Trustee or the Trust Administrator, as applicable, may require
                  reasonable indemnity against such cost, expense, or liability
                  from such Certificateholders as a condition to taking any such
                  action;

                        (vi) Each of the Trustee and the Trust Administrator may
                  execute any of the trusts or powers hereunder or perform any
                  duties hereunder either directly or by or through agents or
                  attorneys;

                       (vii) Neither the Trustee nor the Trust Administrator
                  shall be personally liable for any loss resulting from the
                  investment of funds held in the Collection Account at the
                  direction of the Master Servicer pursuant to Section 3.12; and

                      (viii) Any request or direction of the Depositor, the
                  Master Servicer or the Certificateholders mentioned herein
                  shall be sufficiently evidenced in writing.

                  (b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee or the Trust Administrator, may be
enforced by it without the possession of any of the Certificates, or the
production thereof at the trial or other proceeding relating thereto, and any
such suit, action or proceeding instituted by the Trustee or the Trust
Administrator shall be brought in its name for the benefit of all the Holders of
such Certificates, subject to the provisions of this Agreement.

                  SECTION 8.03. Neither Trustee nor Trust Administrator Liable
                                for Certificates or Mortgage Loans.

                  The recitals contained herein and in the Certificates (other
than the signature of the Trustee or the Trust Administrator, the authentication
of the Trustee on the Certificates, the acknowledgments of the Trustee contained
in Article II and the representations and warranties of the

                                      -110-



<PAGE>



Trustee and the Trust Administrator in Section 8.12) shall be taken as the
statements of the Depositor and neither the Trustee nor the Trust Administrator
assumes any responsibility for their correctness.
Neither the Trustee nor the Trust Administrator makes any representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth in Section 8.12) or of the Certificates (other than the
signature of the Trustee and authentication of the Trustee on the Certificates)
or of any Mortgage Loan or related document. Neither the Trustee nor the Trust
Administrator shall be accountable for the use or application by the Depositor
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Depositor or the Master Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the Collection
Account by the Master Servicer, other than any funds held by or on behalf of the
Trustee in accordance with Section 3.10.

                  SECTION 8.04. Trustee and Trust Administrator May Own
                                Certificates.

                  Each of the Trustee and the Trust Administrator in its
individual capacity or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Trustee or Trust
Administrator, as applicable.

                  SECTION 8.05. Trustee's and Trust Administrator's Fees and
                                Expenses.

                  (a) The Trustee shall withdraw from the Distribution Account
on each Distribution Date and pay to itself the related portion of the
Administration Fee and pay to the Trust Administrator (if the Trust
Administrator is not the Master Servicer) the related portion of the
Administration Fee and, to the extent funds therein are at anytime insufficient
for such purpose, the Depositor shall pay such fees. Each of the Trustee and the
Trust Administrator and any director, officer, employee or agent of the Trustee
or the Trust Administrator, as applicable, shall be indemnified by REMIC I and
held harmless against any loss, liability or expense (not including expenses,
disbursements and advances incurred or made by the Trustee or the Trust
Administrator, as applicable, including the compensation and the expenses and
disbursements of its agents and counsel, in the ordinary course of the Trustee's
or Trust Administrator's, as the case may be, performance in accordance with the
provisions of this Agreement) incurred by the Trustee or the Trust
Administrator, as applicable, in connection with any claim or legal action or
any pending or threatened claim or legal action arising out of or in connection
with the acceptance or administration of its obligations and duties under this
Agreement, other than any loss, liability or expense (i) resulting from any
breach of the Master Servicer's (and in the case of the Trustee, the Trust
Administrator's or in the case of the Trust Administrator, the Trustee's)
obligations in connection with this Agreement and the Mortgage Loans, (ii) that
constitutes a specific liability of the Trustee or the Trust Administrator, as
applicable, pursuant to Section 10.01(c) or (iii) any loss, liability or expense
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 as a result of a breach of the Trust
Administrator's obligations under Article X hereof. Any amounts payable to the
Trustee, or any director, officer, employee or agent of the Trustee in respect
of the indemnification provided by this paragraph (a), or pursuant to any other
right of reimbursement from the Trust Fund that the Trustee or any director,
officer, employee or agent of the Trustee may have

                                      -111-



<PAGE>



hereunder in its capacity as such, may be withdrawn by the Trustee from the
Distribution Account at any time.

                  (b) The Master Servicer agrees to indemnify the Trustee and
the Trust Administrator from, and hold each harmless against, any loss,
liability or expense resulting from a breach of the Master Servicer's
obligations and duties under this Agreement. Such indemnity shall survive the
termination or discharge of this Agreement and the resignation or removal of the
Trustee or the Trust Administrator, as the case may be. Any payment hereunder
made by the Master Servicer to the Trustee or the Trust Administrator shall be
from the Master Servicer's own funds, without reimbursement from the Trust Fund
therefor.

                  (c) The Trustee shall pay any annual rating agency fees of S&P
for ongoing surveillance from its own funds without right of reimbursement.

                  SECTION 8.06. Eligibility Requirements for Trustee and Trust
                                Administrator.

                  Each of the Trustee and the Trust Administrator hereunder
shall at all times be a corporation or an association (other than the Depositor,
the Seller; and, solely in the case of the Trustee, the Master Servicer or any
Affiliate of the foregoing) organized and doing business under the laws of any
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 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 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
conditions so published. In case at any time the Trustee or the Trust
Administrator shall cease to be eligible in accordance with the provisions of
this Section, the Trustee or the Trust Administrator, as the case may be, shall
resign immediately in the manner and with the effect specified in Section 8.07.

                  SECTION 8.07. Resignation and Removal of the Trustee and the
                                Trust Administrator.

                  Either of the Trustee or the Trust Administrator may at any
time resign and be discharged from the trust hereby created by giving written
notice thereof to the Depositor, the Master Servicer and the Certificateholders
and, if the Trustee is resigning, to the Trust Administrator, or, if the Trust
Administrator is resigning, to the Trustee. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee or trust
administrator (which may be the same Person in the event the Trust Administrator
resigns or is removed) by written instrument, in duplicate, which instrument
shall be delivered to the resigning Trustee or Trust Administrator and to the
successor trustee or trust administrator, as applicable. A copy of such
instrument shall be delivered to the Certificateholders, the Trustee or Trust
Administrator, as applicable, and the Master Servicer by the Depositor. If no
successor trustee or trust administrator shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the

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<PAGE>



resigning Trustee or Trust Administrator, as applicable, may petition any court
of competent jurisdiction for the appointment of a successor trustee or trust
administrator, as applicable.

                  If at any time the Trustee or the Trust Administrator shall
cease to be eligible in accordance with the provisions of Section 8.06 and shall
fail to resign after written request therefor by the Depositor (or in the case
of the Trust Administrator, the Trustee), or if at any time the Trustee or the
Trust Administrator shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or the Trust Administrator
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or the Trust Administrator or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor (or in the case of the Trust Administrator, the Trustee) may remove
the Trustee or the Trust Administrator, as applicable, and appoint a successor
trustee or trust administrator (which may be the same Person in the event the
Trust Administrator resigns or is removed) by written instrument, in duplicate,
which instrument shall be delivered to the Trustee or Trust Administrator, so
removed, so removed and to the successor trustee or trust administrator. A copy
of such instrument shall be delivered to the Certificateholders, the Trustee or
the Trust Administrator, as applicable, and the Master Servicer by the
Depositor.

                  The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee or the Trust Administrator and
appoint a successor trustee or trust administrator by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee or the Trust Administrator, as the
case may be, so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders and the
Master Servicer by the Depositor. In addition, if the Trustee has knowledge that
the Trust Administrator has breached any of its duties under this Agreement, the
Trustee may remove the Trust Administrator in the same manner as provided in the
prior sentence. For purposes of this Section, the Trustee shall not be deemed to
have knowledge of a breach by the Trust Administrator of any of its duties
hereunder, unless a Responsible Officer of the Trustee, assigned to and working
in the Trustee's Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such a breach is received by the
Trustee, and such notice references the Certificates, the Trust Fund or this
Agreement.

                  Any resignation or removal of the Trustee or the Trust
Administrator and appointment of a successor trustee or trust administrator, as
the case may be, pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee or
trust administrator as provided in Section 8.08. Notwithstanding the foregoing,
in the event the Trust Administrator advises the Trustee that it is unable to
continue to perform its obligations pursuant to the terms of this Agreement
prior to the appointment of a successor, the Trustee shall be obligated to
perform such obligations until a new trust administrator is appointed. Such
performance shall be without prejudice to any claim by a party hereto or
beneficiary hereof resulting from the Trust Administrator's breach of its
obligations hereunder.


                                      -113-



<PAGE>



                  SECTION 8.08. Successor Trustee or Trust Administrator.

                  Any successor trustee or trust administrator appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the
Depositor, the Trustee or the Trust Administrator, as applicable, and to its
predecessor trustee or trust administrator an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee or trust administrator shall become effective and such
successor trustee or trust administrator, 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 or trust administrator herein. The predecessor trustee or trust
administrator shall deliver to the successor trustee or trust administrator all
Mortgage Files and related documents and statements, as well as all moneys, held
by it hereunder and the Depositor and the predecessor trustee or trust
administrator shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee or trust administrator all such rights,
powers, duties and obligations.

                  No successor trustee or trust administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee or trust administrator shall be eligible under the
provisions of Section 8.06 and the appointment of such successor trustee or
trust administrator shall not result in a downgrading of any Class of
Certificates by the Rating Agency, as evidenced by a letter from the Rating
Agency.

                  Upon acceptance of appointment by a successor trustee or trust
administrator as provided in this Section, the Depositor shall mail notice of
the succession of such trustee or trust administrator hereunder to all Holders
of Certificates at their addresses as shown in the Certificate Register. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee or trust administrator, the successor
trustee or trust administrator shall cause such notice to be mailed at the
expense of the Depositor.

                  SECTION 8.09. Merger or Consolidation of Trustee or Trust
                                Administrator.

                  Any corporation or association into which either the Trustee
or the Trust Administrator may be merged or converted or with which it may be
consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee or the Trust Administrator, as
the case may be, shall be a party, or any corporation or association succeeding
to the business of the Trustee or the Trust Administrator, as applicable, shall
be the successor of the Trustee or the Trust Administrator, as the case may be,
hereunder, provided such corporation or association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.

                  SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.

                  Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of REMIC I or property securing the

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<PAGE>



same may at the time be located, the Master Servicer and the Trustee acting
jointly shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of REMIC I, and to vest in such Person or Persons, in such
capacity, such title to REMIC I, or any part thereof, and, subject to the other
provisions of this Section 8.10, such powers, duties, obligations, rights and
trusts as the Master Servicer and the Trustee may consider necessary or
desirable. If the Master Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request to do so, or in case a
Master Servicer Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment.
No co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 8.06 hereunder and no notice
to Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.

                  In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to the Master Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of title to
REMIC I or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee at the direction of the
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 trust conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee.

                  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.


                                      -115-



<PAGE>



                  SECTION 8.11. [intentionally omitted]

                  SECTION 8.12. Appointment of Office or Agency.

                  The Trustee will appoint an office or agency in the City of
St. Paul, Minnesota where the Certificates may be surrendered for registration
of transfer or exchange, and presented for final distribution, and where notices
and demands to or upon the Trustee in respect of the Certificates and this
Agreement may be served.

                  SECTION 8.13. Representations and Warranties.

                  Each of the Trustee and the Trust Administrator hereby
represents and warrants to the Master Servicer, the Depositor and the Trustee or
the Trust Administrator, as applicable, as of the Closing Date, that:

                  (i) It is a national banking association duly organized,
         validly existing and in good standing under the laws of the United
         States of America.

                  (ii) The execution and delivery of this Agreement by it, and
         the performance and compliance with the terms of this Agreement by it,
         will not violate its articles of association or bylaws or constitute a
         default (or an event which, with notice or lapse of time, or both,
         would constitute a default) under, or result in the breach of, any
         material agreement or other instrument to which it is a party or which
         is applicable to it or any of its assets.

                  (iii) It has the full power and authority to enter into and
         consummate all transactions contemplated by this Agreement, has duly
         authorized the execution, delivery and performance of this Agreement,
         and has duly executed and delivered this Agreement.

                  (iv) This Agreement, assuming due authorization, execution and
         delivery by the other parties hereto, constitutes a valid, legal and
         binding obligation of it, enforceable against it in accordance with the
         terms hereof, subject to (A) applicable bankruptcy, insolvency,
         receivership, reorganization, moratorium and other laws affecting the
         enforcement of creditors' rights generally, and (B) general principles
         of equity, regardless of whether such enforcement is considered in a
         proceeding in equity or at law.

                  (v) It is not in violation of, and its execution and delivery
         of this Agreement and its performance and compliance with the terms of
         this Agreement will not constitute a violation of, any law, any order
         or decree of any court or arbiter, or any order, regulation or demand
         of any federal, state or local governmental or regulatory authority,
         which violation, in its good faith and reasonable judgment, is likely
         to affect materially and adversely either the ability of the it to
         perform its obligations under this Agreement or the financial condition
         of it.

                  (vi) No litigation is pending or, to the best of its
         knowledge, threatened against it which would prohibit it from entering
         into this Agreement or, in its good faith reasonable

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<PAGE>



         judgment, is likely to materially and adversely affect either the
         ability of it to perform its obligations under this Agreement or the
         financial condition of it.

                  SECTION 8.14. Rights and Indemnification of Co-Trustee.

                  The Co-Trustee hereby is given all rights and indemnifications
as the Trustee is entitled to under Article VIII of this Agreement.


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<PAGE>



                                   ARTICLE IX

                                   TERMINATION

                  SECTION 9.01 Termination Upon Repurchase or Liquidation of the
                               REMIC I Regular Interests.

                  (a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Trustee, the Co-Trustee and the Trust Administrator with respect to the Mortgage
Loans (other than the obligations of the Master Servicer to the Trustee, the
Co-Trustee and the Trust Administrator pursuant to Section 8.05 and of the
Master Servicer to provide for and the Trustee to make payments to the Holders
of the related Class(es) of REMIC II Certificates and Class R-I Certificates as
hereinafter set forth) shall terminate upon payment to the Certificateholders
and the deposit of all amounts held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date coinciding with or
following the earlier to occur of (i) the purchase by the Master Servicer of all
Mortgage Loans and each REO Property remaining in REMIC I and (ii) the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or REO Property remaining in REMIC I; provided, however, that in
no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. The purchase by the Master Servicer of all Mortgage
Loans and each REO Property remaining in REMIC I shall be at a price (the
"Termination Price") equal to the greater of (A) the aggregate Purchase Price of
all the Mortgage Loans included in REMIC I, plus the appraised value of each REO
Property, if any, included in REMIC I, such appraisal to be conducted by an
appraiser mutually agreed upon by the Master Servicer and the Trustee in their
reasonable discretion and (B) the aggregate fair market value of all of the
assets in REMIC I (as determined by the Master Servicer, with the consent of the
Trustee, as of the close of business on the third Business Day next preceding
the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Section 9.01).

                  (b) The Master Servicer shall have the right to purchase all
of the Mortgage Loans and each REO Property remaining in REMIC I pursuant to
clause (i) of the preceding paragraph no later than the Determination Date in
the month immediately preceding the Distribution Date on which the Certificates
will be retired; provided, however, that the Master Servicer, as provided above,
may elect to purchase all of the Mortgage Loans and each REO Property remaining
in REMIC I pursuant to clause (i) above only if the aggregate Stated Principal
Balance of the Mortgage Loans and each REO Property remaining in the Trust Fund
at the time of such election is reduced to less than 5% of the aggregate Stated
Principal Balance of the Mortgage Loans at the Cut-off Date. For federal income
tax purposes, the purchase by the Master Servicer of all Mortgage Loans and all
REO Properties underlying the REMIC I Regular Interests is intended to
facilitate a redemption of such REMIC I Regular Interests pursuant to a "cleanup
call" within the meaning of Treasury regulation section 1.860G-2(j).
Notwithstanding the foregoing, the Master Servicer shall have the right to
transfer, sell or assign its rights to purchase all of the Mortgage Loans and
each REO Property remaining in REMIC I.


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<PAGE>



                  (c) Notice of the liquidation of the REMIC I Regular Interests
shall be given promptly by the Trustee by letter to Certificateholders mailed
(a) in the event such notice is given in connection with the purchase of the
Mortgage Loans and each REO Property remaining in REMIC I by the Master
Servicer, not earlier than the 15th day and not later than the 25th day of the
month next preceding the month of the final distribution on the Certificates or
(b) otherwise during the month of such final distribution on or before the
Determination Date in such month, in each case specifying (i) the Distribution
Date upon which the Trust Fund will terminate and final payment of the REMIC II
Certificates will be made upon presentation and surrender of the REMIC II
Certificates at the office of the Trustee therein designated, (ii) the amount of
any such final payment, (iii) that no interest shall accrue in respect of the
REMIC II Certificates from and after the Interest Accrual Period relating to the
final Distribution Date therefor and (iv) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the REMIC II Certificates at the office of
the Trustee. In the event such notice is given in connection with the purchase
of all of the Mortgage Loans and each REO Property remaining in REMIC I by the
Master Servicer, the Master Servicer shall deliver to the Trustee for deposit in
the Distribution Account not later than the last Business Day of the month next
preceding the month in which such distribution will be made an amount in
immediately available funds equal to the Termination Price. Upon certification
to the Trustee by a Servicing Officer of the making of such final deposit, the
Trustee shall promptly release or cause to be released to the Master Servicer
the Mortgage Files for the remaining Mortgage Loans, and the Trustee shall
execute all assignments, endorsements and other instruments necessary to
effectuate such transfer.

                  (d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trustee shall distribute
to each Certificateholder so presenting and surrendering its Certificates the
amount otherwise distributable on such Distribution Date in accordance with
Section 4.01 in respect of the Certificates so presented and surrendered. Any
funds not distributed to any Holder or Holders of Certificates being retired on
such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust by
the Trustee and credited to the account of the appropriate non-tendering Holder
or Holders. If any Certificates as to which notice has been given pursuant to
this Section 9.01 shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall, directly or through an agent, mail a final notice to remaining related
non-tendering Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the trust funds.
If within one year after the final notice any such Certificates shall not have
been surrendered for cancellation, the Trustee shall pay to Salomon Smith Barney
Inc. all such amounts, and all rights of non-tendering Certificateholders in or
to such amounts shall thereupon cease. No interest shall accrue or be payable to
any Certificateholder on any amount held in trust by the Trustee as a result of
such Certificateholder's failure to surrender its Certificate(s) for final
payment thereof in accordance with this Section 9.01.


                                      -119-



<PAGE>



                  Immediately following the deposit of funds in trust hereunder
in respect of the REMIC I Regular Interests, the Trust Fund shall terminate.

                  SECTION 9.02 Additional Termination Requirements.

                  (a) In the event that the Master Servicer purchases all the
Mortgage Loans and each REO Property, the Trust Fund shall be terminated in
accordance with the following additional requirements (or in connection with the
final payment on or other liquidation of the last Mortgage Loan or REO Property
remaining in REMIC I, the additional requirement specified in clause (i) below):

                         (i) The Trust Administrator shall specify the first day
                  in the 90-day liquidation period in a statement attached to
                  REMIC I's and REMIC II's final Tax Return pursuant to Treasury
                  regulation Section 1.860F-1, and such termination shall
                  satisfy all 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 Master Servicer;

                        (ii) During such 90-day liquidation period, and at or
                  prior to the time of making of the final payment on the
                  Certificates, the Trustee shall sell all of the assets of
                  REMIC I to the Master Servicer 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 Holders of the
                  applicable Class of Residual Certificates all cash on hand in
                  each or REMIC I and REMIC II (other than cash retained to meet
                  claims), and the Trust Fund shall terminate at that time.

                  (b) At the expense of the Master Servicer (or in the event of
termination under Section 9.01(a)(ii), at the expense of the Trust
Administrator), the Trust Administrator shall prepare or cause to be prepared
the documentation required in connection with the adoption of a plan of
liquidation of each of REMIC I and REMIC II pursuant to this Section 9.02.

                  (c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trust Administrator to specify the 90-day
liquidation period for each of REMIC I and REMIC II, which authorization shall
be binding upon all successor Certificateholders.

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<PAGE>



                                    ARTICLE X

                                REMIC PROVISIONS

                  SECTION 10.01. REMIC Administration.

                  (a) The Trustee shall elect to treat each of REMIC I and REMIC
II as a REMIC under the Code and, if necessary, under applicable state law. Each
such election will be made by the Trust Administrator on behalf of the Trustee
on Form 1066 or other appropriate federal tax or information return or any
appropriate state return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. For the purposes of the
REMIC election in respect of REMIC I, REMIC I Regular Interests shall be
designated as the Regular Interests in REMIC I and the Class R-I Certificates
shall be designated as the Residual Interests in REMIC I. Each of the Classes
listed in the Preliminary Statement hereto shall be designated as the Regular
Interests in REMIC II and the Class R-II Certificates shall be designated as the
Residual Interests in REMIC II. The Trustee shall not permit the creation of any
"interests" in REMIC I or REMIC II (within the meaning of Section 860G of the
Code) other than the REMIC I Regular Interests and the interests represented by
the Certificates.

                  (b) The Closing Date is hereby designated as the "Startup Day"
of REMIC I and REMIC II within the meaning of Section 860G(a)(9) of the Code.

                  (c) The Trust Administrator shall pay out of its own funds,
without any right of reimbursement, any and all expenses relating to any tax
audit of the Trust Fund (including, but not limited to, any professional fees or
any administrative or judicial proceedings with respect to either REMIC I or
REMIC II that involve the Internal Revenue Service or state tax authorities),
other than the expense of obtaining any tax related Opinion of Counsel except as
specified herein. The Trust Administrator, as agent for both of REMIC I's and
REMIC II's tax matters person, shall (i) act on behalf of the Trust Fund in
relation to any tax matter or controversy involving either REMIC I or REMIC II
and (ii) represent the Trust Fund in any administrative or judicial proceeding
relating to an examination or audit by any governmental taxing authority with
respect thereto. The holder of the largest Percentage Interest of each Class of
Residual Certificates shall be designated, in the manner provided under Treasury
regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the related REMIC created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Residual Certificates hereby agrees to irrevocably appoint the
Trust Administrator or an Affiliate as its agent to perform all of the duties of
the tax matters person for the Trust Fund.

                  (d) The Trust Administrator shall prepare and the Trustee
shall sign and the Trust Administrator shall file all of the Tax Returns in
respect of each REMIC created hereunder. The expenses of preparing and filing
such returns shall be borne by the Trust Administrator without any right of
reimbursement therefor. The Master Servicer shall provide on a timely basis to
the Trust Administrator or its designee such information with respect to the
assets of the Trust Fund as is in its possession and reasonably required by the
Trust Administrator to enable it to perform its obligations under this Article.

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<PAGE>



                  (e) The Trust Administrator shall perform on behalf of each of
REMIC I and REMIC II all reporting and other tax compliance duties that are the
responsibility of the REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, as required by the Code, the REMIC
Provisions or other such compliance guidance, the Trust Administrator shall
provide (i) to any Transferor of a Residual Certificate such information as is
necessary for the application of any tax relating to the transfer of a Residual
Certificate to any Person who is not a Permitted Transferee, (ii) to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who will serve as the representative of REMIC I
and REMIC II. The Master Servicer shall provide on a timely basis to the Trust
Administrator such information with respect to the assets of the Trust Fund,
including, without limitation, the Mortgage Loans, as is in its possession and
reasonably required by the Trust Administrator to enable it to perform its
obligations under this subsection. In addition, the Depositor shall provide or
cause to be provided to the Trust Administrator, within ten (10) days after the
Closing Date, all information or data that the Trust Administrator reasonably
determines to be relevant for tax purposes as to the valuations and issue prices
of the Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

                  (f) The Master Servicer, the Trustee and the Trust
Administrator shall take such action and shall cause each REMIC created
hereunder to take such action as shall be necessary to create or maintain the
status thereof as a REMIC under the REMIC Provisions. The Master Servicer, the
Trustee and the Trust Administrator shall not take any action, cause the Trust
Fund to take any action or fail to take (or fail to cause to be taken) any
action that, under the REMIC Provisions, if taken or not taken, as the case may
be, could (i) endanger the status of REMIC I or REMIC II as a REMIC or (ii)
result in the imposition of a tax upon the Trust Fund (including but not limited
to the tax on prohibited transactions as defined in Section 860F(a)(2) of the
Code and the tax on contributions to a REMIC set forth in Section 860G(d) of the
Code) (either such event, an "Adverse REMIC Event") unless the Trustee and the
Trust Administrator have received an Opinion of Counsel, addressed to the
Trustee and the Trust Administrator (at the expense of the party seeking to take
such action but in no event at the expense of the Trust Administrator or the
Trustee) to the effect that the contemplated action will not, with respect to
either REMIC I or REMIC II, endanger such status or result in the imposition of
such a tax, nor shall the Master Servicer take or fail to take any action
(whether or not authorized hereunder) as to which the Trustee or the Trust
Administrator has advised it in writing that it has received an Opinion of
Counsel to the effect that an Adverse REMIC Event could occur with respect to
such action. In addition, prior to taking any action with respect to REMIC I or
REMIC II or the respective assets of each, or causing REMIC I or REMIC II to
take any action, which is not contemplated under the terms of this Agreement,
the Master Servicer will consult with the Trustee and the Trust Administrator or
their designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to either REMIC I or REMIC II, and the
Master Servicer shall not take any such action or cause either REMIC I or REMIC
II to take any such action as to which the Trustee or the Trust Administrator
has advised it in writing that an Adverse REMIC Event could occur. The Trust
Administrator and the Trustee may consult with counsel to make such written
advice, and the cost of same shall be borne

                                      -122-



<PAGE>



by the party seeking to take the action not permitted by this Agreement, but in
no event shall such cost be an expense of the Trustee or the Trust
Administrator. At all times as may be required by the Code, the Trust
Administrator, the Trustee or the Master Servicer will ensure that substantially
all of the assets of both REMIC I and REMIC II will consist of "qualified
mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code.

                  (g) In the event that any tax is imposed on "prohibited
transactions" of either REMIC created hereunder as defined in Section 860F(a)(2)
of the Code, on the "net income from foreclosure property" of such REMIC as
defined in Section 860G(c) of the Code, on any contributions to either such
REMIC after the Startup Day therefor pursuant to Section 860G(d) of the Code, or
any other tax is imposed by the Code or any applicable provisions of state or
local tax laws, such tax shall be charged (i) to the Trust Administrator
pursuant to Section 10.03 hereof, if such tax arises out of or results from a
breach by the Trust Administrator of any of its obligations under this Article
X, (ii) to the Trustee pursuant to Section 10.03 hereof, if such tax arises out
of or results from a breach by the Trustee of any of its obligations under this
Article X, (iii) to the Master Servicer pursuant to Section 10.03 hereof, if
such tax arises out of or results from a breach by the Master Servicer of any of
its obligations under Article III or this Article X, or otherwise (iv) against
amounts on deposit in the Distribution Account and shall be paid by withdrawal
therefrom.

                  (h) On or before April 15 of each calendar year, commencing
April 15, 2001, the Trust Administrator shall deliver to the Master Servicer,
the Trustee and the Rating Agency a Certificate from a Responsible Officer of
the Trust Administrator stating the Trust Administrator's compliance with this
Article X.

                  (i) The Trust Administrator shall, for federal income tax
purposes, maintain books and records with respect to each of REMIC I and REMIC
II on a calendar year and on an accrual basis.

                  (j) Following the Startup Day, the Master Servicer, the
Trustee and the Trust Administrator shall not accept any contributions of assets
to either REMIC I or REMIC II other than in connection with any Qualified
Substitute Mortgage Loan delivered in accordance with Section 2.03 unless it
shall have received an Opinion of Counsel to the effect that the inclusion of
such assets in the Trust Fund will not cause the related REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding or subject
such REMIC to any tax under the REMIC Provisions or other applicable provisions
of federal, state and local law or ordinances.

                  (k) None of the Trustee, the Trust Administrator or the Master
Servicer shall enter into any arrangement by which REMIC I or REMIC II will
receive a fee or other compensation for services nor permit either such REMIC to
receive any income from assets other than "qualified mortgages" as defined in
Section 860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code.


                                      -123-



<PAGE>



                  SECTION 10.02. Prohibited Transactions and Activities.

                  None of the Depositor, the Master Servicer, the Trust
Administrator or the Trustee shall sell, dispose of or substitute for any of the
Mortgage Loans (except in connection with (i) the foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC
I, (iii) the termination of REMIC I pursuant to Article IX of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a purchase
of Mortgage Loans pursuant to Article II or III of this Agreement), nor acquire
any assets for either REMIC I or REMIC II (other than REO Property acquired in
respect of a defaulted Mortgage Loan), nor sell or dispose of any investments in
the Collection Account or the Distribution Account for gain, nor accept any
contributions to either REMIC I or REMIC II after the Closing Date (other than a
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03),
unless it has received an Opinion of Counsel, addressed to the Trustee and the
Trust Administrator (at the expense of the party seeking to cause such sale,
disposition, substitution, acquisition or contribution but in no event at the
expense of the Trustee or the Trust Administrator) that such sale, disposition,
substitution, acquisition or contribution will not (a) affect adversely the
status of either REMIC I or REMIC II as a REMIC or (b) cause either REMIC I or
REMIC II to be subject to a tax on "prohibited transactions" or "contributions"
pursuant to the REMIC Provisions.

                  SECTION 10.03. Master Servicer, Trustee and Trust
                                 Administrator Indemnification.

                  (a) The Trustee agrees to indemnify the Trust Fund, the
Depositor, the Master Servicer and the Trust Administrator for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer or the Trust
Administrator as a result of a breach of the Trustee's covenants set forth in
this Article X.

                  (b) The Trust Administrator agrees to indemnify the Trust
Fund, the Depositor, the Master Servicer and the Trustee for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer or the Trustee as
a result of a breach of the Trust Administrator's covenants set forth in this
Article X.

                  (b) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor, the Trust Administrator and the Trustee for any taxes and costs
including, without limitation, any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Trust Administrator or the
Trustee, as a result of a breach of the Master Servicer's covenants set forth in
Article III or this Article X.



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<PAGE>



                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

                  SECTION 11.01. Amendment.

                   This Agreement may be amended from time to time by the
Depositor, the Master Servicer, the Trustee, the Co-Trustee and the Trust
Administrator without the consent of any of the Certificateholders, (i) to cure
any ambiguity or defect, (ii) to correct, modify or supplement any provisions
herein (including to give effect to the expectations of Certificateholders) or
(iii) to make any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of this
Agreement, provided that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Trustee, adversely affect in any material respect the
interests of any Certificateholder. No amendment shall be deemed to adversely
affect in any material respect the interests of any Certificateholder who shall
have consented thereto, and no Opinion of Counsel shall be required to address
the effect of any such amendment on any such consenting Certificateholder.

         This Agreement may also be amended from time to time by the Depositor,
the Master Servicer, the Trust Administrator, the Co-Trustee and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights 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 received on Mortgage Loans which are 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 at least 66% of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Depositor or the Master Servicer or any Affiliate thereof shall be entitled
to Voting Rights with respect to matters affecting such Certificates.

                  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 to the effect that such amendment will
not result in the imposition of any tax on either REMIC I or REMIC II pursuant
to the REMIC Provisions or cause either REMIC I or REMIC II to fail to qualify
as a REMIC at any time that any Certificates are outstanding.

                  Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder.

                  It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent

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<PAGE>



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.

                  The cost of any Opinion of Counsel to be delivered pursuant to
this Section 11.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee, the
Co-Trustee or the Trust Administrator.

                  Notwithstanding the foregoing, each of the Trustee, the
Co-Trustee and Trust Administrator may, but shall not be obligated to enter into
any amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.

                  SECTION 11.02. Recordation of Agreement; Counterparts.

                  To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the expense of the Certificateholders, but
only upon direction of the Trustee accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders.

                  For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.

                  SECTION 11.03. 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 representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor 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
expressly provided for 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 any 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 person 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 of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this

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<PAGE>



Agreement, unless (i) such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and (ii) the Holders of Certificates entitled to at least 25% of the
Voting Rights shall have made written request upon 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 15 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 is understood and intended, and 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
whatsoever by virtue of any provision of this Agreement to affect, disturb or
prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.

                  SECTION 11.04. Governing Law.

                  This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

                  SECTION 11.05. Notices.

                  All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified herein, to (a) in
the case of the Depositor, 390 Greenwich Street, New York, New York 10013,
Attention: Mortgage Finance Group (telecopy number (212) 723-8604), or such
other address or telecopy number as may hereafter be furnished to the Master
Servicer, the Trust Administrator, the Co- Trustee and the Trustee in writing by
the Depositor, (b) in the case of the Master Servicer and Trust Administrator,
15851 Clayton Road, Ballwin, Missouri 63011, Attention: William Felts (telecopy
number (636) 256-5433), or such other address or telecopy number as may
hereafter be furnished to the Trustee, the Co-Trustee and the Depositor in
writing by the Master Servicer and Trust Administrator, (c) in the case of the
Trustee, 180 East Fifth Street, St. Paul, Minnesota, 55101, Attention:
Structured Finance/SBMSVII 2000-1 (telecopy number (612) 244-0089), or such
other address or telecopy number as may hereafter be furnished to the Master
Servicer, the Trust Administrator, the Co-Trustee and the Depositor in writing
by the Trustee and (d) in the case of the Co-Trustee, 180 East Fifth Street, St.
Paul, Minnesota, 55101, Attention: Structured Finance/SBMSVII 2000-1 (telecopy
number (612) 244-0089), or such other address or telecopy number as may
hereafter be furnished to the Master Servicer, the Trust Administrator, the
Trustee and the Depositor in writing by the Co-Trustee. Any notice required or
permitted to be given to a Certificateholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement

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<PAGE>



shall be conclusively presumed to have been duly given when mailed, whether or
not the Certificateholder receives such notice. A copy of any notice required to
be telecopied hereunder also shall be mailed to the appropriate party in the
manner set forth above.

                  SECTION 11.06. Severability of Provisions.

                  If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.

                  SECTION 11.07. Notice to Rating Agency.

                  The Trustee shall use its best efforts promptly to provide
notice to the Rating Agency with respect to each of the following of which it
has actual knowledge:

                  1.       Any material change or amendment to this Agreement;

                  2.       The occurrence of any Master Servicer Event of
                           Default that has not been cured or waived;

                  3.       The resignation or termination of the Master
                           Servicer, the Trust Administrator or the Trustee;

                  4.       The repurchase or substitution of Mortgage Loans
                           pursuant to or as contemplated by Section 2.03;

                  5.       The final payment to the Holders of any Class of
                           Certificates;

                  6.       Any change in the location of the Collection Account
                           or the Distribution Account;

                  7.       Any event that would result in the inability of the
                           Trustee, were it to succeed as Master Servicer, to
                           make advances regarding delinquent Mortgage Loans;
                           and

                  8.       The filing of any claim under the Master Servicer's
                           blanket bond and errors and omissions insurance
                           policy required by Section 3.14 or the cancellation
                           or material modification of coverage under any such
                           instrument.

                  In addition, the Trustee shall promptly furnish to the Rating
Agency copies of each report to Certificateholders described in Section 4.02 and
the Master Servicer, as required pursuant to Section 3.20 and Section 3.21,
shall promptly furnish to the Rating Agency copies of the following:

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<PAGE>



                  1.       Each annual statement as to compliance described in
                           Section 3.20; and

                  2.       Each annual independent public accountants' servicing
                           report described in Section 3.21.

                  Any such notice pursuant to this Section 11.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Standard & Poor's Ratings Services, 25 Broadway, New York, New York 10004, or
such other addresses as the Rating Agency may designate in writing to the
parties hereto.

                  SECTION 11.08. Article and Section References.

                  All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.

                  SECTION 11.09. Grant of Security Interest.

                  It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee be, and be
construed as, a sale of the Mortgage Loans by the Depositor and not a pledge of
the Mortgage Loans by the Depositor to secure a debt or other obligation of the
Depositor. However, in the event that, notwithstanding the aforementioned intent
of the parties, the Mortgage Loans are held to be property of the Depositor,
then, (a) it is the express intent of the parties that such conveyance be deemed
a pledge of the Mortgage Loans by the Depositor to the Trustee to secure a debt
or other obligation of the Depositor and (b)(1) this Agreement shall also be
deemed to be a security agreement within the meaning of Articles 8 and 9 of the
Uniform Commercial Code as in effect from time to time in the State of New York;
(2) the conveyance provided for in Section 2.01 hereof shall be deemed to be a
grant by the Depositor to the Trustee of a security interest in all of the
Depositor's right, title and interest in and to the Mortgage Loans and all
amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account and the Distribution Account,
whether in the form of cash, instruments, securities or other property; (3) the
obligations secured by such security agreement shall be deemed to be all of the
Depositor's obligations under this Agreement, including the obligation to
provide to the Certificateholders the benefits of this Agreement relating to the
Mortgage Loans and the Trust Fund; and (4) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law. Accordingly, the Depositor hereby grants to the Trustee a
security interest in the Mortgage Loans and all other property described in
clause (2) of the preceding sentence, for the purpose of securing to the Trustee
the performance by the Depositor of the obligations described in clause (3) of
the preceding sentence. Notwithstanding the foregoing, the parties hereto intend
the conveyance pursuant to Section 2.01 to be a true, absolute

                                      -129-



<PAGE>



and unconditional sale of the Mortgage Loans and assets constituting the Trust
Fund by the Depositor to the Trustee.



                                      -130-



<PAGE>




                  IN WITNESS WHEREOF, the Depositor, the Master Servicer, the
Trust Administrator, the Trustee and the Co-Trustee have caused their names to
be signed hereto by their respective officers thereunto duly authorized, in each
case as of the day and year first above written.


                                     SALOMON BROTHERS MORTGAGE
                                     SECURITIES VII, INC.,
                                     as Depositor


                                     By:  /s/  David Reedy
                                        ----------------------------------------
                                     Name:     David Reedy
                                     Title:    Assistant Vice President



                                     CITICORP MORTGAGE, INC.,
                                     as Master Servicer and Trust Administrator


                                     By:  /s/  William S. Felts
                                        ----------------------------------------
                                     Name:     William S. Felts
                                     Title:    Vice President




                                     U.S. BANK NATIONAL ASSOCIATION,
                                     as Trustee


                                     By:  /s/  Eve D. Kaplan
                                        ----------------------------------------
                                     Name:     Eve D. Kaplan
                                     Title:    Vice President


                                     U.S. BANK TRUST NATIONAL ASSOCIATION,
                                     as Co-Trustee


                                     By:  /s/  Eve D. Kaplan
                                        ----------------------------------------
                                     Name:     Eve D. Kaplan
                                     Title:    Vice President






<PAGE>




STATE OF NEW YORK  )
                   ) ss.:
COUNTY OF NEW YORK )



                  On the 30th day of March 2000, before me, a notary public in
and for said State, personally appeared _________________, known to me to be an
Assistant Vice President of Salomon Brothers Mortgage Securities VII, Inc., one
of the corporations that executed the within instrument, and also known to me to
be the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.




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

[Notarial Seal]




<PAGE>





STATE OF ______________   )
                          ) ss.:
COUNTY OF ___________     )



                  On the 30th day of March 2000, before me, a notary public in
and for said State, personally appeared ______________, known to me to be a
________________ of Citicorp Mortgage, Inc., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.





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

[Notarial Seal]




<PAGE>




STATE OF ____________   )
                        ) ss.:
COUNTY OF ___________   )



                  On the 30th day of March 2000, before me, a notary public in
and for said State, personally appeared ______________, known to me to be a
_______________ of U.S. Bank National Association, one of the entities that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
entity executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.





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

[Notarial Seal]




<PAGE>



STATE OF ____________  )
                       ) ss.:
COUNTY OF ___________  )



                  On the 30th day of March 2000, before me, a notary public in
and for said State, personally appeared ______________, known to me to be a
_______________ of U.S. Bank Trust National Association, one of the entities
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
entity executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.





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

[Notarial Seal]

<PAGE>

                              EXHIBIT A-1
                              -----------


                     FORM OF CLASS A-1 CERTIFICATE

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
     A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
     CONDUIT", AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
     860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").


Series 2000-1, Class A-1               Aggregate Certificate Principal
                                       Balance of Class A-1 Certificates as
                                       of the Issue Date: $77,657,158.00
Pass-Through Rate:  Variable
                                       Denomination:  $77,657,158.00

Date of Agreement and Cut-off Date:    Master Servicer and Trust Administrator:
March 1, 2000                          Citicorp Mortgage, Inc.

                                       Trustee: U.S. Bank National Association
First Distribution Date:
April 25, 2000
                                       Issue Date: March 30, 2000

No. 1                                  CUSIP: 79548K 3A 4


     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
     OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
     AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
     DENOMINATION OF THIS CERTIFICATE.






<PAGE>


                                       -2-

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Cede & Company is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-1 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-1 Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Trust Administrator, the Co-Trustee, the Co- Trustee and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-1 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A-1 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class A-1 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be



<PAGE>


                                       -3-

made after due notice by the Trustee of the pendency of such distribution and
only upon the presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other



<PAGE>


                                       -4-

governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer, the Trust
Administrator or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trust Administrator, the Trustee nor any such agent
shall be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in REMIC I, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC I all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan remaining therein at a price determined as provided
in the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
5% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>



          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION
                                         as Trustee


                                         By:____________________________
                                                  Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.


Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.





<PAGE>


                              EXHIBIT A-2
                              -----------


                     FORM OF CLASS A-2 CERTIFICATE

     SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE
     REPRESENTS  A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE
     INVESTMENT CONDUIT", AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
     SECTIONS 860G AND 860D OF THE INTERNAL  REVENUE CODE OF 1986 (THE
     "CODE").

     THE FOLLOWING  INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
     APPLYING  THE U.S.  FEDERAL  INCOME TAX ORIGINAL  ISSUE  DISCOUNT
     ("OID")  RULES  TO  THIS  CERTIFICATE.  THE  ISSUE  DATE  OF THIS
     CERTIFICATE IS MARCH 30, 2000.  BASED ON THE OID  REGULATIONS AND
     ASSUMING  THAT THE MORTGAGE  LOANS PREPAY AT 20% CPR, USED SOLELY
     FOR THE  PURPOSES OF APPLYING  THE OID RULES TO THE  CERTIFICATES
     (THE "PREPAYMENT  ASSUMPTION"),  THIS CERTIFICATE HAS BEEN ISSUED
     WITH NO MORE THAN $5400 OF OID PER  $100,000 OF INITIAL  NOTIONAL
     AMOUNT,  THE YIELD TO  MATURITY  IS 40.57%  AND THE AMOUNT OF OID
     ATTRIBUTABLE  TO THE  INITIAL  ACCRUAL  PERIOD  IS NO  MORE  THAN
     $105.00 PER $100,000 OF INITIAL NOTIONAL  AMOUNT,  COMPUTED UNDER
     THE EXACT  METHOD.  NO  REPRESENTATION  IS MADE THAT THE MORTGAGE
     LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR
     AT ANY OTHER RATE.

Series 2000-1, Class A-2                Aggregate Notional Amount of Class A-2
                                        Certificates as of the Issue Date:
Variable Pass-Through Rate              $77,657,158.00

Date of Agreement and Cut-off Date:     Notional Amount of this Class A-2
March 1, 2000                           Certificate: $77,657,158.00

First Distribution Date:                Master Servicer and Trust Administrator:
April 25, 2000                          Citicorp Mortgage, Inc.

No. 1                                   Trustee: U.S. Bank National Association

                                        Issue Date:  March 30, 2000

                                        CUSIP:  79548K 3B 2

<PAGE>


                                       -2-

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Cede & Company is the registered owner of a
Percentage Interest (obtained by dividing the Notional Amount of this
Certificate by the aggregate Notional Amount of the Class A-2 Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class A-2 Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Trust Administrator, the Co- Trustee, the Co-Trustee and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-2 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A-2 Certificates, the
aggregate initial Notional Amount of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial Notional Amount of the
Class A-2 Certificates, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall



<PAGE>


                                       -3-

appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Notional Amount of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.




<PAGE>


                                       -4-

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer, the Trust
Administrator or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trust Administrator, the Trustee nor any such agent
shall be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and each REO
Property remaining therein, and (ii) the final payment (or any advance with
respect thereto) on or other liquidation of the last Mortgage Loan or REO
Property remaining in REMIC I. The Agreement permits, but does not require, the
party designated in the Agreement to purchase from REMIC I all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining
therein at a price determined as provided in the Agreement. The exercise of such
right will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 5% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>




          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

                  This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.



Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.




<PAGE>


                              EXHIBIT A-3
                              -----------

                     FORM OF CLASS IO CERTIFICATE

     SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE
     REPRESENTS  A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE
     INVESTMENT CONDUIT", AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
     SECTIONS 860G AND 860D OF THE INTERNAL  REVENUE CODE OF 1986 (THE
     "CODE").

     THE FOLLOWING  INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
     APPLYING  THE U.S.  FEDERAL  INCOME TAX ORIGINAL  ISSUE  DISCOUNT
     ("OID")  RULES  TO  THIS  CERTIFICATE.  THE  ISSUE  DATE  OF THIS
     CERTIFICATE IS MARCH 30, 2000.  BASED ON THE OID  REGULATIONS AND
     ASSUMING  THAT THE MORTGAGE  LOANS PREPAY AT 20% CPR, USED SOLELY
     FOR THE  PURPOSES OF APPLYING  THE OID RULES TO THE  CERTIFICATES
     (THE "PREPAYMENT  ASSUMPTION"),  THIS CERTIFICATE HAS BEEN ISSUED
     WITH NO MORE THAN $700.00 OF OID PER $100,000 OF INITIAL NOTIONAL
     AMOUNT,  THE YIELD TO  MATURITY  IS 19.31%  AND THE AMOUNT OF OID
     ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $10.20
     PER $100,000 OF INITIAL NOTIONAL AMOUNT, COMPUTED UNDER THE EXACT
     METHOD.  NO  REPRESENTATION  IS MADE THAT THE MORTGAGE LOANS WILL
     PREPAY AT A RATE  BASED ON THE  PREPAYMENT  ASSUMPTION  OR AT ANY
     OTHER RATE.

Series 2000-1, Class IO                 Aggregate Notional Amount of Class IO
                                        Certificates as of the Issue Date:
Variable Pass-Through Rate              $82,393,708.61

Date of Agreement and Cut-off Date:     Notional Amount of this Class IO
March 1, 2000                           Certificate: $82,393,708.61

First Distribution Date:                Master Servicer and Trust Administrator:
April 25, 2000                          Citicorp Mortgage, Inc.

No. 1                                   Trustee:U.S. Bank National Association

                                        Issue Date: March 30, 2000

                                        CUSIP: 79548K 3G 1

<PAGE>


                                       -2-


                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Salomon Smith Barney Inc. is the registered owner
of a Percentage Interest (obtained by dividing the Notional Amount of this
Certificate by the aggregate Notional Amount of the Class IO Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class IO Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Trust Administrator, the Co-Trustee, the Co-Trustee and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class IO Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class IO Certificates, the
aggregate initial Notional Amount of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the



<PAGE>


                                       -3-

aggregate initial Notional Amount of the Class IO Certificates, or otherwise by
check mailed by first class mail to the address of the Person entitled thereto,
as such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon the presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Notional Amount of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.



<PAGE>


                                       -4-

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer, the Trust
Administrator or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trust Administrator, the Trustee nor any such agent
shall be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and each REO
Property remaining therein, and (ii) the final payment (or any advance with
respect thereto) on or other liquidation of the last Mortgage Loan or REO
Property remaining in REMIC I. The Agreement permits, but does not require, the
party designated in the Agreement to purchase from REMIC I all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining
therein at a price determined as provided in the Agreement. The exercise of such
right will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 5% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>



          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class IO Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.


Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.



<PAGE>


                              EXHIBIT A-4
                              -----------

                     FORM OF CLASS PO CERTIFICATE

     SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE
     REPRESENTS  A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE
     INVESTMENT CONDUIT", AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
     SECTIONS 860G AND 860D OF THE INTERNAL  REVENUE CODE OF 1986 (THE
     "CODE").

     THE FOLLOWING  INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
     APPLYING  THE U.S.  FEDERAL  INCOME TAX ORIGINAL  ISSUE  DISCOUNT
     ("OID")  RULES  TO  THIS  CERTIFICATE.  THE  ISSUE  DATE  OF THIS
     CERTIFICATE IS MARCH 30, 2000.  BASED ON THE OID  REGULATIONS AND
     ASSUMING  THAT THE MORTGAGE  LOANS PREPAY AT 20% CPR, USED SOLELY
     FOR THE  PURPOSES OF APPLYING  THE OID RULES TO THE  CERTIFICATES
     (THE "PREPAYMENT  ASSUMPTION"),  THIS CERTIFICATE HAS BEEN ISSUED
     WITH  NO  MORE  THAN   $274.00  OF  OID  PER  $1,000  OF  INITIAL
     CERTIFICATE  PRINCIPAL  BALANCE,  THE YIELD TO MATURITY IS 10.63%
     AND THE AMOUNT OF OID  ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD
     IS NO MORE THAN $5.36 PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL
     BALANCE,  COMPUTED UNDER THE EXACT METHOD.  NO  REPRESENTATION IS
     MADE THAT THE  MORTGAGE  LOANS WILL PREPAY AT A RATE BASED ON THE
     PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.


Series 2000-1, Class PO                 Aggregate Certificate Principal
                                        Balance of Class PO Certificates as of
                                        the Issue Date: $3,087,842.26
Pass-Through Rate: 0.00% per annum

                                        Denomination:  $3,087,842.26
Date of Agreement and Cut-off Date:
March 1, 2000                           Master Servicer and Trust Administrator
                                        Citicorp Mortgage, Inc.

First Distribution Date:
April 25, 2000                          Trustee: U.S. Bank National Association

No. 1                                   Issue Date: March 30, 2000

                                        CUSIP: 79548K 3F 3


<PAGE>


                                       -2-


                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Salomon Smith Barney Inc. is the registered owner
of a Percentage Interest (obtained by dividing the Certificate Principal Balance
of this Certificate by the aggregate Certificate Principal Balance of the Class
PO Certificates as of the Issue Date) in that certain beneficial ownership
interest evidenced by all the Class PO Certificates in REMIC II created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer, the Trust Administrator, the Co-Trustee, the
Co-Trustee and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class PO Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class PO Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two- thirds of the aggregate initial
Certificate Principal Balance of the Class PO Certificates, or otherwise by
check mailed by first class mail to the address of the Person entitled thereto,
as such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon the presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.



<PAGE>


                                       -3-

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer, the Trust
Administrator or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trust Administrator, the Trustee nor any such agent
shall be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and each REO
Property remaining therein, and (ii) the final payment (or any advance with
respect thereto) on or other liquidation of the last Mortgage Loan or REO
Property remaining in REMIC I. The Agreement permits, but does not require, the
party designated in the Agreement to purchase from REMIC I all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining
therein at a price determined as provided in the Agreement. The exercise of such
right will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 5% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>



          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class PO Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                 Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.


Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.



<PAGE>


                              EXHIBIT A-5
                              -----------

                     FORM OF CLASS B-1 CERTIFICATE

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
     A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
     CONDUIT", AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
     860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THIS CERTIFICATE IS SUBORDINATE TO THE SENIOR CERTIFICATES TO THE
     EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

     NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
     OTHER  RETIREMENT  ARRANGEMENT  (EACH A  "PLAN")  SUBJECT  TO THE
     EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS  AMENDED
     ("ERISA"),  OR THE CODE WILL BE  REGISTERED  EXCEPT IN COMPLIANCE
     WITH THE PROCEDURES DESCRIBED HEREIN.

Series 2000-1, Class B-1                Aggregate Certificate Principal
                                        Balance of Class B-1 Certificates as
                                        of the Issue Date: $618,000.00
Pass-Through Rate: 9.00% per annum
                                        Denomination:  $618,000.00

Date of Agreement and Cut-off Date:     Master Servicer and Trust Administrator
March 1, 2000                           Citicorp Mortgage, Inc.

                                        Trustee: U.S. Bank National Association
First Distribution Date:
April 25, 2000                          Issue Date: March 30, 2000

No. 1                                   CUSIP: 79548K 3C 0


     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
     OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
     AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
     DENOMINATION OF THIS CERTIFICATE.



<PAGE>


                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Cede & Company is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class B-1 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class B-1 Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Trust Administrator, the Co- Trustee, the Co-Trustee and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class B-1 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class B-1 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two- thirds of the aggregate initial
Certificate Principal Balance of the Class B-1 Certificates, or otherwise by
check mailed by first class mail to the address of the Person entitled thereto,
as such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final



<PAGE>


                                       -3-

distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

     No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan



<PAGE>


                                       -4-

Assets to acquire this Certificate shall be made except in accordance with
Section 5.02(c) of the Agreement.

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer, the Trust
Administrator or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Trust Administrator, the Trustee nor any such agent
shall be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in REMIC I, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC I all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan remaining therein at a price determined as provided
in the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
5% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>


          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class B-1 Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.


<PAGE>


                              EXHIBIT A-6
                              -----------

                     FORM OF CLASS B-2 CERTIFICATE

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
     A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
     CONDUIT", AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
     860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THIS  CERTIFICATE IS SUBORDINATE TO THE SENIOR  CERTIFICATES  AND
     THE  CLASS  B-1  CERTIFICATES  TO  THE  EXTENT  DESCRIBED  IN THE
     AGREEMENT REFERRED TO HEREIN.

     NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
     OTHER  RETIREMENT  ARRANGEMENT  (EACH A  "PLAN")  SUBJECT  TO THE
     EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS  AMENDED
     ("ERISA"),  OR THE CODE WILL BE  REGISTERED  EXCEPT IN COMPLIANCE
     WITH THE PROCEDURES DESCRIBED HEREIN.



<PAGE>


Series 2000-1, Class B-2                Aggregate Certificate Principal
                                        Balance of Class B-2 Certificates as
                                        of the Issue Date: $206,000.00
Pass-Through Rate: 9.00% per annum

                                        Denomination:  $206,000.00
Date of Agreement and Cut-off Date:
March 1, 2000                           Master Servicer and Trust Administrator
                                        Citicorp Mortgage, Inc.

First Distribution Date:
April 25, 2000                          Trustee: U.S. Bank National Association

No. 1
                                        Issue Date: March 30, 2000

                                        CUSIP: 79548K 3D 8


     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
     OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
     AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
     DENOMINATION OF THIS CERTIFICATE.



<PAGE>


                                       -3-

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Cede & Company is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class B-2 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class B-2 Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Trust Administrator, the Co- Trustee, the Co-Trustee and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-2 Certificates on
such Distribution Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class B-2 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two- thirds of the aggregate initial
Certificate Principal Balance of the Class B-2 Certificates, or



<PAGE>


                                       -4-

otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon the presentation and surrender of this Certificate at
the office or agency appointed by the Trustee for that purpose as provided in
the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class B-2 Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class B-2 Certificates specified on the
face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.




<PAGE>


                                       -5-

     No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(c) of the Agreement.

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trust Administrator, the Trustee nor any such agent shall be affected by notice
to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in REMIC I, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC I all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan remaining therein at a price determined as provided
in the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
5% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>


          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class B-2 Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                 Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.


<PAGE>


                              EXHIBIT A-7
                              -----------

                     FORM OF CLASS B-3 CERTIFICATE

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
     A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
     CONDUIT", AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
     860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THE FOLLOWING  INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
     APPLYING  THE U.S.  FEDERAL  INCOME TAX ORIGINAL  ISSUE  DISCOUNT
     ("OID")  RULES  TO  THIS  CERTIFICATE.  THE  ISSUE  DATE  OF THIS
     CERTIFICATE IS MARCH 30, 2000.  BASED ON THE OID  REGULATIONS AND
     ASSUMING  THAT THE MORTGAGE  LOANS PREPAY AT 20% CPR, USED SOLELY
     FOR THE  PURPOSES OF APPLYING  THE OID RULES TO THE  CERTIFICATES
     (THE "PREPAYMENT  ASSUMPTION"),  THIS CERTIFICATE HAS BEEN ISSUED
     WITH NO MORE THAN $24.00 OF OID PER $1,000 OF INITIAL CERTIFICATE
     PRINCIPAL BALANCE,  THE YIELD TO MATURITY IS 9.44% AND THE AMOUNT
     OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN
     $0.16  PER  $1,000  OF  INITIAL  CERTIFICATE  PRINCIPAL  BALANCE,
     COMPUTED UNDER THE EXACT METHOD.  NO  REPRESENTATION IS MADE THAT
     THE MORTGAGE  LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT
     ASSUMPTION OR AT ANY OTHER RATE.

     THIS CERTIFICATE IS SUBORDINATE TO THE SENIOR  CERTIFICATES,  THE
     CLASS B-1  CERTIFICATES  AND THE CLASS B- 2  CERTIFICATES  TO THE
     EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

     NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
     OTHER  RETIREMENT  ARRANGEMENT  (EACH A  "PLAN")  SUBJECT  TO THE
     EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS  AMENDED
     ("ERISA"),  OR THE CODE WILL BE  REGISTERED  EXCEPT IN COMPLIANCE
     WITH THE PROCEDURES DESCRIBED HEREIN.





<PAGE>


Series 2000-1, Class B-3                Aggregate Certificate Principal
                                        Balance of Class B-3 Certificates as
                                        of the Issue Date: $206,000.00
Pass-Through Rate: 9.00% per annum

                                        Denomination:  $206,000.00
Date of Agreement and Cut-off Date:
March 1, 2000                           Master Servicer and Trust Administrator
                                        Citicorp Mortgage, Inc.

First Distribution Date:
April 25, 2000                          Trustee: U.S. Bank National Association


No. 1                                   Issue Date: March 30, 2000


                                        CUSIP: 79548K 3E 6


     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
     OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
     AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
     DENOMINATION OF THIS CERTIFICATE.



<PAGE>


                                       -3-

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Cede & Company is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class B-3 Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class B-3 Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer, the Trust Administrator, the Co- Trustee, the Co-Trustee and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class B-3 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class B-3 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two- thirds of the aggregate initial
Certificate Principal Balance of the Class B-3 Certificates, or otherwise by
check mailed by first class mail to the address of the Person entitled thereto,
as such



<PAGE>


                                       -4-

name and address shall appear on the Certificate Register. Notwithstanding the
above, the final distribution on this Certificate will be made after due notice
by the Trustee of the pendency of such distribution and only upon the
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.




<PAGE>


                                       -5-

     No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(c) of the Agreement.

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trust Administrator,
the Trustee and any agent of the Depositor, the Master Servicer or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trust Administrator, the Trustee nor any such agent shall be affected by notice
to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in REMIC I, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from REMIC I all the Mortgage Loans and all property acquired in
respect of any Mortgage Loan remaining therein at a price determined as provided
in the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
5% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>


          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class B-3 Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                 Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.


<PAGE>


                              EXHIBIT A-8
                              -----------

                     FORM OF CLASS B-4 CERTIFICATE

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
     A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
     CONDUIT", AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
     860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THE FOLLOWING  INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
     APPLYING  THE U.S.  FEDERAL  INCOME TAX ORIGINAL  ISSUE  DISCOUNT
     ("OID")  RULES  TO  THIS  CERTIFICATE.  THE  ISSUE  DATE  OF THIS
     CERTIFICATE IS MARCH 30, 2000.  BASED ON THE OID  REGULATIONS AND
     ASSUMING  THAT THE MORTGAGE  LOANS PREPAY AT 20% CPR, USED SOLELY
     FOR THE  PURPOSES OF APPLYING  THE OID RULES TO THE  CERTIFICATES
     (THE "PREPAYMENT  ASSUMPTION"),  THIS CERTIFICATE HAS BEEN ISSUED
     WITH  NO  MORE  THAN   $132.00  OF  OID  PER  $1,000  OF  INITIAL
     CERTIFICATE  PRINCIPAL  BALANCE,  THE YIELD TO MATURITY IS 11.72%
     AND THE AMOUNT OF OID  ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD
     IS NO MORE THAN $0.83 PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL
     BALANCE,  COMPUTED UNDER THE EXACT METHOD.  NO  REPRESENTATION IS
     MADE THAT THE  MORTGAGE  LOANS WILL PREPAY AT A RATE BASED ON THE
     PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.

     THIS CERTIFICATE IS SUBORDINATE TO THE SENIOR  CERTIFICATES,  THE
     CLASS B-1 CERTIFICATES,  THE CLASS B-2 CERTIFICATES AND THE CLASS
     B-3  CERTIFICATES  TO  THE  EXTENT  DESCRIBED  IN  THE  AGREEMENT
     REFERRED TO HEREIN.

     THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE REGISTERED  UNDER
     THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
     ANY  STATE  AND MAY NOT BE  RESOLD  OR  TRANSFERRED  UNLESS IT IS
     REGISTERED   PURSUANT  TO  SUCH  ACT  AND  LAWS  OR  IS  SOLD  OR
     TRANSFERRED  IN  TRANSACTIONS  THAT ARE EXEMPT FROM  REGISTRATION
     UNDER SUCH ACT AND UNDER  APPLICABLE STATE LAW AND IS TRANSFERRED
     IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  5.02  OF  THE
     AGREEMENT.

     NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
     OTHER  RETIREMENT  ARRANGEMENT  (EACH A  "PLAN")  SUBJECT  TO THE
     EMPLOYEE RETIREMENT INCOME SECURITY



<PAGE>


     ACT OF 1974, AS AMENDED ("ERISA"), OR THE CODE WILL BE REGISTERED
     EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

Series 2000-1, Class B-4                Aggregate Certificate Principal
                                        Balance of Class B-4 Certificates as
                                        of the Issue Date: $330,000.00
Pass-Through Rate: 9.00% per annum
                                        Denomination:  $330,000.00

Date of Agreement and Cut-off Date:     Master Servicer and Trust Administrator
March 1, 2000                           Citicorp Mortgage, Inc.


First Distribution Date:                Trustee: U.S. Bank National Association
April 25, 2000

                                        Issue Date: March 30, 2000
No. 1


     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
     OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
     AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
     DENOMINATION OF THIS CERTIFICATE.



<PAGE>


                                       -3-

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Salomon Smith Barney Inc. is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class B-4
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class B-4 Certificates in REMIC II created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trust Administrator, the Co-Trustee, the Co-Trustee and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on Record Date, in an amount equal to the product of
the Percentage Interest evidenced by this Certificate and the amount required to
be distributed to the Holders of Class B-4 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class B-4 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two- thirds of the aggregate initial
Certificate Principal Balance of the Class B-4 Certificates, or



<PAGE>


                                       -4-

otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon the presentation and surrender of this Certificate at
the office or agency appointed by the Trustee for that purpose as provided in
the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.




