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                                                                EXHIBIT 10.2


                 SUBSERVICING AND TRANSITION SERVICES AGREEMENT

                 THIS SUBSERVICING AND TRANSITION SERVICES AGREEMENT (this
"Agreement"), dated as of January 31, 1996, by and between First Nationwide
Mortgage Corporation, a Delaware corporation ("Principal") and Lomas Mortgage
USA, