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Independent Auditors' Report on Uniform Single Attestation Program
for Mortgage Bankers

The Board of Directors
Peoples Heritage Financial Group, Inc.:

We have examined  management's  assertion about Family Bank, FSB, and its wholly
owned subsidiary  Peoples Heritage  Mortgage ("the Bank's")  compliance with the
minimum  servicing  standards set forth in the Mortgage  Bankers  Association of
America's Uniform Single Attestation  Program for Mortgage Bankers as of and for
the year  ended  December  31,  1999  included  in the  accompanying  management
assertion.  Management  is  responsible  for the  Bank's  compliance  with those
minimum  servicing  standards.  Our  responsibility  is to express an opinion on
management's assertion about the Bank's compliance based on our examination.

Our  examination  was  made in  accordance  with  standards  established  by the
American  Institute of Certified Public Accountants and,  accordingly,  included
examining,  on a test  basis,  evidence  about the  Bank's  compliance  with the
minimum  servicing   standards  and  performing  such  other  procedures  as  we
considered  necessary  in the  circumstances.  We believe  that our  examination
provides a reasonable basis for our opinion.  Our examination does not provide a
legal  determination  on  the  Bank's  compliance  with  the  minimum  servicing
standards.

In our  opinion,  management's  assertion  that,  except  for the  noncompliance
described  below,   the  Bank  complied  in  all  material   respects  with  the
aforementioned minimum servicing standards as of and for the year ended December
31, 1999 is fairly stated, in all material respects.

As discussed in management's assertion, the following instances of noncompliance
were reported as of December 31, 1998 but were resolved as of December 31, 1999:


1. USAP states that reconciliations shall be prepared on a monthly basis for all
   custodial   bank   accounts  and  related   bank   clearing   accounts.   The
   reconciliation  shall be prepared within  forty-five (45) calendar days after
   the cutoff date and  reconciling  items shall be resolved  within ninety (90)
   calendar days of their original identification.

   The Bank had several Principal and Interest and Taxes and Insurance custodial
   accounts that were not reconciled  timely throughout the year. Since accounts
   were not reconciled  timely,  there were many reconciling  items that did not
   get cleared within 90 days of identification.

2. USAP states  that funds of the  servicing  entity  shall be advanced in cases
   where there is an overdraft in an investors' or mortgagors' account.

   Throughout 1998, the Bank had investors'  custodial accounts where funds were
   not advanced to cover overdrafts.

3. USAP states that taxes and insurance  payments shall be made on or before the
   penalty or insurance policy  expiration  dates, as indicated on the tax bills
   and insurance premium notices,  respectively,  provided that such support has
   been  received by the  servicing  entity at least thirty (30)  calendar  days
   prior to these dates.

   The Bank had  several  tax and  insurance  payments  that  were not paid on a
   timely basis, mostly from September through December, 1998.

4. USAP states  that  adjustments  on ARM loans  shall be computed  based on the
   related mortgage note and any ARM rider.

   The Bank had several ARM loans that were not being computed properly.


KPMG LLP
January 18,2000