<PAGE>


                                       -5-

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Master Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate desiring
to effect the transfer and/or such Holder's prospective transferee upon which
such Opinion of Counsel is based. None of the Depositor or the Trustee is
obligated to register or qualify the Class of Certificates specified on the face
hereof under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

     No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(c) of the Agreement.

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trust Administrator, the Trustee nor any such agent shall be affected by notice
to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in REMIC I, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the



<PAGE>


                                       -6-

Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining therein at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>


          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class B-4 Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                 Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.


<PAGE>


                              EXHIBIT A-9
                              -----------

                     FORM OF CLASS B-5 CERTIFICATE

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
     A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
     CONDUIT", AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
     860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THE FOLLOWING  INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
     APPLYING  THE U.S.  FEDERAL  INCOME TAX ORIGINAL  ISSUE  DISCOUNT
     (OID)  RULES  TO  THIS  CERTIFICATE.   THE  ISSUE  DATE  OF  THIS
     CERTIFICATE IS MARCH 30, 2000.  BASED ON THE OID  REGULATIONS AND
     ASSUMING  THAT THE MORTGAGE  LOANS PREPAY AT 20% CPR, USED SOLELY
     FOR THE  PURPOSES OF APPLYING  THE OID RULES TO THE  CERTIFICATES
     (THE "PREPAYMENT  ASSUMPTION"),  THIS CERTIFICATE HAS BEEN ISSUED
     WITH  NO  MORE  THAN   $306.00  OF  OID  PER  $1,000  OF  INITIAL
     CERTIFICATE  PRINCIPAL  BALANCE,  THE YIELD TO MATURITY IS 16.79%
     AND THE AMOUNT OF OID  ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD
     IS NO MORE THAN $1.71 PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL
     BALANCE,  COMPUTED UNDER THE EXACT METHOD.  NO  REPRESENTATION IS
     MADE THAT THE  MORTGAGE  LOANS WILL PREPAY AT A RATE BASED ON THE
     PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.

     THIS CERTIFICATE IS SUBORDINATE TO THE SENIOR  CERTIFICATES,  THE
     CLASS B-1 CERTIFICATES, THE CLASS B-2 CERTIFICATES, THE CLASS B-3
     CERTIFICATES  AND  THE  CLASS  B- 4  CERTIFICATES  TO THE  EXTENT
     DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

     THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE REGISTERED  UNDER
     THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
     ANY  STATE  AND MAY NOT BE  RESOLD  OR  TRANSFERRED  UNLESS IT IS
     REGISTERED   PURSUANT  TO  SUCH  ACT  AND  LAWS  OR  IS  SOLD  OR
     TRANSFERRED  IN  TRANSACTIONS  THAT ARE EXEMPT FROM  REGISTRATION
     UNDER SUCH ACT AND UNDER  APPLICABLE STATE LAW AND IS TRANSFERRED
     IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  5.02  OF  THE
     AGREEMENT.

     NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
     OTHER RETIREMENT ARRANGEMENT (EACH A "PLAN")



<PAGE>



     SUBJECT TO THE EMPLOYEE  RETIREMENT  INCOME SECURITY ACT OF 1974,
     AS AMENDED  ("ERISA"),  OR THE CODE WILL BE REGISTERED  EXCEPT IN
     COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

Series 2000-1, Class B-5                Aggregate Certificate Principal
                                        Balance of Class B-5 Certificates as
                                        of the Issue Date: $123,000.00
Pass-Through Rate: 9.00% per annum
                                        Denomination:  $123,000.00

Date of Agreement and Cut-off Date:     Master Servicer and Trust Administrator
March 1, 2000                           Citicorp Mortgage, Inc.


First Distribution Date:                Trustee: U.S. Bank National Association
April 25, 2000

No. 1                                   Issue Date: March 30, 2000


     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
     OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
     AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
     DENOMINATION OF THIS CERTIFICATE.



<PAGE>


                                       -3-

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Salomon Smith Barney Inc. is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class B-5
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class B-5 Certificates in REMIC II created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trust Administrator, the Co-Trustee, the Co-Trustee and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class B-5 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class B-5 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two- thirds of the aggregate initial
Certificate Principal Balance of the Class B-5 Certificates, or



<PAGE>


                                       -4-

otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon the presentation and surrender of this Certificate at
the office or agency appointed by the Trustee for that purpose as provided in
the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.




<PAGE>


                                       -5-

     No transfer of this Certificate shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Master Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate desiring
to effect the transfer and/or such Holder's prospective transferee upon which
such Opinion of Counsel is based. None of the Depositor or the Trustee is
obligated to register or qualify the Class of Certificates specified on the face
hereof under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

     No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(c) of the Agreement.

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trust Administrator, the Trustee nor any such agent shall be affected by notice
to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in REMIC I, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the



<PAGE>


                                       -6-

Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining therein at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>


          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

                  This is one of the Class B-5 Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                 Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.


<PAGE>


                             EXHIBIT A-10
                             ------------

                     FORM OF CLASS B-6 CERTIFICATE

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
     A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
     CONDUIT", AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
     860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

     THE FOLLOWING  INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
     APPLYING  THE U.S.  FEDERAL  INCOME TAX ORIGINAL  ISSUE  DISCOUNT
     (OID)  RULES  TO  THIS  CERTIFICATE.   THE  ISSUE  DATE  OF  THIS
     CERTIFICATE IS MARCH 30, 2000.  BASED ON THE OID  REGULATIONS AND
     ASSUMING  THAT THE MORTGAGE  LOANS PREPAY AT 20% CPR, USED SOLELY
     FOR THE  PURPOSES OF APPLYING  THE OID RULES TO THE  CERTIFICATES
     (THE "PREPAYMENT  ASSUMPTION"),  THIS CERTIFICATE HAS BEEN ISSUED
     WITH  NO  MORE  THAN   $755.00  OF  OID  PER  $1,000  OF  INITIAL
     CERTIFICATE  PRINCIPAL  BALANCE,  THE YIELD TO MATURITY IS 51.68%
     AND THE AMOUNT OF OID  ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD
     IS NO MORE THAN $2.59 PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL
     BALANCE,  COMPUTED UNDER THE EXACT METHOD.  NO  REPRESENTATION IS
     MADE THAT THE  MORTGAGE  LOANS WILL PREPAY AT A RATE BASED ON THE
     PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.

     THIS CERTIFICATE IS SUBORDINATE TO THE SENIOR  CERTIFICATES,  THE
     CLASS B-1 CERTIFICATES, THE CLASS B-2 CERTIFICATES, THE CLASS B-3
     CERTIFICATES, THE CLASS B-4 CERTIFICATES AND THE B-5 CERTIFICATES
     TO THE EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

     THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE REGISTERED  UNDER
     THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
     ANY  STATE  AND MAY NOT BE  RESOLD  OR  TRANSFERRED  UNLESS IT IS
     REGISTERED   PURSUANT  TO  SUCH  ACT  AND  LAWS  OR  IS  SOLD  OR
     TRANSFERRED  IN  TRANSACTIONS  THAT ARE EXEMPT FROM  REGISTRATION
     UNDER SUCH ACT AND UNDER  APPLICABLE STATE LAW AND IS TRANSFERRED
     IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  5.02  OF  THE
     AGREEMENT.

     NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
     OTHER RETIREMENT ARRANGEMENT (EACH A "PLAN")



<PAGE>


     SUBJECT TO THE EMPLOYEE  RETIREMENT  INCOME SECURITY ACT OF 1974,
     AS AMENDED  ("ERISA"),  OR THE CODE WILL BE REGISTERED  EXCEPT IN
     COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.

Series 2000-1, Class B-6                Aggregate Certificate Principal
                                        Balance of Class B-6 Certificates as
                                        of the Issue Date: $165,708.35
Pass-Through Rate: 9.00% per annum
                                        Denomination: $165,708.35

Date of Agreement and Cut-off Date:     Master Servicer and Trust Administrator
March 1, 2000                           Citicorp Mortgage, Inc.


First Distribution Date:                Trustee: U.S. Bank National Association
April 25, 2000

No. 1                                   Issue Date: March 30, 2000


     DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
     OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
     ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
     AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
     DENOMINATION OF THIS CERTIFICATE.



<PAGE>


                                       -3-

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Salomon Smith Barney Inc. is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class B-6
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class B-6 Certificates in REMIC II created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trust Administrator, the Co-Trustee, the Co-Trustee and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class B6 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class B-6 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two- thirds of the aggregate initial
Certificate Principal Balance of the Class B-6 Certificates, or



<PAGE>


                                       -4-

otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon the presentation and surrender of this Certificate at
the office or agency appointed by the Trustee for that purpose as provided in
the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.




<PAGE>


                                       -5-

     No transfer of this Certificate shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Master Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate desiring
to effect the transfer and/or such Holder's prospective transferee upon which
such Opinion of Counsel is based. None of the Depositor or the Trustee is
obligated to register or qualify the Class of Certificates specified on the face
hereof under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

     No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(c) of the Agreement.

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trust Administrator, the Trustee nor any such agent shall be affected by notice
to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in REMIC I, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the



<PAGE>


                                       -6-

Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining therein at a price determined
as provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>



          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class B-6 Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                 Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.


<PAGE>


                             EXHIBIT A-11
                             ------------


                     FORM OF CLASS R-I CERTIFICATE

     THIS  CERTIFICATE  MAY NOT BE TRANSFERRED TO A NON-UNITED  STATES
     PERSON.

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
     A  "RESIDUAL  INTEREST"  IN A "REAL  ESTATE  MORTGAGE  INVESTMENT
     CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED,  RESPECTIVELY, IN
     SECTIONS 860G AND 860D OF THE INTERNAL  REVENUE CODE OF 1986 (THE
     "CODE").

     ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
     BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
     THE AGREEMENT REFERRED TO HEREIN.

     THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE REGISTERED  UNDER
     THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
     ANY  STATE  AND MAY NOT BE  RESOLD  OR  TRANSFERRED  UNLESS IT IS
     REGISTERED   PURSUANT  TO  SUCH  ACT  AND  LAWS  OR  IS  SOLD  OR
     TRANSFERRED  IN  TRANSACTIONS  THAT ARE EXEMPT FROM  REGISTRATION
     UNDER SUCH ACT AND UNDER  APPLICABLE STATE LAW AND IS TRANSFERRED
     IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  5.02  OF  THE
     AGREEMENT.

     NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
     OTHER  RETIREMENT  ARRANGEMENT  (EACH A  "PLAN")  SUBJECT  TO THE
     EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS  AMENDED
     ("ERISA"),  OR THE CODE WILL BE  REGISTERED  EXCEPT IN COMPLIANCE
     WITH THE PROCEDURES DESCRIBED HEREIN.

     ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
     BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
     TO THE  TRUSTEE  THAT (A) SUCH  TRANSFEREE  IS NOT (1) THE UNITED
     STATES  OR  ANY  POSSESSION  THEREOF,   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) THAT IS EXEMPT FROM THE TAX
     IMPOSED BY CHAPTER 1 OF THE



<PAGE>


                                   -2-

     CODE  UNLESS SUCH  ORGANIZATION  IS SUBJECT TO THE TAX IMPOSED BY
     SECTION  511 OF THE  CODE,  (3)  ANY  ORGANIZATION  DESCRIBED  IN
     SECTION  1381(A)(2)(C)  OF THE CODE (ANY SUCH PERSON DESCRIBED IN
     THE  FOREGOING  CLAUSES  (1),  (2) OR (3)  SHALL  HEREINAFTER  BE
     REFERRED TO AS A "DISQUALIFIED  ORGANIZATION") OR (4) AN AGENT OF
     A DISQUALIFIED  ORGANIZATION  AND (B) NO PURPOSE OF SUCH TRANSFER
     IS TO IMPEDE THE  ASSESSMENT  OR COLLECTION OF TAX, AND (II) SUCH
     TRANSFEREE  SATISFIES CERTAIN ADDITIONAL  CONDITIONS  RELATING TO
     THE   FINANCIAL    CONDITION   OF   THE   PROPOSED    TRANSFEREE.
     NOTWITHSTANDING  THE REGISTRATION IN THE CERTIFICATE  REGISTER OF
     ANY TRANSFER,  SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
     DISQUALIFIED   ORGANIZATION   OR  AN  AGENT  OF  A   DISQUALIFIED
     ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL
     FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO
     BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,  INCLUDING, BUT
     NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
     EACH HOLDER OF THIS  CERTIFICATE  BY  ACCEPTANCE  HEREOF SHALL BE
     DEEMED TO HAVE  CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND
     THE  PROVISIONS OF SECTION  5.02(D) OF THE AGREEMENT  REFERRED TO
     HEREIN.  ANY  PERSON  THAT  IS  A  DISQUALIFIED  ORGANIZATION  IS
     PROHIBITED   FROM   ACQUIRING   BENEFICIAL   OWNERSHIP   OF  THIS
     CERTIFICATE.

Series 2000-1, Class R-I                Aggregate Percentage Interest of Class
                                        R-I Certificates as of the Issue Date:
                                        100.00%

Date of Agreement and Cut-off Date:
March 1, 2000                           Master Servicer and Trust Administrator
                                        Citicorp Mortgage, Inc.
First Distribution Date:
April 25, 2000
                                        Trustee: U.S. Bank National Association

No. 1
                                        Issue Date: March 30, 2000


<PAGE>


                                       -3-

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Salomon Smith Barney Inc. is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class R-I
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class R-I Certificates in REMIC I created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trust Administrator, the Co-Trustee, the Co-Trustee and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-I Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register. Notwithstanding the above, the final distribution on
this Certificate will be made after due notice



<PAGE>


                                       -4-

by the Trustee of the pendency of such distribution and only upon the
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933



<PAGE>


                                       -5-

Act"), and an effective registration or qualification under applicable state
securities laws, or is made in a transaction that does not require such
registration or qualification. In the event that such a transfer of this
Certificate is to be made without registration or qualification, the Trustee
shall require receipt of (i) if such transfer is purportedly being made in
reliance upon Rule 144A under the 1933 Act, written certifications from the
Holder of the Certificate desiring to effect the transfer, and from such
Holder's prospective transferee, substantially in the forms attached to the
Agreement as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Master Servicer in their respective
capacities as such), together with copies of the written certification(s) of the
Holder of the Certificate desiring to effect the transfer and/or such Holder's
prospective transferee upon which such Opinion of Counsel is based. None of the
Depositor or the Trustee is obligated to register or qualify the Class of
Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor and the Master
Servicer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

          Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-I Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-I Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

     The Holder of this Certificate, by its acceptance hereof, shall be deemed
to have consented to the provisions of Section 5.02 of the Agreement and to any
amendment of the Agreement deemed necessary by counsel of the Depositor to
ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust Fund to cease
to qualify as a REMIC or cause the imposition of a tax upon the REMIC.



<PAGE>


                                       -6-

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trust Administrator, the Trustee nor any such agent shall be affected by notice
to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>


          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class R-I Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                 Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.


<PAGE>


                             EXHIBIT A-12
                             ------------

                    FORM OF CLASS R-II CERTIFICATE

     THIS  CERTIFICATE  MAY NOT BE TRANSFERRED TO A NON-UNITED STATES
     PERSON.

     SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
     A  "RESIDUAL  INTEREST"  IN A "REAL  ESTATE  MORTGAGE  INVESTMENT
     CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED,  RESPECTIVELY, IN
     SECTIONS 860G AND 860D OF THE INTERNAL  REVENUE CODE OF 1986 (THE
     "CODE").

     ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
     BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
     THE AGREEMENT REFERRED TO HEREIN.

     THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE REGISTERED  UNDER
     THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
     ANY  STATE  AND MAY NOT BE  RESOLD  OR  TRANSFERRED  UNLESS IT IS
     REGISTERED   PURSUANT  TO  SUCH  ACT  AND  LAWS  OR  IS  SOLD  OR
     TRANSFERRED  IN  TRANSACTIONS  THAT ARE EXEMPT FROM  REGISTRATION
     UNDER SUCH ACT AND UNDER  APPLICABLE STATE LAW AND IS TRANSFERRED
     IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  5.02  OF  THE
     AGREEMENT.

     NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
     OTHER  RETIREMENT  ARRANGEMENT  (EACH A  "PLAN")  SUBJECT  TO THE
     EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS  AMENDED
     ("ERISA"),  OR THE CODE WILL BE  REGISTERED  EXCEPT IN COMPLIANCE
     WITH THE PROCEDURES DESCRIBED HEREIN.

     ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
     BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
     TO THE  TRUSTEE  THAT (A) SUCH  TRANSFEREE  IS NOT (1) THE UNITED
     STATES  OR  ANY  POSSESSION  THEREOF,   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) THAT IS EXEMPT FROM THE TAX
     IMPOSED  BY CHAPTER 1 OF THE CODE  UNLESS  SUCH  ORGANIZATION  IS
     SUBJECT TO THE TAX



<PAGE>


     IMPOSED  BY  SECTION  511  OF  THE  CODE,  (3)  ANY  ORGANIZATION
     DESCRIBED IN 1 SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON
     DESCRIBED  IN  THE  FOREGOING  CLAUSES  (1),  (2)  OR  (3)  SHALL
     HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED  ORGANIZATION")  OR
     (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF
     SUCH  TRANSFER IS TO IMPEDE THE  ASSESSMENT OR COLLECTION OF TAX,
     AND (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL  CONDITIONS
     RELATING TO THE FINANCIAL  CONDITION OF THE PROPOSED  TRANSFEREE.
     NOTWITHSTANDING  THE REGISTRATION IN THE CERTIFICATE  REGISTER OF
     ANY TRANSFER,  SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
     DISQUALIFIED   ORGANIZATION   OR  AN  AGENT  OF  A   DISQUALIFIED
     ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL
     FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO
     BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,  INCLUDING, BUT
     NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
     EACH HOLDER OF THIS  CERTIFICATE  BY  ACCEPTANCE  HEREOF SHALL BE
     DEEMED TO HAVE  CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND
     THE  PROVISIONS OF SECTION  5.02(D) OF THE AGREEMENT  REFERRED TO
     HEREIN.  ANY  PERSON  THAT  IS  A  DISQUALIFIED  ORGANIZATION  IS
     PROHIBITED   FROM   ACQUIRING   BENEFICIAL   OWNERSHIP   OF  THIS
     CERTIFICATE.

Series 2000-1, Class R-II               Aggregate Percentage Interest of Class
                                        R-II Certificates as of the Issue
                                        Date: 100.00%
Date of Agreement and Cut-off Date:
March 1, 2000                           Master Servicer and Trust Administrator
                                        Citicorp Mortgage, Inc.

First Distribution Date:
April 25, 2000                          Trustee:  U.S. Bank National Association


No. 1                                   Issue Date:  March 30, 2000


<PAGE>


                                       -3-

                        MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

     THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
     IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
     SERVICER,  THE TRUST  ADMINISTRATOR,  THE TRUSTEE OR ANY OF THEIR
     RESPECTIVE   AFFILIATES.   NEITHER  THIS   CERTIFICATE   NOR  THE
     UNDERLYING  MORTGAGE  LOANS  ARE  GUARANTEED  BY  ANY  AGENCY  OR
     INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Salomon Smith Barney Inc. is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class R-II
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class R-II Certificates in REMIC II created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer, the Trust Administrator, the Co-Trustee and the Trustee, a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-II Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register. Notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon the presentation and surrender



<PAGE>


                                       -4-

of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series specified on the
face hereof (hereinafter called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions and conditions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trust Administrator and
the Trustee and the rights of the Holders of the Certificates under the
Agreement at any time by the Depositor, the Master Servicer, the Trust
Administrator and the Trustee, with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is



<PAGE>


                                       -5-

made in a transaction that does not require such registration or qualification.
In the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Master Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate desiring
to effect the transfer and/or such Holder's prospective transferee upon which
such Opinion of Counsel is based. None of the Depositor or the Trustee is
obligated to register or qualify the Class of Certificates specified on the face
hereof under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

          Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-II Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-II Certificates. Notwithstanding the
registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified Organization, such
registration shall be deemed to be of no legal force or effect whatsoever and
such Person shall not be deemed to be a Certificateholder for any purpose,
including, but not limited to, the receipt of distributions in respect of this
Certificate.

          The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement and
to any amendment of the Agreement deemed necessary by counsel of the Depositor
to ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust Fund to cease
to qualify as a REMIC or cause the imposition of a tax upon the REMIC.




<PAGE>


                                       -6-

          No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

          The Depositor, the Master Servicer, the Trust Administrator, the
Trustee and any agent of the Depositor, the Master Servicer or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trust Administrator, the Trustee nor any such agent shall be affected by notice
to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment (or provision for payment) to the Holders
of the Certificates of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate principal balance of the Mortgage
Loans as of the Cut-off Date.


          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



<PAGE>


          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March 30, 2000

                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                  Authorized Officer




                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class R-II Certificates referred to in the
within-mentioned Agreement.


                                         U.S. BANK NATIONAL ASSOCIATION,
                                         as Trustee


                                         By:____________________________
                                                 Authorized Signatory




<PAGE>


                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common             UNIF GIFT MIN ACT -   Custodian
                                                              ---------------
                                                              (Cust)   (Minor)
TEN ENT - as tenants by the entireties                       under Uniform Gifts
                                                               to Minors Act
JT TEN  - as joint tenants with right                   _______________
           of survivorship and not as                       (State)
           tenants in common

    Additional abbreviations may also be used though not in the above list.



                                   ASSIGNMENT
                                   ----------


          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor


                                         _______________________________________
                                         Signature Guaranteed





<PAGE>


                            DISTRIBUTION INSTRUCTIONS
                            -------------------------


     The assignee should include the following for purposes of distribution:

     Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________,
for the account of ____________________________, account number _______________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.

     This information is provided by ______________________________________, the
assignee named above, or ________________________________________, as its agent.



<PAGE>



                                    EXHIBIT B


                                   [RESERVED]





<PAGE>



                                   EXHIBIT C-1
                                   -----------

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION


                                                 [Date]

Salomon Brothers Mortgage                        Citicorp Mortgage, Inc.
Securities VII, Inc.                             15851 Clayton Road
390 Greenwich Street                             Ballwin, Missouri 63011
New York, New York  10013


          Re:  Pooling and Servicing Agreement, dated as of March 1, 2000, among
               Salomon Brothers Mortgage Securities VII, Inc., as Depositor
               Citicorp Mortgage, Inc. as Master Serivcer and Trust
               Administrator and U.S. Bank National Association as Trustee
               Mortgage Pass-Through Certificates, Series 2000-1
               -----------------------------------------------------------------

Ladies and Gentlemen:

     Attached is the Trustee's preliminary exceptions in accordance with Section
2.02 of the referenced Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"). Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Pooling and Servicing Agreement.

     The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in the Mortgage File of any of the Mortgage Loans identified
on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan, or (iii) whether any
Mortgage File included any of the documents specified in clause (v) of Section
2.01 of the Pooling and Servicing Agreement.


                                          U.S. BANK NATIONAL ASSOCIATION


                                          By:______________________________
                                          Name:____________________________
                                          Title:___________________________



<PAGE>



                                   EXHIBIT C-2
                                   -----------



                       FORM OF TRUSTEE FINAL CERTIFICATION


                                                  [Date]

Salomon Brothers Mortgage
Securities VII, Inc.
390 Greenwich Street
New York, New York  10013

Citicorp Mortgage, Inc.
15851 Clayton Road
Ballwin, Missouri 63011

          Re:  Pooling and Servicing Agreement, dated as of March 1, 2000, among
               Salomon Brothers Mortgage Securities VII, Inc., as Depositor
               Citicorp Mortgage, Inc. as Master Serivcer and Trust
               Administrator and U.S. Bank National Association as Trustee
               Mortgage Pass-Through Certificates, Series 2000-1
               -----------------------------------------------------------------

Ladies and Gentlemen:

     In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or specifically identified in the exception report annexed
hereto), (i) all documents constituting part of such Mortgage File (other than
such documents described in Section 2.01(v) of the Pooling and Servicing
Agreement) required to be delivered to it pursuant to the Pooling and Servicing
Agreement are in its possession, (ii) such documents have been reviewed by it
and appear regular on their face and relate to such Mortgage Loan, (iii) based
on its examination and only as to the foregoing, the information set forth in
the Mortgage Loan Schedule that corresponds to items (i) through (iii), (vi),
(vii), (ix), (x), (xi) and (xv) of the definition of "Mortgage Loan Schedule"
accurately reflects information set forth in the Mortgage File.

     The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.




<PAGE>



     Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.


                                             U.S. BANK NATIONAL ASSOCIATION



                                             By:_____________________________
                                             Name:
                                             Title:





<PAGE>



                                    EXHIBIT D
                                    ---------


                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

<PAGE>

                        MORTGAGE LOAN PURCHASE AGREEMENT

                  This is a Mortgage Loan Purchase Agreement (the "Agreement"),
dated March 27, 2000, between Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation (the "Purchaser") and Salomon Brothers Realty Corp., a New
York corporation (the "Seller").

                              PRELIMINARY STATEMENT

                  The Seller intends to sell the Mortgage Loans (as hereinafter
defined) to the Purchaser on the terms and subject to the conditions set forth
in this Agreement. The Purchaser intends to deposit the Mortgage Loans into a
mortgage pool comprising the trust fund. The trust fund will be evidenced by a
single series of mortgage pass-through certificates designated as Series 2000-1
(the "Certificates"). The Certificates will consist of twelve classes of
certificates. The Certificates will be issued pursuant to a Pooling and
Servicing Agreement, dated as of March 1, 2000 (the "Pooling and Servicing
Agreement"), among the Purchaser as depositor, U.S. Bank National Association as
trustee (the "Trustee"), U.S. Bank Trust National Association as co-trustee (the
"Co-Trustee") and Citicorp Mortgage, Inc. as master servicer (in such capacity,
the "Master Servicer") and as trust administrator (in such capacity, the "Trust
Administrator"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Pooling and Servicing Agreement.

                  The parties hereto agree as follows:

                  SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell,
and the Purchaser agrees to purchase, on or before March 30, 2000 (the "Closing
Date"), certain fixed-rate, seasoned conventional residential mortgage loans
(the "Mortgage Loans"), having an aggregate principal balance as of the close of
business on March 1, 2000 (the "Cut-off Date") of approximately $82,393,709 (the
"Closing Balance"), after giving effect to all payments due on the Mortgage
Loans on or before the Cut-off Date, whether or not received.

                  SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the
Seller have agreed upon which of the mortgage loans owned by the Seller are to
be purchased by the Purchaser pursuant to this Agreement and the Seller will
prepare or cause to be prepared on or prior to the Closing Date a final schedule
(the "Closing Schedule") that together shall describe such Mortgage Loans and
set forth all of the Mortgage Loans to be purchased under this Agreement. The
Closing Schedule will conform to the requirements set forth in this Agreement
and to the definition of "Mortgage Loan Schedule" under the Pooling and
Servicing Agreement. The Closing Schedule shall be used as the Mortgage Loan
Schedule under the Pooling and Servicing Agreement.

                  SECTION 3.        CONSIDERATION.

                           (a) In consideration for the Mortgage Loans to be
purchased hereunder, the Purchaser shall, as described in Section 8, pay to or
upon the order of the Seller in immediately available funds an amount (the
"Purchase Price") equal to the net sale proceeds of the Certificates, plus
accrued interest in the case of the Certificates (other than the Class PO
Certificates).




<PAGE>


                                       -2-


                           (b) The Purchaser or any assignee, transferee or
designee of the Purchaser shall be entitled to all scheduled payments of
principal due after the Cut-off Date, all other payments of principal due and
collected after the Cut-off Date, and all payments of interest on the Mortgage
Loans allocable to the period after the Cut-off Date. All scheduled payments of
principal and interest due on or before the Cut-off Date and collected after the
Cut-off Date shall belong to the Seller.

                           (c) Pursuant to the Pooling and Servicing Agreement,
the Purchaser will assign all of its right, title and interest in and to the
Mortgage Loans, together with its rights under this Agreement, to the Trustee
for the benefit of the related Certificateholders.

                  SECTION 4.        TRANSFER OF THE MORTGAGE LOANS.

                           (a) POSSESSION OF MORTGAGE FILES. The Seller does
hereby sell, transfer, assign, set over and convey to the Purchaser, without
recourse but subject to the terms of this Agreement, all of its right, title and
interest in, to and under the Mortgage Loans. The contents of each Mortgage File
not delivered to the Purchaser or to any assignee, transferee or designee of the
Purchaser on or prior to the Closing Date are and shall be held in trust by the
Seller for the benefit of the Purchaser or any assignee, transferee or designee
of the Purchaser. Upon the sale of the Mortgage Loans the ownership of each
Mortgage Note, the related Mortgage and the other contents of the related
Mortgage File is vested in the Purchaser and the ownership of all records and
documents with respect to the related Mortgage Loan prepared by or that come
into the possession of the Seller on or after the Closing Date shall immediately
vest in the Purchaser and shall be delivered immediately to the Purchaser or as
otherwise directed by the Purchaser.

                           (b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. In
connection with such transfer and assignment, the Seller does hereby deliver to,
and deposit with, the Purchaser, the following documents or instruments with
respect to each Mortgage Loan so transferred and assigned (a "Mortgage File"):

                         (i) the original Mortgage Note, endorsed in one of the
                  following forms: (i) in the name of the Co-Trustee or (ii) in
                  blank, in each case, with all prior and intervening
                  endorsements showing a complete chain of endorsement from the
                  originator to the Person so endorsing to the Co-Trustee;

                        (ii) the original Mortgage with evidence of recording
                  thereon. If in connection with any Mortgage Loan, the Seller
                  has not caused the original recorded Mortgage to be delivered
                  to the Purchaser because of a delay caused by the public
                  recording office were such Mortgage has been delivered for
                  recordation or because such Mortgage has been lost or because
                  such public recording office retains the original recorded
                  Mortgage, the Mortgage File shall include, in lieu of such
                  Mortgage, a photocopy of such Mortgage, together with (a) in
                  the case of a delay caused by the public recording office, an
                  Officer's Certificate of the title insurer insuring the
                  Mortgage stating that such Mortgage has been delivered to the
                  appropriate public recording office for recordation and that
                  the original recorded



<PAGE>


                                       -3-


                  Mortgage or a copy of such Mortgage certified by such public
                  recording office to be a true and complete copy of the
                  original recorded Mortgage will be promptly delivered to the
                  Purchaser upon receipt by the Seller; or (b) in the case where
                  a public recording office retains the original recorded
                  Mortgage or in the case where a Mortgage is lost after
                  recordation in a public recording office, a copy of such
                  Mortgage with the recording information thereon certified by
                  such public recording office to be a true and complete copy of
                  the original recorded Mortgage;

                       (iii) an original Assignment of the Mortgage to the
                  Co-Trustee in recordable form;

                        (iv) the original recorded Assignment or Assignments of
                  the Mortgage showing a complete chain of assignment from the
                  originator to the Person assigning the Mortgage to the
                  Co-Trustee as contemplated by the immediately preceding clause
                  (iii), or if any such intervening assignment has not been
                  returned from the applicable public recording office or has
                  been lost or if such public recording office retains the
                  original recorded Assignments of Mortgage, the Mortgage File
                  shall include a photocopy of such intervening assignment,
                  together with (a) in the case of a delay caused by the public
                  recording, an Officer's Certificate of the title insurer
                  insuring the Mortgage stating that such intervening Assignment
                  of Mortgage has been delivered to the appropriate public
                  recording office for recordation and that such original
                  recorded intervening Assignment of Mortgage or a copy of such
                  intervening Assignment of Mortgage certified by the
                  appropriate public recording office to be a true and complete
                  copy of the original recorded intervening Assignment of
                  Mortgage will be promptly delivered to the Purchaser upon
                  receipt thereof by the Seller; or (b) in the case of an
                  intervening Assignment of Mortgage where a public recording
                  office retains the original recorded intervening Assignment of
                  Mortgage or in the case where an intervening Assignment of
                  Mortgage is lost after recordation in a public recording
                  office, a copy of such intervening Assignment with recording
                  information thereon certified by such public recording office
                  to be a true and complete copy of the original recorded
                  intervening Assignment of Mortgage;

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

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

                       (vii) with respect to any Mortgage Loan listed on
                  Schedule 2 attached to the Pooling and Servicing Agreement,
                  the original Primary Mortgage Insurance Policy or certificate;

                       (viii) the original mortgagee title insurance policy;




<PAGE>


                                       -4-


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

                       (x) the original power of attorney, if applicable.

                  To the extent not already recorded, the Seller shall promptly
(and in no event later than five Business Days following the later of the
Closing Date and the date of receipt by the Seller of the recording information
for a Mortgage) submit or cause to be submitted for recording, at no expense to
the Trust Fund or the Trustee, in the appropriate public office for real
property records, each Assignment referred to in Sections 4(b)(iii) and (iv)
above. In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Seller shall promptly prepare or cause to be
prepared a substitute Assignment or cure or cause to be cured such defect, as
the case may be, and thereafter cause each such Assignment to be duly recorded.

                  With respect to a maximum of approximately 0.5% of the
Mortgage Loans, by outstanding principal balance of the Mortgage Loans as of the
Cut-off Date, if any original Mortgage Note referred to in Section 4(b)(i) above
cannot be located, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon delivery to the Purchaser of a photocopy of such
Mortgage Note, if available, with a lost note affidavit. If any of the original
Mortgage Notes for which a lost note affidavit was delivered to the Purchaser is
subsequently located, such original Mortgage Note shall be delivered to the
Purchaser within three Business Days.

                  The Seller shall deliver or cause to be delivered to the
Purchaser promptly upon receipt thereof any other original documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan.

                  All original documents relating to the Mortgage Loans that are
not delivered to the Purchaser are and shall be held by or on behalf of the
Seller in trust for the benefit of the Trustee on behalf of the
Certificateholders. In the event that any such original document is required
pursuant to the terms of this Section to be a part of a Mortgage File, such
document shall be delivered promptly to the Purchaser. Any such original
document delivered to or held by the Seller that is not required pursuant to the
terms of this Section to be a part of a Mortgage File, shall be delivered
promptly to the Seller.

                           (c) ACCEPTANCE OF MORTGAGE LOANS. The documents
delivered pursuant to Section 4(b) hereof shall be reviewed by the Purchaser or
any assignee, transferee or designee of the Purchaser at any time before or
after the Closing Date (and with respect to each document permitted to be
delivered after the Closing Date within seven days of its delivery) to ascertain
that all required documents have been executed and received and that such
documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule.




<PAGE>


                                       -5-


                           (d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser
has the right to assign its interest under this Agreement, in whole or in part,
to the Trustee, as may be required to effect the purposes of the Pooling and
Servicing Agreement, without the consent of the Seller, and the assignee shall
succeed to the rights and obligations hereunder of the Purchaser. Any expense
reasonably incurred by or on behalf of the Purchaser or the Trustee in
connection with enforcing any obligations of the Seller under this Agreement
will be promptly reimbursed by the Seller.

                           (e) EXAMINATION OF MORTGAGE FILES. Prior to the
Closing Date, the Seller shall either (i) deliver in escrow to the Purchaser or
to any assignee, transferee or designee of the Purchaser, for examination, the
Mortgage File pertaining to each Mortgage Loan, or (ii) make such Mortgage Files
available to the Purchaser or to any assignee, transferee or designee of the
Purchaser for examination. Such examination may be made by the Purchaser or the
Trustee, and their respective designees, upon reasonable notice to the Seller
during normal business hours before the Closing Date and within 60 days after
the Closing Date. If any such person makes such examination prior to the Closing
Date and identifies any Mortgage Loans that do not conform to the requirements
of the Purchaser as described in this Agreement, such Mortgage Loans shall be
deleted from the Closing Schedule. The Purchaser may, at its option and without
notice to the Seller, purchase all or part of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Purchaser or
any person has conducted or has failed to conduct any partial or complete
examination of the Mortgage Files shall not affect the rights of the Purchaser
or any assignee, transferee or designee of the Purchaser to demand repurchase or
other relief as provided herein or under the Pooling and Servicing Agreement.

                  SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
                             SELLER

                  (a) The Seller hereby represents and warrants, as of the date
hereof and as of the Closing Date, and covenants, that:

                           (i) The Seller is a corporation, duly organized and
validly existing and in good standing under the laws of the State of New York
with full corporate power and authority to conduct its business as presently
conducted by it to the extent material to the consummation of the transactions
contemplated herein. The Seller had the full corporate power and authority to
acquire the Mortgage Loans. The Seller has the full corporate power and
authority to own the Mortgage Loans and to transfer and convey the Mortgage
Loans to the Purchaser and has the full corporate power and authority to execute
and deliver, engage in the transactions contemplated by, and perform and observe
the terms and conditions of this Agreement;

                           (ii) This Agreement has been duly and validly
authorized, executed and delivered by the Seller, all requisite corporate action
having been taken, and (assuming the due authorization, execution and delivery
hereof by the Purchaser) constitutes the valid, legal and binding obligation of
the Seller, enforceable in accordance with its terms, except as such enforcement
may be limited by (A) bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, (B) general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law) or (C) public
policy



<PAGE>


                                       -6-


considerations underlying the securities laws, to the extent that such public
policy considerations limit the enforceability of the provisions of this
Agreement which purport to provide indemnification from securities laws
liabilities;

                           (iii) No consent, approval, authorization or order
of, registration or filing with, or notice to any governmental authority or
court is required, under federal laws or the laws of the State of New York, for
the execution, delivery and performance by the Seller of, or compliance by the
Seller with, this Agreement or the consummation by the Seller of any other
transaction contemplated hereby and by the Pooling and Servicing Agreement;
provided, however, that the Seller makes no representation or warranty regarding
federal or state securities laws in connection with the sale or distribution of
the Certificates;

                           (iv) No certificate of an officer, statement or other
information furnished in writing or report delivered by the Seller to the
Purchaser, any affiliate of the Purchaser or the Trustee for use in connection
with the purchase of the Mortgage Loans and the transactions contemplated
hereunder and under the Pooling and Servicing Agreement will contain any untrue
statement of a material fact, or omit a material fact necessary to make the
information, certificate, statement or report not misleading in any material
respect.

                           (v) Neither the sale of the Mortgage Loans to the
Purchaser, nor the execution, delivery or performance of this Agreement by the
Seller, conflicts or will conflict with or results or will result in a breach of
or constitutes or will constitute a default (or an event, which with notice or
lapse of time or both, would constitute a default) under (A) any terms or
provisions of the certificate of incorporation or by-laws of the Seller, (B) any
term or provision of any material agreement, contract, instrument or indenture,
to which the Seller is a party or by which the Seller or any of its property is
bound, or (C) any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over the
Seller or any of its property, or results or will result in the creation or
imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans;

                           (vi) The Seller has not dealt with any broker,
investment banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans;

                           (vii) There is no litigation currently pending or, to
the best of the Seller's knowledge, threatened against the Seller that would
reasonably be expected to adversely affect the transfer of the Mortgage Loans,
the issuance of the Certificates, the execution, delivery, performance or
enforceability of this Agreement or that would result in a material adverse
change in the financial condition of the Seller;

                           (viii) Each Mortgage Note, each Mortgage, each
Assignment and any other document required to be delivered by or on behalf of
the Seller under this Agreement or the Pooling and Servicing Agreement to the
Purchaser or any assignee, transferee or designee of the Purchaser



<PAGE>


                                       -7-


for each Mortgage Loan has been or will be, in accordance with Section 4(b)
hereof, delivered to the Purchaser or any such assignee, transferee or designee.
With respect to each Mortgage Loan, the Seller is in possession of a complete
Mortgage File in compliance with the Pooling and Servicing Agreement, except for
such documents that (A) have been delivered (1) to the Purchaser or any
assignee, transferee or designee of the Purchaser or (2) for recording to the
appropriate public recording office and have not yet been returned or (B) are
not required to be delivered to the Purchaser or any assignee, transferee or
designee of the Purchaser until 90 days following the Closing Date or such later
date as provided in Section 4;

                           (ix) The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any relevant jurisdiction, except any as may have been complied with;

                           (x) The Seller (A) is a solvent entity and is paying
its debts as they become due and (B) after giving effect to the transfer of the
Mortgage Loans, will be a solvent entity and will have sufficient resources to
pay its debts as they become due;

                           (xi) The form of endorsement of each Mortgage Note
satisfied the requirement, if any, of endorsement in order to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note; and each Assignment to be delivered
hereunder is in recordable form and is sufficient to effect the assignment of
and to transfer to the assignee thereunder the benefits of the assignor, as
mortgagee or assignee thereof, under each Mortgage to which that Assignment
relates;

                           (xii) The transfer of the Mortgage Loans to the
Purchaser at the Closing Date will be treated by the Seller for financial
accounting and reporting purposes as a sale of assets;

                           (xiii) Immediately prior to the sale of the Mortgage
Loans to the Purchaser as herein contemplated, the Seller had good title to, and
was the sole owner of, the Mortgage Loans, and such sale validly transfers the
Mortgage Loans to the Purchaser free and clear of any pledge, lien, encumbrance
or security interest; and

                           (xiv) With respect to the Mortgage Loans, the Seller
hereby represents and warrants, as of the date hereof and as of the Closing
Date, that each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860(G)(a)(3) of the Code.

                  SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE SELLER
                             RELATING TO THE MORTGAGE LOANS.

         Capitalized terms used in this Section 6 but not defined herein or in
the Pooling and Servicing Agreement, shall have the meanings given to such terms
in Exhibit 4 hereto. The Seller hereby represents and warrants to the Purchaser
that, as to each Mortgage Loan, as of the Closing Date for such Mortgage Loan:



<PAGE>


                                       -8-


                  (i) The information set forth in the Mortgage Loan Schedule is
complete, true and correct;

                  (ii) The Mortgage Loan Documents are genuine, the Mortgage
Notes and Mortgages are enforceable in accordance with their terms, each
Mortgage and Mortgage Note is duly and properly executed by a Mortgagor of legal
capacity, and all insertions in any Mortgage Loan Document are correct. To the
Seller's knowledge, there are no facts that would impair the validity or value
of the Mortgage Note, the Mortgage, any other Mortgage Loan Document or the
collateral.

                  (iii) The amount of the unpaid balance for each Mortgage Loan
which is reflected on the Mortgage Loan Schedule is correct as of the date
thereof and there are no defenses, setoffs, rights of rescission or
counterclaims against any Mortgage Loan.

                  (iv) The security interest granted by the Mortgagor in the
Mortgaged Property described in the Mortgage is an enforceable and valid first
lien on the Mortgaged Property described therein.

                  (v) The origination of each Mortgage Loan complies in all
material respects with the Applicable Requirements.

                  (vi) All applicable taxes, special government assessments,
ground rents and flood, hazard and PMI insurance premiums have been paid when
due in accordance with Applicable Requirements.

                  (vii) All flood, hazard and PMI insurance policies and flood
certifications were obtained where required and are in compliance with all
Applicable Requirements and remain in full force and effect.

                  (viii) All real estate tax identifications relating to the
Mortgage Loans are legally sufficient and in accordance with Applicable
Requirements. Tax segregation, where required, has been completed.

                  (ix) All payoff and assumption statements with respect to each
Mortgage Loan provided to Mortgagors or their agents were complete and accurate
when provided.

                  (x) A title policy (except with respect to Mortgaged
Properties located in Iowa, as to which an opinion of counsel of the type
customarily rendered in Iowa in lieu of title insurance is acceptable), which is
currently in effect, conforming to Applicable Requirements, and has not been
modified, has been issued for each Mortgage Loan insuring, in an amount no less
than the outstanding Mortgage Loan balance, that the Mortgage relating thereto
is a valid first lien on the property therein described and that the related
Mortgaged Property is free and clear of all encumbrances and liens having
priority over the first lien of the Mortgage, except for liens for real estate
taxes and special assessments not yet due and payable and except for easements
and restrictions of record being applicable to mortgage lending institutions
generally and specifically



<PAGE>


                                       -9-


identified in the title policy. In jurisdictions that give unpaid common expense
assessments limited priority over a first mortgage lien, the policy provides
assurance that those assessments have been paid through the effective date of
the policy.

                  (xi) To the Seller's knowledge, the Mortgage Loans have been
serviced in compliance with all Applicable Requirements pertaining to tax
reporting in all material respects. For example, but not by way of limitation,
the Seller has, to the extent required under the Applicable Requirements:

                          (a) Implemented backup withholding of interest accrual
                  on Escrow Accounts, where required;

                          (b) Certified Social Security or Taxpayer
                  Identification numbers for each Mortgage Loan; and

                           (c) Provided all appropriate tax forms and
                  information to (i) the Internal Revenue Service, (ii) the
                  buyers and sellers in assumption or foreclosure transactions
                  and (iii) Mortgagors who have a buydown account as part of
                  their Mortgage Loan.

                  (xii) No misrepresentation or fraud with respect to a Mortgage
Loan has taken place on the part of the Seller, or to the Seller's Knowledge,
any Person with respect to the origination of the Mortgage Loan or in the
application of any insurance regarding such Mortgage Loan which materially and
adversely affects the Purchaser, the Mortgage Loan or the servicing rights.

                  (xiii) Each Mortgage Loan has been, and is being, serviced in
all material respects in accordance with the terms of its Mortgage Note,
Mortgage and related Mortgage Loan Documents and the Applicable Requirements and
Customary Servicing Procedures.

                  (xiv) Except in accordance with Applicable Requirements and as
documented in the Mortgage Loan Documents, no waiver, alterations or
modifications have been made to the Mortgage Loan Documents constituting the
Mortgage Loan nor have same been satisfied, subordinated or released in whole or
in part.

                  (xv) Each Mortgage has been duly acknowledged and recorded or
sent for recordation except where not required by law to preserve the interest
of the owner against claims of subsequent transferees.

                  (xvi) There is a life of loan tax service contract in place
for each Mortgage Loan (including Mortgage Loans with respect to which an escrow
waiver has been granted).

                  (xvii) The Mortgage Loan is in compliance with the
characteristics of the Mortgage Loans as set Forth on Exhibit 5.




<PAGE>


                                      -10-


                  (xviii) Except with respect to approximately 4.47% of the
Mortgage Loans, by aggregate principal balance of the Mortgage Loans as of the
Cut-off Date; as of February 29, 2000, the Monthly Payment due under each
Mortgage Loan is not delinquent in payment; and except with respect to
approximately 2.15% of the Mortgage Loans, by aggregate principal balance of the
Cut-off date, the Monthly Payment due under each Mortgage Loan has not been 30
or more days delinquent in payment more than once during the preceding twelve
months (assuming that a "rolling" 30 day delinquency is considered to be
delinquent only once) and no Mortgage Loan will ever have experienced a
delinquency of 60 or more days since the origination thereof.

                  SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION
                             AND FOR BREACH OF REPRESENTATION AND WARRANTY.

                  (a) The representations and warranties contained in Section 6
shall not be impaired by any review and examination of loan files or other
documents evidencing or relating to the Mortgage Loans or any failure on the
part of the Seller or the Purchaser to review or examine such documents and
shall inure to the benefit of any assignee, transferee or designee of the
Purchaser, including the Trustee for the benefit of holders of Mortgage
Pass-Through Certificates evidencing an interest in all or a portion of the
Mortgage Loans.

                  Upon discovery by the Seller, the Purchaser or any assignee,
transferee or designee of the Purchaser of any materially defective document in,
or that any material document was not transferred by the Seller as part of any
Mortgage File or of a breach of any of the representations and warranties
contained in Section 5 or Section 6 that materially and adversely affects the
value of any Mortgage Loan, the Purchaser or the Purchaser's assignee,
transferee or designee or the party discovering the breach shall give prompt
written notice to the Seller. Within sixty (60) days of its discovery or its
receipt of notice of any such missing documentation which was not transferred to
the Purchaser as described above or materially defective documentation or any
breach of a represen tation and warranty, the Seller promptly shall deliver such
missing document or cure such defect or breach in all material respects, or in
the event the Seller cannot deliver such missing document or such defect or
breach cannot be cured, the Seller shall within sixty (60) days of its discovery
or receipt of notice, either (i) repurchase the affected Mortgage Loan at the
Purchase Price (as such term is defined in the Pooling and Servicing Agreement)
or (ii) pursuant to the provisions of the Pooling and Servicing Agreement, cause
the removal of such Mortgage Loan from the Trust Fund and substi tute one or
more Qualified Substitute Mortgage Loans. With respect to Mortgage Loans where
the Mortgage File is missing a material document that was transferred from the
Seller to the Purchaser or upon discovery by the Seller, the Purchaser or any
assignee, transferee or designee of the Purchaser of a breach of any of the
representations and warranties contained in Section 5(xi), (xiii) and (xiv) that
materially and adversely affects the value of any Mortgage Loan, the Purchaser
or the Purchaser's assignee, transferee or designee, the party discovering such
breach shall give prompt written notice to the Seller. Within sixty (60) days of
its discovery or its receipt of notice of any such missing document or any such
breach of a representation and warranty the Seller promptly shall deliver such
missing document or cure such defect or breach in all material respects, or in
the event the Seller cannot deliver such missing document or such defect or
breach cannot be cured, the Seller shall, within sixty (60) days of its
discovery or receipt of notice, either (i) repurchase the affected



<PAGE>


                                      -11-


Mortgage Loan at the Purchase Price (as such term is defined in the Pooling and
Servicing Agreement) or (ii) pursuant to the provisions of the Pooling and
Servicing Agreement, cause the removal of such Mortgage Loan from the Trust Fund
and substitute one or more Qualified Substitute Mortgage Loans. The Seller shall
amend the Closing Schedule to reflect the withdrawal of such Mortgage Loan from
the terms of this Agreement and the Pooling and Servicing Agreement and the
addition, if any, of a Qualified Substitute Mortgage Loan. The Seller shall
deliver to the Purchaser such amended Closing Schedule and shall deliver such
other documents as are required by this Agreement or the Pooling and Servicing
Agreement within five (5) days of any such amendment.
Any repurchase pursuant to this Section 7(a) shall be accomplished by deposit in
the Collection Account of the amount of the Purchase Price in accordance with
Section 2.03 of the Pooling and Servicing Agreement. Any repurchase or
substitution required by this Section shall be made in a manner consistent with
Section 2.03 of the Pooling and Servicing Agreement.

                  (b) It is understood and agreed that the obligations of the
Seller set forth in this Section 7 to cure, repurchase or substitute for a
defective Mortgage Loan constitute the sole remedies of the Purchaser against
the Seller, respecting a missing or defective document or a breach of the rep
resentations and warranties contained in Section 5 or Section 6. It is
understood and agreed that the obligations of the Seller set forth in this
Section 7 to repurchase or substitute for a Mortgage Loan as to which a material
document is missing constitute the sole remedies of the Purchaser against the
Seller respecting a missing document.

                  SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The
closing of the purchase and sale of the Mortgage Loans shall be held at the New
York City office of Thacher Proffitt & Wood at 10:00 AM New York City time on
the Closing Date.

                  The closing shall be subject to each of the following
conditions:

                  (a)      All of the representations and warranties of the
                           Seller under this Agreement shall be true and correct
                           in all material respects as of the date as of which
                           they are made and no event shall have occurred which,
                           with notice or the passage of time, would constitute
                           a default under this Agreement;

                  (b)      The Purchaser shall have received, or the attorneys
                           of the Purchaser shall have received in escrow (to be
                           released from escrow at the time of closing), all
                           Closing Documents as specified in Section 9 of this
                           Agreement, in such forms as are agreed upon and
                           acceptable to the Purchaser, duly executed by all
                           signatories other than the Purchaser as required
                           pursuant to the respective terms thereof;

                  (c)      The Seller shall have delivered or caused to be
                           delivered and released to the Purchaser or to its
                           designee, all documents (including without
                           limitation, the Mortgage Loans) required to be so
                           delivered by the Purchaser; and




<PAGE>


                                      -12-


                  (d)      All other terms and conditions of this Agreement
                           shall have been complied with.

                  Subject to the foregoing conditions, the Purchaser shall
deliver or cause to be delivered to the Seller on the Closing Date, against
delivery and release by the Seller to the Trustee of all documents required
pursuant to the Pooling and Servicing Agreement, the consideration for the
Mortgage Loans as specified in Section 3 of this Agreement, by delivery to the
Seller of the Purchase Price in immediately available funds.

                  SECTION 9. CLOSING DOCUMENTS. Without limiting the generality
of Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:

                           (a)      An Officers' Certificate of the Seller,
                                    dated the Closing Date, upon which the
                                    Purchaser and Salomon Smith Barney Inc. (the
                                    "Underwriter") may rely, in the form of
                                    Exhibit 1 hereto, and attached thereto
                                    copies of the certificate of incorporation,
                                    by-laws and certificate of good standing of
                                    the Seller under the laws of New York;

                           (b)      An Officers' Certificate of the Seller,
                                    dated the Closing Date, upon which the
                                    Purchaser and the Underwriter may rely, in
                                    the form of Exhibit 2 hereto, with respect
                                    to certain facts regarding the sale of the
                                    Mortgage Loans by the Seller to the
                                    Purchaser;

                           (c)      An Opinion of Counsel of the Seller, dated
                                    the Closing Date and addressed to the
                                    Purchaser and the Underwriter, substantially
                                    in the form attached hereto as Exhibit 3;

                           (d)      Such opinions of counsel as the Rating
                                    Agencies or the Trustee may request in
                                    connection with the sale of the Mortgage
                                    Loans by the Seller to the Purchaser or the
                                    Seller's execution and delivery of, or
                                    performance under, this Agreement;

                            (e)     A letter from Deloitte & Touche L.L.P.,
                                    certified public accountants, dated the date
                                    hereof and to the effect that they have
                                    performed certain specified procedures as a
                                    result of which they determined that certain
                                    information of an accounting, financial or
                                    statistical nature set forth in the
                                    Purchaser's Prospectus Supplement, dated
                                    March 27, 2000 under the subheadings
                                    "Summary of Prospectus Supplement--The
                                    Mortgage Loans," "Risk Factors," "The
                                    Mortgage Pool," "Yield on the Certificates"
                                    and "Description of the Certificates" agrees
                                    with the records of the Seller; and

                           (f)      Such further information, certificates,
                                    opinions and documents as the Purchaser or
                                    the Underwriter may reasonably request.



<PAGE>


                                      -13-


                  SECTION 10. COSTS. The Seller shall pay (or shall reimburse
the Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording Assignments, the costs and expenses of printing (or otherwise
reproducing) and delivering this Agreement, the Pooling and Servicing Agreement,
the Certificates, the prospectus, prospectus supplement, and private placement
memorandum relating to the Certificates and other related documents, the initial
fees, costs and expenses of the Trustee, the fees and expenses of the Seller's
counsel in connection with the preparation of all documents relating to the
securitization of the Mortgage Loans, the filing fee charged by the Securities
and Exchange Commission for registration of the Certificates and the fees
charged by any rating agency to rate the Certificates. All other costs and
expenses in connection with the transactions contemplated hereunder shall be
borne by the party incurring such expense.

                  SECTION 11.       [Reserved].

                  SECTION 12. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST.
The sale and delivery on the Closing Date of the Mortgage Loans described on the
Mortgage Loan Schedule in accordance with the terms and conditions of this
Agreement is mandatory. It is specifically understood and agreed that each
Mortgage Loan is unique and identifiable on the date hereof and that an award of
money damages would be insufficient to compensate the Purchaser for the losses
and damages incurred by the Purchaser in the event of the Seller's failure to
deliver the Mortgage Loans on or before the Closing Date. The Seller hereby
grants to the Purchaser a lien on and a continuing security interest in the
Seller's interest in each Mortgage Loan and each document and instrument
evidencing each such Mortgage Loan to secure the performance by the Seller of
its obligation hereunder, and the Seller agrees that it holds such Mortgage
Loans in custody for the Purchaser, subject to the Purchaser's (i) right, prior
to the Closing Date, to reject any Mortgage Loan to the extent permitted by this
Agreement, and (ii) obligation to deliver or cause to be delivered the
consideration for the Mortgage Loans pursuant to Section 8 hereof. Any Mortgage
Loans rejected by the Purchaser shall concurrently therewith be released from
the security interest created hereby.
The Seller agrees that, upon acceptance of the Mortgage Loans by the Purchaser
or its designee and delivery of payment to the Seller, that its security
interest in the Mortgage Loans shall be released.
All rights and remedies of the Purchaser under this Agreement are distinct from,
and cumulative with, any other rights or remedies under this Agreement or
afforded by law or equity and all such rights and remedies may be exercised
concurrently, independently or successively.

                  Notwithstanding the foregoing, if on the Closing Date, each of
the conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the redelivery of the Mortgage Loans, if delivery to
the Purchaser has occurred and the security interest created by this Section 12
shall be deemed to have been released.




<PAGE>


                                      -14-


                  SECTION 13. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by telex or telegraph and confirmed by a similar mailed writing, if
to the Purchaser, addressed to the Purchaser at 390 Greenwich Street, New York,
New York 10013, Attention: Mortgage Finance Group, or such other address as may
hereafter be furnished to the Seller in writing by the Purchaser; if to the
Seller, addressed to the Seller at 390 Greenwich Street, New York, New York
10013, Attention: Mortgage Finance Group, or to such other address as the Seller
may designate in writing to the Purchaser.

                  SECTION 14. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement which is prohibited or which is
held to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement which
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.

                  SECTION 15. AGREEMENT OF PARTIES. The Seller and the Purchaser
each agree to execute and deliver such instruments and take such actions as
either of the others may, from time to time, reasonably request in order to
effectuate the purpose and to carry out the terms of this Agree ment and the
Pooling and Servicing Agreement.

                  SECTION 16. SURVIVAL. The Seller agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on its behalf, and that the representations,
warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery of and payment for the Mortgage
Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.

                  SECTION 17. INDEMNIFICATION. (a) The Seller will indemnify and
hold harmless each of (i) the Purchaser and (ii) each person, if any, who
controls the Purchaser within the meaning of the Securities Act of 1933, as
amended (the "1933 Act") (i) through (iii) collectively, the "Indemnified
Party"), against any losses, claims, damages or liabilities to which such
Indemnified Party may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (a) any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus Supplement dated
March 27, 2000 (the "Prospectus Supplement"), as amended or supplemented,
relating to the public offering of the Certificates, representing interests in
the Mortgage Loans, or in any other offering document (the "Private Placement
Memorandum") relating to the offering by the Purchaser or an affiliate



<PAGE>


                                      -15-


thereof, of the Class B-4, Class B-5, and Class B-6 Certificates or in any
revision or amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading in each case to the extent and only
to the extent that such untrue statement or alleged untrue statement or omission
or alleged omission relates to information furnished by the Seller specifically
for use in the Prospectus Supplement, under the captions "Summary of Prospectus
Supplement--The Mortgage Loans," "Risk Factors," "The Mortgage Pool," "Yield on
the Certificates" and "Description of the Certificates"(and substantially
identical information approved by the Seller for inclusion in the Private
Placement Memorandum relating to the Class B-4, Class B-5, Class B-6
Certificates), (b) any representation, warranty or covenant made by the Seller
in this Agreement and (c) any updated collateral information provided by the
Underwriter to a purchaser of the certificates derived from the data provided by
the Seller or in the Remittance Report or a current collateral tape obtained
from the Seller or an affiliate of the Seller, including the current loan
balances of the Mortgage Loans to the extent such information was inaccurate
((a) through (c) collectively, the "Seller Information") and will reimburse each
such Indemnified Party for any legal or other expenses reasonably incurred by
such Indemnified Party and each such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
The Seller's liability under this Section 17 shall be in addition to any other
liability the Seller may otherwise have.

                  (b) The Purchaser agrees to indemnify and hold harmless the
Seller, its officers and its directors, and each person who controls the Seller
within the meaning of the 1933 Act against any and all losses, claims, damages
or liabilities, joint or several, to which they may become subject under the
1933 Act, or other federal or state statutory law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based in whole or in part upon any
untrue statement or alleged untrue statement of a material fact contained in the
Prospectus Supplement, the Prospectus or Private Placement Memorandum, or in any
revision or amendment thereof or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading, as of
the date thereof and as of the Closing Date, except insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or omission or
alleged untrue statement or omission made therein in reliance upon and in
conformity with the Seller Information and will reimburse the Seller and each
such controlling person for any legal or other expenses reasonably incurred by
the Seller and each such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. The Purchaser's
liability under this Section 17 shall be in addition to any other liability the
Purchaser may otherwise have.

                  (c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either Section 17(a) or 17(b) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the



<PAGE>


                                      -16-


indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the reasonable fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by the Purchaser, in the case of parties
indemnified pursuant to clause 17(a) and by the Seller, in the case of parties
indemnified pursuant to clause 17(b). The indemnifying party may, at its option,
at any time upon written notice to the indemnified party, assume the defense of
any proceeding and may designate counsel satisfactory to the indemnified party
in connection therewith provided that the counsel so designated would have no
actual or potential conflict of interest in connection with such representation.
Unless it shall assume the defense of any proceeding, the indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. If the indemnifying party assumes the defense of any
proceeding, it shall be entitled to settle such proceeding with the consent of
the indemnified party or, if such settlement provides for release of the
indemnified party in connection with all matters relating to the proceeding
which have been asserted against the indemnified party in such proceeding by the
other parties to such settlement, without the consent of the indemnified party.

                  (d) If the indemnification provided for in this Section 17 is
unavailable to an indemnified party under Section 17(a) or 17(b) hereof or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities, in
such proportion as is appropriate to reflect the relative fault of the
indemnified and indemnifying parties in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
indemnified and indemnifying parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such parties and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

                  (e) The Purchaser and the Seller agree that it would not be
just and equitable if contribution pursuant to Section 17 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the considerations referred to in Section 17(d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in this Section 17 shall be deemed
to include, subject to the limitations set forth



<PAGE>


                                      -17-


above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim, except
where the indemnified party is required to bear such expenses pursuant to this
Section 17, which expenses the indemnifying party shall pay as and when
incurred, at the request of the indemnified party, to the extent that the
indemnifying party will be ultimately obligated to pay such expenses. In the
event that any expenses so paid by the indemnifying party are subsequently
determined to not be required to be borne by the indemnifying party hereunder,
the party which received such payment shall promptly refund the amount so paid
to the party which made such payment. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.

                  (f) The indemnity and contribution agreements contained in
this Section 17 shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by the
Purchaser or any person controlling the Purchaser or by or on behalf of the
Seller and their respective directors or officers or any person controlling the
Seller and (iii) acceptance of and payment for any of the Certificates.

                  SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS,
DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND
THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY TO THIS AGREEMENT.

                  SECTION 19. MISCELLANEOUS. This Agreement may be executed in
two or more counterparts, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

                  It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Seller to the Purchaser as provided in
Section 4 hereof be, and be construed as, a sale of the Mortgage Loans by the
Seller to the Purchaser and not as a pledge of the Mortgage Loans by the Seller
to the Purchaser to secure a debt or other obligation of the Seller. However, in
the event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then, (a) it is the
express intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller and (b) (1) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code; (2) the conveyance provided for in



<PAGE>


                                      -18-


Section 4 hereof shall be deemed to be a grant by the Seller to the Purchaser of
a security interest in all of the Seller's right, title and interest in and to
the Mortgage Loans and all amounts payable to the holders of the Mortgage Loans
in accordance with the terms thereof and all proceeds of the con version,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the Collection Account whether
in the form of cash, instruments, securities or other property; (3) the
possession by the Purchaser or its agent of Mortgage Notes, the related
Mortgages and such other items of property that constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the New York Uniform Commercial Code; and (4) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Purchaser for the purpose of perfecting
such security interest under applicable law.
Any assignment of the interest of the Purchaser pursuant to Section 4(d) hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Seller and the Purchaser 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 Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement and the Pooling and Servicing Agreement.



<PAGE>


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


                                             SALOMON BROTHERS MORTGAGE
                                             SECURITIES VII, INC.


                                             By:
                                                ------------------------------
                                             Name:
                                             Title:   Assistant Vice President



                                             SALOMON BROTHERS REALTY CORP.


                                             By:
                                                ------------------------------
                                             Name:
                                             Title:   Authorized Agent










<PAGE>


                                                                       EXHIBIT 1


                  [FORM OF OFFICER'S CERTIFICATE OF THE SELLER]

                          Salomon Brothers Realty Corp.

                              Officer's Certificate


                  I, ________________, hereby certify that I am the duly
appointed Authorized Agent of Salomon Brothers Realty Corp., a New York
corporation (the "Seller"), and further certify as follows:

                  1. Attached hereto is a true and correct copy of the
         Certificate of Incorporation and By-laws of the Seller, all of which
         are in full force and effect on the date hereof. There has been no
         amendment or other document filed affecting the Certificate of
         Incorporation of the Seller since December 20, 1982, and no such
         amendment has been authorized. There has been no amendment or other
         document filed affecting the By-laws of the Seller since October 7,
         1986, and no such amendment has been authorized. Attached hereto is a
         good standing certificate issued by the Secretary of State of the State
         of New York with respect to the Seller. No event has occurred since the
         date thereof that, to the best knowledge of the undersigned, has
         affected the good standing of the Seller under the laws of New York.

                  2. There are no actions, suits or proceedings pending or, to
         the best of my knowledge, threatened against or affecting the Seller
         which, if adversely determined, individually or in the aggregate, would
         materially and adversely affect the Seller's ability to perform its
         obligations under the Mortgage Loan Purchase Agreement (the "Mortgage
         Loan Purchase Agreement"), dated March __, 2000, between the Seller and
         Salomon Brothers Mortgage Securities VII, Inc (the "Depositor"). No
         proceedings looking toward merger, consolidation or liquidation,
         dissolution or bankruptcy of the Seller are pending or contemplated.

                  3. Each person who, as an officer or representative of the
         Seller, signed the Mortgage Loan Purchase Agreement and any other
         document delivered prior hereto or on the date hereof in connection
         with the purchase described in the Mortgage Loan Purchase Agreement
         was, at the respective times of such signing and delivery, and is now,
         duly elected or appointed, qualified and acting as such officer or
         representative, and the signatures of such persons appearing on such
         documents are their genuine signatures.

                  4. All of the representations and warranties of the Seller
         under the Mortgage Loan Purchase Agreement are true and correct in all
         material respects as of the Closing Date subject, in the case of the
         Closing Schedule delivered pursuant to the Mortgage Loan Purchase
         Agreement, to such amendments thereto as were duly made on or before
         the date hereof and no event has occurred with respect to the Seller
         which, with notice or the passage of time or both, would constitute a
         default under the Mortgage Loan Purchase Agreement.



<PAGE>


                                       -2-


                  5. The information set forth in the Mortgage Loan Schedule
         attached as an exhibit to the Pooling and Servicing Agreement is true
         and correct in all material respects.

                  6. The transactions contemplated in the Mortgage Loan Purchase
         Agreement will be reported as a sale in the Seller's financial reports.

                  7. With respect to its sale of the Mortgage Loans and the
         transactions and undertakings contemplated by the Mortgage Loan
         Purchase Agreement, the Seller has complied in all material respects
         with all the obligations by which it is bound and has satisfied in all
         material respects all the conditions on its part to be performed or
         satisfied prior to the Closing Date.

                  8. Capitalized terms used but not defined herein shall have
         the meanings assigned in the Mortgage Loan Purchase Agreement.



<PAGE>


                                       -3-


                  IN WITNESS WHEREOF, I have hereunto signed my name.


Dated:
                                                    By:
                                                       ------------------------
                                                    Name:
                                                    Title:     Authorized Agent



                  I, _____________________________, an ________________ of
Salomon Brothers Realty Corp., hereby certify that ________________ is a duly
appointed, qualified and acting Authorized Agent of the Seller and that the
signature appearing above is his genuine signature.

                  IN WITNESS WHEREOF, I have hereunto signed my name.

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



<PAGE>


                                                                       EXHIBIT 2

                  [FORM OF OFFICER'S CERTIFICATE OF THE SELLER]

                                   CERTIFICATE
                                       OF
                          SALOMON BROTHERS REALTY CORP.


         This Certificate is being delivered to Thacher Proffitt & Wood ("TPW")
for reliance hereon by TPW in rendering its opinion letter to which this
Certificate is annexed, dated the date hereof (the "Opinion Letter"). The
undersigned and the individual signing on its behalf understand, acknowledge and
agree that the facts set forth in the Opinion Letter have been relied upon by
TPW in rendering the Opinion Letter and by each addressee thereof and other
parties to the transactions to which the Opinion Letter relates in the
consummation of those transactions. Capitalized terms not defined herein have
the meanings assigned to them in the Opinion Letter and the Agreements.
The undersigned hereby represents, warrants, covenants and certifies after
reasonable investigation as follows:

                  Reference is made to the sale of mortgage loans (the "Mortgage
Loans") by Salomon Brothers Realty Corp. ("SBRC") to Salomon Brothers Mortgage
Securities VII, Inc. (the "Depositor") pursuant to a Mortgage Loan Purchase
Agreement, dated March __, 2000 (the "Purchase Agreement"), between the
Depositor and SBRC and the simultaneous issuance of Mortgage Pass-Through
Certificates, Series 2000-1, Class A-1, Class A-2, Class PO, Class IO, Class
B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class R-I and Class
R-II (the "Certificates"), pursuant to a Pooling and Servicing Agreement, dated
as of March 1, 2000 (the "Pooling and Servicing Agreement"), among the Depositor
as depositor, Citicorp Mortgage, Inc. as master servicer (in such capacity, the
"Master Servicer") and as Trust Administrator (in such capacity, the "Trust
Administrator"), U.S. Bank Trust National Association as co-trustee (the "Co-
trustee) and U.S. Bank National as trustee (the "Trustee"). In consideration for
its purchase of the Mortgage Loans, the Depositor will deliver to SBRC
immediately available funds. The Depositor will sell the Certificates to Salomon
Smith Barney Inc. (the "Underwriter") pursuant to the terms of an Underwriting
Agreement, dated March __, 2000 (the "Underwriting Agreement"), between the
Depositor and the Underwriter. The Purchase Agreement, the Pooling and Servicing
Agreement and the Underwriting Agreement collectively, are hereinafter referred
to as the "Agreements." Capitalized terms not otherwise defined herein have the
meanings set forth in the Agreements.

         Pursuant to the Mortgage Loan Purchase Agreement, the Seller sold the
Mortgage Loans to the Depositor for consideration (the "Mortgage Loan Purchase
Price") consisting of the cash proceeds of the sale of the Underwritten
Certificates pursuant to the Underwriting Agreement. Pursuant to the Pooling and
Servicing Agreement, the Depositor transferred the Mortgage Loans to the Trustee
in exchange for the Certificates. Pursuant to the Underwriting Agreement, the
Depositor sold the Underwritten Certificates to the Purchaser in exchange for
cash proceeds. The Depositor remitted those cash proceeds to the Seller in
payment of the Mortgage Loan Purchase Price.





<PAGE>


                                       -2-


         1. The transfer of the Mortgage Loans by the undersigned pursuant to
the Agreements was intended to be a sale and to be reported as such under
generally accepted accounting principles ("GAAP") and for federal income tax
purposes.

         2. In connection with the sale of the Mortgage Loans by the undersigned
pursuant to the Agreements, the undersigned (i) was solvent at all relevant
times prior thereto and was not rendered insolvent thereby, (ii) after giving
effect thereto, is able to pay its debts as they mature, (iii) was not left with
unreasonably small capital for the business in which it is engaged and proposes
to be engaged, (iv) had and has no intention of commencing any bankruptcy,
insolvency or similar proceeding, (v) did not and does not have any intent to
hinder, delay or defraud any of the undersigned's creditors, (vi) had a valid
business reason therefor and (vii) received new value and consideration
constituting reasonably equivalent value and fair consideration.

         3. The undersigned has not acquired, and will not acquire at any time,
any direct or indirect ownership or other economic interest in, or other right
or obligation with respect to, any Mortgage Loan or Certificate, except as
described in the Agreements.

         4. The factual assumptions in the Opinion Letter are accurate.

         The undersigned has executed this Certificate as of March __, 20000.

                                            SALOMON BROTHERS REALTY CORP.


                                            By:_________________________________
                                            Name:
                                            Title:



<PAGE>


                                                                       EXHIBIT 3

                   [FORM OF OPINION OF COUNSEL TO THE SELLER]

                                   SEE TAB 10



<PAGE>


                                                                       EXHIBIT 4

                                                    DEFINITIONS

         "Applicable Requirements" shall mean, as of the time of reference, with
respect to the Mortgage Loans and the origination, closing, pooling and
servicing thereof, all of the (a) contractual obligations of Citicorp Mortgage,
Inc. ("Citicorp") or the Seller, as applicable, including without limitation
those contractual obligations of Citicorp contained in the Transfer of
Termination Rights and Servicing Agreement, dated as of November 9, 1999,
between Citicorp and Salomon Smith Barney Inc., in any agreement with an
insurer, in the Mortgage Loan Documents; (b) all applicable federal, state and
local legal and regulatory requirements (including statutes, rules, regulations
and ordinances) binding upon Citicorp or the Seller, as applicable; (c) all
other applicable requirements and guidelines of each governmental agency, board,
commission, instrumentality and other governmental or quasi-governmental body or
officer having jurisdiction and (d) all other applicable judicial and
administrative judgments, orders, stipulations, awards, writs and injunctions.

         "Customary Servicing Procedures" shall mean procedures (including
collection procedures) that Citicorp customarily employs and exercises in
servicing and administering mortgage loans for its own account and which are in
accordance with accepted mortgage servicing practices of prudent lending
institutions.

         "Knowledge" shall mean the actual knowledge of any senior officers
(senior vice president or above) of the Seller.

         "Mortgage Loan Documents" shall mean the Mortgage Note, Mortgage,
credit and closing packages (including disclosures), custodial documents,
servicing documents, escrow documents and all other documents, records and tapes
relating to a Mortgage Loan that are required to document and service the
Mortgage Loan in accordance with Applicable Requirements, whether on hard copy,
microfiche, microfilm or its equivalent or in electronic format.




<PAGE>


                                                                       EXHIBIT 5

                  Pool Characteristics of the Mortgage Loans as delivered on the
Closing Date:

                  All percentages set forth herein are based upon the aggregate
unpaid principal balances of the Mortgage Loans as of the Cut-off Date.

         (1)      No Mortgage Loan had a Loan-to-Value Ratio in excess of
                  83.62%;

         (2)      No more than 1.74% of the Mortgage Loans (measured by the
                  Cut-off Date Principal Balance), are related to Mortgaged
                  Properties located in any one zip code area;

         (3)      Each Mortgaged Property is located in one of the states listed
                  in the chart entitled "Geographic Distribution of the
                  Mortgaged Properties" in the Prospectus Supplement;

         (4)      No more than approximately 7.45% of the Mortgage Loans
                  (measured by the Cut-off Date Principal Balance) are secured
                  by condominium units and all condominium Mortgage Loans have
                  been originated on a form acceptable to Fannie Mae or Freddie
                  Mac with such riders as have been acceptable to Fannie Mae or
                  Freddie Mac, as the case may be;

         (5)      No more than 0.45% of the Mortgage Loans (measured by the
                  Cut-off Date Principal Balance) are secured by two- to
                  four-family dwellings. None of the Mortgage Loans are secured
                  by Town Houses or Manufactured Housing. No more than 0.16% of
                  the Mortgage Loans (measured by the Cut-off Date Principal
                  Balance) are secured by dwelling units in PUDs;

         (6)      No Mortgage Loan had a principal balance in excess of $689,817
                  at origination;

         (7)      Each Mortgage Loan was originated between May 1987 and May
                  1992;

         (8)      On the basis of representations made by the Mortgagors in
                  their loan applications, no more than 6.59% of the Mortgage
                  Loans are secured by investor properties or by second homes
                  and at least 93.41% of the Mortgage Loans are owner-occupied
                  Mortgaged Properties (in each case measured by the Cut-off
                  Date Principal Balance);

         (9)      The Mortgage Rates borne by the Mortgage Loans as of the
                  Cut-off Date ranged from 8.250% per annum to 11.250% per annum
                  and the weighted average Mortgage Interest Rate as of the
                  Cut-off Date was 9.3491% per annum;

         (10)     As of the Cut-off Date, approximately 26.28% of the Mortgage
                  Loans were rate/term refinancings, approximately 21.74% of the
                  Mortgage Loans were cash out refinancings and approximately
                  51.98% of the Mortgage Loans were made to purchase the related
                  Mortgaged Properties;

<PAGE>

                                   EXHIBIT E-1
                                   -----------


                               REQUEST FOR RELEASE
                             (for Trustee/Custodian)



Loan Information
----------------

     Name of Mortgagor:       __________________________________

     Master Servicer
     Loan No.:                __________________________________

Trustee/Custodian

     Name:                    __________________________________

     Address:                 __________________________________
                              __________________________________


     Trustee/Custodian
     Mortgage File No.:       __________________________________

Depositor
---------

     Name:                SALOMON BROTHERS MORTGAGE
                              SECURITIES VII, INC.

     Address:                 __________________________________
                              __________________________________

     Certificates:            Mortgage Pass-Through Certificates,
                              Series 2000-1.






<PAGE>



          The undersigned Master Servicer hereby acknowledges that it has
received from _______________________, as Trustee for the Holders of Mortgage
Pass-Through Certificates, Series 2000-1, the documents referred to below (the
"Documents"). All capitalized terms not otherwise defined in this Request for
Release shall have the meanings given them in the Pooling and Servicing
Agreement, dated as of March 1, 2000, among the Trustee, the Depositor and the
Master Servicer (the "Pooling and Servicing Agreement").

()   Promissory Note dated _______________, 20__, in the original principal sum
     of $__________, made by _____________________, payable to, or endorsed to
     the order of, the Trustee.

()   Mortgage recorded on _________________________ as instrument no.
     ____________________ in the County Recorder's Office of the County of
     _________________, State of __________________ in book/reel/docket
     _________________ of official records at page/image _____________.

()   Deed of Trust recorded on ___________________ as instrument no.
     ________________ in the County Recorder's Office of the County of
     _________________, State of ____________________ in book/reel/docket
     _________________ of official records at page/image ______________.

()   Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
     ___________________ as instrument no. _________ in the County Recorder's
     Office of the County of _______________, State of _______________________
     in book/reel/docket ____________ of official records at page/image
     ____________.

()   Other documents, including any amendments, assignments or other assumptions
     of the Mortgage Note or Mortgage.

()   ______________________________________________

()   ______________________________________________

()   ______________________________________________

()   ______________________________________________

          The undersigned Master Servicer hereby acknowledges and agrees as
follows:

          (1) The Master Servicer shall hold and retain possession of the
     Documents in trust for the benefit of the Trustee, solely for the purposes
     provided in the Agreement.

          (2) The Master Servicer shall not cause or permit the Documents to
     become subject to, or encumbered by, any claim, liens, security interest,
     charges, writs of attachment or other impositions nor shall the Master
     Servicer assert or seek to assert any claims or rights of setoff to or
     against the Documents or any proceeds thereof.



<PAGE>




          (3) The Master Servicer shall return each and every Document
     previously requested from the Mortgage File to the Trustee when the need
     therefor no longer exists, unless the Mortgage Loan relating to the
     Documents has been liquidated and the proceeds thereof have been remitted
     to the Collection Account and except as expressly provided in the
     Agreement.

          (4) The Documents and any proceeds thereof, including any proceeds of
     proceeds, coming into the possession or control of the Master Servicer
     shall at all times be earmarked for the account of the Trustee, and the
     Master Servicer shall keep the Documents and any proceeds separate and
     distinct from all other property in the Master Servicer's possession,
     custody or control.

Dated:

                                     [Master Servicer]

                                     By:____________________________
                                     Name:__________________________
                                     Title:_________________________



<PAGE>



                                   EXHIBIT E-2
                                   -----------


                               REQUEST FOR RELEASE
                          [Mortgage Loans Paid in Full]

                     OFFICERS' CERTIFICATE AND TRUST RECEIPT
                       MORTGAGE PASS-THROUGH CERTIFICATES
                                  Series 2000-1


____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH
BENEATH HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:

WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:

ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN
MADE.

LOAN NUMBER:_________________                BORROWER'S NAME:_________________

COUNTY:______________________

WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.


__________________________________          DATED:______________________

/ /   VICE PRESIDENT

/ /   ASSISTANT VICE PRESIDENT



<PAGE>



                                   EXHIBIT F-1
                                   -----------


                    FORM OF TRANSFEROR REPRESENTATION LETTER


                                     [Date]


[Trustee]
______________________
______________________



               Re:  Salomon Brothers Mortgage Securities VII, Inc., Mortgage
                    Pass-Through Certificates, Series 2000-1, Class ___,
                    representing a ___% Class ___ Percentage Interest
                    ---------------------------------------------------------

Ladies and Gentlemen:

          In connection with the transfer by ________________ (the "Transferor")
to ________________ (the "Transferee") of the captioned mortgage pass-through
certificates (the "Certificates"), the Transferor hereby certifies as follows:

          Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
March 1, 2000, among Salomon Brothers Mortgage Securities VII, Inc. as
Depositor, Citicorp Mortgage, Inc. as Master Servicer and Trust Administrator
and U.S. Bank National Association as Trustee (the "Pooling and Servicing
Agreement"), pursuant to which Pooling and Servicing Agreement the Certificates
were issued.




<PAGE>



          Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.

                                         Very truly yours,

                                         [Transferor]

                                         By:__________________________
                                         Name:________________________
                                         Title:_______________________





<PAGE>



                    FORM OF TRANSFEREE REPRESENTATION LETTER


                                                 [Date]


[Trustee]





               Re:  Salomon Brothers Mortgage Securities VII, Inc., Mortgage
                    Pass-Through Certificates, Series 2000-1, Class ___,
                    representing a ___% Class ___ Percentage Interest
                    ---------------------------------------------------------

Ladies and Gentlemen:

          In connection with the purchase from ______________________ (the
"Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:

          1. The Transferee is a "qualified institutional buyer" as that term is
     defined in Rule 144A ("Rule 144A") under the Securities Act of 1933 (the
     "1933 Act") and has completed either of the forms of certification to that
     effect attached hereto as Annex 1 or Annex 2. The Transferee is aware that
     the sale to it is being made in reliance on Rule 144A. The Transferee is
     acquiring the Certificates for its own account or for the account of a
     qualified institutional buyer, and understands that such Certificate may be
     resold, pledged or transferred only (i) to a person reasonably believed to
     be a qualified institutional buyer that purchases for its own account or
     for the account of a qualified institutional buyer to whom notice is given
     that the resale, pledge or transfer is being made in reliance on Rule 144A,
     or (ii) pursuant to another exemption from registration under the 1933 Act.

          2. The Transferee has been furnished with all information regarding
     (a) the Certificates and distributions thereon, (b) the nature, performance
     and servicing of the Mortgage Loans, (c) the Pooling and Servicing
     Agreement referred to below, and (d) any credit enhancement mechanism
     associated with the Certificates, that it has requested.




<PAGE>




          All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of March 1, 2000, among Salomon Brothers Mortgage Securities VII, Inc.
as Depositor, Citicorp Mortgage, Inc. as Master Servicer and Trust Administrator
and U.S. Bank National Association as Trustee, pursuant to which the
Certificates were issued.


                                      [TRANSFEREE]

                                      By:______________________________
                                      Name:____________________________
                                      Title:___________________________





<PAGE>


                                                          ANNEX 1 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

          [For Transferees Other Than Registered Investment Companies]

          The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and U.S. Bank National Association, as Trustee, with respect
to the mortgage pass- through certificates (the "Certificates") described in the
Transferee Certificate to which this certification relates and to which this
certification is an Annex:

          1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

          2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Transferee owned and/or
invested on a discretionary basis $______________________1 in securities (except
for the excluded securities referred to below) as of the end of the Transferee's
most recent fiscal year (such amount being calculated in accordance with Rule
144A) and (ii) the Transferee satisfies the criteria in the category marked
below.

     ___  CORPORATION, ETC. The Transferee is a corporation (other than a bank,
          savings and loan association or similar institution), Massachusetts or
          similar business trust, partnership, or any organization described in
          Section 501(c)(3) of the Internal Revenue Code of 1986.

     ___  BANK. The Transferee (a) is a national bank or banking institution
          organized under the laws of any State, territory or the District of
          Columbia, the business of which is substantially confined to banking
          and is supervised by the State or territorial banking commission or
          similar official or is a foreign bank or equivalent institution, and
          (b) has an audited net worth of at least $25,000,000 as demonstrated
          in its latest annual financial statements, a copy of which is attached
          hereto.

     ___  SAVINGS AND LOAN. The Transferee (a) is a savings and loan
          association, building and loan association, cooperative bank,
          homestead association or similar institution, which is supervised and
          examined by a State or Federal authority having supervision over any
          such institutions or is a foreign savings and loan association or
          equivalent institution and (b) has an audited net worth of at least

_________________________

1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.




<PAGE>



          $25,000,000 as demonstrated in its latest annual financial statements,
          A COPY OF WHICH IS ATTACHED HERETO.

     ___  BROKER-DEALER. The Transferee is a dealer registered pursuant to
          Section 15 of the Securities Exchange Act of 1934.

     ___  INSURANCE COMPANY. The Transferee is an insurance company whose
          primary and predominant business activity is the writing of insurance
          or the reinsuring of risks underwritten by insurance companies and
          which is subject to supervision by the insurance commissioner or a
          similar official or agency of a State, territory or the District of
          Columbia.

     ___  STATE OR LOCAL PLAN. The Transferee 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 Transferee is an employee benefit plan within the
          meaning of Title I of the Employee Retirement Income Security Act of
          1974.

     ___  INVESTMENT ADVISOR. The Transferee is an investment advisor registered
          under the Investment Advisers Act of 1940.

          3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee 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 Transferee, the Transferee
used the cost of such securities to the Transferee and did not include any of
the securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Transferee may have included securities owned by
subsidiaries of the Transferee, but only if such subsidiaries are consolidated
with the Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee's direction. However, such
securities were not included if the Transferee is a majority-owned, consolidated
subsidiary of another enterprise and the Transferee is not itself a reporting
company under the Securities Exchange Act of 1934.

          5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor 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 Transferee may be in reliance on Rule 144A.

    ___   ___    Will the Transferee be purchasing the Certificates

<PAGE>

    Yes   No     only for the Transferee's own account?

          6. If the answer to the foregoing question is "no", the Transferee
agrees that, in connection with any purchase of securities sold to the
Transferee for the account of a third party (including any separate account) in
reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.

          7. The Transferee 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 Transferee's purchase of the Certificates will
constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties
updated annual financial statements promptly after they become available.

Dated:


                                    Print Name of Transferee


                                    By:_____________________________
                                    Name:___________________________
                                    Title:__________________________





<PAGE>



                                                          ANNEX 2 TO EXHIBIT F-1
                                                          ----------------------


            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That Are Registered Investment Companies]


          The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and U.S. Bank National Association, as Trustee, with respect
to the mortgage pass- through certificates (the "Certificates") described in the
Transferee Certificate to which this certification relates and to which this
certification is an Annex:

          1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

          2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as defined in Rule 144A because (i) the
Transferee is an investment company registered under the Investment Company Act
of 1940, and (ii) as marked below, the Transferee alone, or the Transferee'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
Transferee's most recent fiscal year. For purposes of determining the amount of
securities owned by the Transferee or the Transferee's Family of Investment
Companies, the cost of such securities was used.

____      The Transferee owned $___________________ in securities (other than
          the excluded securities referred to below) as of the end of the
          Transferee's most recent fiscal year (such amount being calculated in
          accordance with Rule 144A).

____      The Transferee 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
          Transferee's most recent fiscal year (such amount being calculated in
          accordance with Rule 144A).

          3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

          4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee'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,



<PAGE>



(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.

          5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will continue
to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.

          6. The undersigned will notify the parties to which this certification
is made of any changes in the information and conclusions herein. Until such
notice, the Transferee's purchase of the Certificates will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.

Dated:

                                      _____________________________________
                                      Print Name of Transferee or Advisor


                                      By:__________________________________
                                      Name:________________________________
                                      Title:_______________________________


                                      IF AN ADVISER:

                                      _____________________________________
                                      Print Name of Transferee






<PAGE>



                    FORM OF TRANSFEREE REPRESENTATION LETTER


          The undersigned hereby certifies on behalf of the purchaser named
below (the "Purchaser") as follows:

          1. I am an executive officer of the Purchaser.

          2. The Purchaser is a "qualified institutional buyer", as defined in
     Rule 144A, ("Rule 144A") under the Securities Act of 1933, as amended.

          3. As of the date specified below (which is not earlier than the last
     day of the Purchaser's most recent fiscal year), the amount of
     "securities", computed for purposes of Rule 144A, owned and invested on a
     discretionary basis by the Purchaser was in excess of $100,000,000.


Name of Purchaser _____________________________________________________________

By: (Signature) _______________________________________________________________

Name of Signatory _____________________________________________________________

Title _________________________________________________________________________

Date of this certificate ______________________________________________________

Date of information provided in paragraph 3 ___________________________________





<PAGE>


                                   EXHIBIT F-2
                                   -----------


                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF NEW YORK    )
                     : ss.:
COUNTY OF NEW YORK   )


          ______________________ , being duly sworn, deposes, represents and
warrants as follows:

          1. I am a ______________________ of ____________________________ (the
"Owner") a corporation duly organized and existing under the laws of
______________, the record owner of Salomon Brothers Mortgage Securities VII,
Inc., Mortgage Pass-Through Certificates, Series 2000-1, [Class R-I] [and Class
R-II] (the "Class R Certificates"), on behalf of whom I make this affidavit and
agreement. Capitalized terms used but not defined herein have the respective
meanings assigned thereto in the Pooling and Servicing Agreement pursuant to
which the Class R Certificates were issued.

          2. The Owner (i) is and will be a "Permitted Transferee" as of
____________________, 200___ and (ii) is acquiring the Class R Certificates for
its own account or for the account of another Owner from which it has received
an affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a "disqualified organization"
means the United States, any state or political subdivision thereof, any agency
or instrumentality of any of the foregoing (other than an instrumentality all of
the activities of which are subject to tax and, except for the Federal Home Loan
Mortgage Corporation, a majority of whose board of directors is not selected by
any such governmental entity) or any foreign government, international
organization or any agency or instrumentality of such foreign government or
organization, any rural electric or telephone cooperative, or any organization
(other than certain farmers' cooperatives) that is generally exempt from federal
income tax unless such organization is subject to the tax on unrelated business
taxable income.

          3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
or, if such transfer is through an agent (which person includes a broker,
nominee or middleman) for a non-Permitted Transferee, on the agent; (iii) that
the person otherwise liable for the tax shall be relieved of liability for the
tax if the transferee furnishes to such person an affidavit that the transferee
is a Permitted Transferee and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that each of the
Class R Certificates may be a "noneconomic residual interest" within the meaning
of proposed Treasury regulations promulgated under the Code and that the
transferor of a "noneconomic residual interest" will remain liable for any taxes
due with respect to the income on such residual



<PAGE>

interest, unless no significant purpose of the transfer is to impede the
assessment or collection of tax.

          4. The Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificates if, at any time during the taxable year of the
pass-through entity, a non-Permitted Transferee is the record holder of an
interest in such entity. (For this purpose, a "pass-through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)

          5. The Owner is aware that the Trustee will not register the transfer
of any Class R Certificate unless the transferee, or the transferee's agent,
delivers to the Trustee, among other things, an affidavit in substantially the
same form as this affidavit. The Owner expressly agrees that it will not
consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.

          6. The Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to constitute a reasonable
arrangement to ensure that the Class R Certificates will only be owned, directly
or indirectly, by an Owner that is a Permitted Transferee.

          7. The Owner's taxpayer identification number is ___________________.

          8. The Owner has reviewed the restrictions set forth on the face of
the Class R Certificates and the provisions of Section 5.02(d) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(d)); and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.

          9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of any tax.

          10. The Owner anticipates that it will, so long as it holds
the Class R Certificates, have sufficient assets to pay any taxes owed by the
holder of such Class R Certificates, and hereby represents to and for the
benefit of the person from whom it acquired the Class R Certificates that the
Owner intends to pay taxes associated with holding such Class R Certificates as
they become due, fully understanding that it may incur tax liabilities in excess
of any cash flows generated by the Class R Certificates.

          11. The Owner has no present knowledge that it may become insolvent or
subject to a bankruptcy proceeding for so long as it holds the Class R
Certificates.

          12. The Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.




<PAGE>



          13. The Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or entity that will
not have sufficient assets to pay any taxes owed by the holder of such Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.

          14. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, obtain from its transferee the representations
required by Section 5.02(d) of the Pooling and Servicing Agreement under which
the Class R Certificate were issued and will not consummate any such transfer if
it knows, or knows facts that should lead it to believe, that any such
representations are false.

          15. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, deliver to the Trustee an affidavit, which represents
and warrants that it is not transferring the Class R Certificates to impede the
assessment or collection of any tax and that it has no actual knowledge that the
proposed transferee: (i) has insufficient assets to pay any taxes owed by such
transferee as holder of the Class R Certificates; (ii) may become insolvent or
subject to a bankruptcy proceeding for so long as the Class R Certificates
remains outstanding; and (iii) is not a "Permitted Transferee".

          16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States may be included 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.



<PAGE>



          IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
__________, 200___.

                                     [OWNER]


                                     By:________________________________
                                     Name:______________________________
                                     Title:    [Vice] President


ATTEST:


By:____________________________
Name:__________________________
Title:   [Assistant] Secretary




          Personally appeared before me the above-named , known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Vice] President of the Owner, and acknowledged to me that [he/she]
executed the same as [his/her] free act and deed and the free act and deed of
the Owner.

          Subscribed and sworn before me this ____ day of __________, 200___.



                                     ___________________________________
                                                  Notary Public


                                     County of ________________________
                                     State of _________________________

                                     My Commission expires:





<PAGE>


                          FORM OF TRANSFEROR AFFIDAVIT

STATE OF NEW YORK      )
                       : ss. :
COUNTY OF NEW YORK )


          ______________________________, being duly sworn, deposes, represents
and warrants as follows:


1.   I am a ____________________ of _____________________________ (the "Owner"),
a corporation duly organized and existing under the laws of ______________, on
behalf of whom I make this affidavit.

          2. The Owner is not transferring the [Class R-I][and Class R-II] (the
"Residual Certificates") to impede the assessment or collection of any tax.

          3. The Owner has no actual knowledge that the Person that is the
proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.

          4. The Owner understands that the Purchaser has delivered to the
Trustee a transfer affidavit and agreement in the form attached to the Pooling
and Servicing Agreement as Exhibit F-2. The Owner does not know or believe that
any representation contained therein is false.

          5. At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically paid
its debts as they became due and has found no significant evidence to indicate
that the Purchaser will not continue to pay its debts as they become due in the
future. The Owner understands that the transfer of a Residual Certificate may
not be respected for United States income tax purposes (and the Owner may
continue to be liable for United States income taxes associated therewith)
unless the Owner has conducted such an investigation.

          6. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement



<PAGE>



          IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
___________, 200___.

                                     [OWNER]


                                     By:_______________________________
                                     Name:_____________________________
                                     Title:     [Vice] President


ATTEST:


By:_______________________________
Name:_____________________________
Title:    [Assistant] Secretary




          Personally appeared before me the above-named , known or proved to me
to be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.

          Subscribed and sworn before me this ____ day of __________, 200___.



                                            ___________________________________
                                                      Notary Public


                                            County of ______________________
                                            State of _______________________

                                            My Commission expires:






<PAGE>



                                    EXHIBIT G
                                    ---------


            FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE

                                                _____________, 200__

Salomon Brothers Mortgage Securities VII, Inc.
390 Greenwich Street
New York, New York 10013

U.S. Bank National Association,
180 East Fifth Street
St. Paul, Minnesota 55101

Citicorp Mortgage, Inc.
15851 Clayton Road
Ballwin, Missouri 63011


               Re: Salomon Brothers Mortgage Securities VII, Inc.
                   Mortgage Pass-Through Certificates, Series 2000-1, Class__
                   ----------------------------------------------------------

Dear Sirs:

          __________________________________ (the "Transferee") intends to
acquire from _____________________ (the "Transferor") $____________ Initial
Certificate Principal Balance of Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 2000-1, [Class B-1][Class B-2][Class
B-3][Class B-4][Class B-5][Class B-6] (the "Certificates"), issued pursuant to a
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") dated as
of March 1, 2000 among Salomon Brothers Mortgage Securities VII, Inc. as
depositor (the "Depositor"), Citicorp Mortgage, Inc. as master servicer (in such
capacity, the "Master Servicer") and as trust administrator (in such capacity,
the "Trust Administrator") and U.S. Bank National Association as trustee (the
"Trustee"). Capitalized terms used herein and not otherwise defined shall have
the meanings assigned thereto in the Pooling and Servicing Agreement. The
Transferee hereby certifies, represents and warrants to, and covenants with the
Depositor, the Trustee and the Master Servicer that the following statements in
either (1) or (2) are accurate:

         _____ (1) The Certificates (i) are not being acquired by, and will not
         be transferred to, any employee benefit plan within the meaning of
         section 3(3) of the Employee Retirement Income Security Act of 1974, as
         amended ("ERISA"), or other retirement arrangement, including
         individual retirement accounts and annuities, Keogh plans and bank
         collective investment funds and insurance company general or separate
         accounts in which such plans, accounts or arrangements are invested,
         that is subject to Section 406 of ERISA or Section 4975 of the Internal
         Revenue Code of 1986 (the "Code") (any of the



<PAGE>



         foregoing, a "Plan"), (ii) are not being acquired with "plan assets" of
         a Plan within the meaning of the Department of Labor ("DOL")
         regulation, 29 C.F.R. ss. 2510.3-101, and (iii) will not be transferred
         to any entity that is deemed to be investing in plan assets within the
         meaning of the DOL regulation at 29 C.F.R. ss. 2510.3-101; or

         _____ (2) The purchase of Certificates is permissible under applicable
         law, will not constitute or result in any prohibited transaction under
         ERISA or Section 4975 of the Code, will not subject the Depositor, the
         Trustee or the Master Servicer to any obligation in addition to those
         undertaken in the Pooling and Servicing Agreement and the transferee is
         an insurance company and (A) the source of funds used to purchase such
         Certificate is an "insurance company general account" (as such term is
         defined in PTCE 95-60), (B) the conditions set forth in PTCE 95-60 have
         been satisfied and (C) there is no Plan with respect to which the
         amount of such general account's reserves and liabilities for contracts
         held by or on behalf of such Plan and all other Plans maintained by the
         same employer (or any "affiliate" thereof, as defined in PTCE 95-60) or
         by the same employee organization, exceeds 10% of the total of all
         reserves and liabilities of such general account (as determined under
         PTCE 95-60) as of the date of the acquisition of such Certificates.

                                             Very truly yours,

                                             __________________________________

                                             By:_______________________________
                                             Name:
                                             Title:



<PAGE>

                                    EXHIBIT H
                                    ---------

                           FORM OF OMNIBUS ASSIGNMENT
                           --------------------------


     U.S. BANK NATIONAL ASSOCIATION, as trustee for the registered holders of
Salomon Brothers Mortgage Securities VII, Inc., Series __________ (the
"Assignor") for good and valuable consideration, the receipt and sufficiency of
which are acknowledged, hereby sells, transfers, assigns, delivers, sets-over
and conveys (without representation, warranty or recourse) to U.S. BANK NATIONAL
ASSOCIATION, as trustee for the registered holders of Salomon Brothers Mortgage
Securities VII, Inc., Floating Rate Mortgage Pass-Through Certificates, Series
__________, its successors and assigns, all right, title and interest of the
Assignor in and to:



     All of the Mortgage Loans listed on the attached Exhibit A.








     IN WITNESS WHEREOF, Assignor has executed this instrument to be effective
as of the __ day of ______, 200_



                                        U.S. BANK NATIONAL ASSOCIATION, as
                                        trustee for the registered holders of
                                        Salomon Brothers Mortgage Securities
                                        VII, Inc., Series ______


                                        By:____________________________________
                                        Name:
                                        Title:



<PAGE>



                                    EXHIBIT I
                                    ---------

                     FORM OF REPORT PURSUANT TO SECTION 4.07

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549

                                    Form 10-K

     Annualreport pursuant to Section 13 or 15(d) of the Securities Exchange
          Act of 1934 (Fee Required). For fiscal year ended __________

                        Commission file number: 333-84249

                 Salomon Brothers Mortgage Securities VII, Inc.
       (AS DEPOSITOR UNDER THE POOLING AND SERVICING AGREEMENT DATED AS OF
                                 MARCH 1, 2000,
        PROVIDING FOR THE ISSUANCE OF MORTGAGE PASS-THROUGH CERTIFICATES
                                 SERIES 2000-1)
--------------------------------------------------------------------------------

             (Exact name of registrant as specified in its charter)

               Delaware                                13-3439681
               -------------                           ---------------
      (State or Other Jurisdiction                (I.R.S. Employer
            of Incorporation                     Identification Number)

                         390 Greenwich Street, 4th Floor
                            New York, New York 10013
                     --------------------------------------
                       (Address of Principal  (Zip Code)
                        Executive Offices)

                  Registrant's telephone number: (212) 816-6000

           Securities registered pursuant to Section 12(b) of the Act:

                                      None

           Securities registered pursuant to Section 12(g) of the Act:

                                      None




<PAGE>



Indicate whether the Registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
                           X  YES                  No
                         -----                -----

Item 1.  Business:

         Not applicable

Item 2.  Properties:

         Not applicable

Item 3.  Legal Proceedings:

         None

Item 4.  Submission of Matters to a Vote of Security-Holders

         None

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

         To the best knowledge of the registrant there is no established public
         trading market for the certificates.

         There are approximately _____ holders of record as of the end of the
         reporting year.

Item 6.  Selected Financial Data.

         Not applicable.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

         Not applicable

Item 8.  Financial Statements and Supplementary Data.

         Not applicable.

Item 9.  Changes in and Disagreements With Accountants on Accounting and
         Financial Disclosure

         None



<PAGE>




Item 10.

         Not applicable

Item 11.  Executive Compensation

         Not applicable

Item 12.  Security Ownership of Certain Beneficial Owners and Management

         Not applicable

Item 13.  Certain Relationships and Related Transactions

         Not applicable

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

         a)   The company filed on Form 8-K, separately for each
              distribution date, the distribution of funds related to the
              trust for each of the following distribution dates:

                  Distribution Date              Form 8-K Filing Date
                  -----------------              --------------------
                  ____________________           ______________________
                  ____________________           ______________________
                  ____________________           ______________________

         b)   99.1     Annual Report of Independent Public Accountants' as to
                       master servicing activities or servicing activities, as
                       applicable

                       (a)   Citicorp Mortgage, Inc., as master servicer

              99.2     Annual Statement of Compliance with obligations under
                       the Pooling and Servicing Agreement or servicing
                       agreement, as applicable, of:

                       (a)   Citicorp Mortgage, Inc., as master servicer

         Such document (i) is not filed herewith since such document was not
         received by the Reporting Person at least three business days prior to
         the due date of this report; and (ii) will be included in an amendment
         to this report on Form 10-K/A to be filed within 30 days of the
         Reporting Person's receipt of such document.



<PAGE>



Signatures

          Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

Date: ___________

Salomon Brothers Mortgage Securities VII, Inc. by Citicorp Mortgage, Inc., as
Trust Administrator for Salomon Brothers Mortgage Securities VII, Inc. Floating
Rate Mortgage Pass- Through Certificates, Series _______,

By:__________________________
Name:
Title:
Company:



<PAGE>



                                   Schedule 1
                                   ----------


                             MORTGAGE LOAN SCHEDULE

                                [FILED BY PAPER]



<PAGE>


                                   Schedule 2
                                   ----------

        MORTGAGE LOAN SCHEDULE WITH RESPECT TO MORTGAGE LOANS WITH LOAN-
               TO-VALUE RATIOS IN EXCESS OF 80% THAT HAVE PRIMARY
                           MORTGAGE INSURANCE POLICES

                                [FILED BY PAPER]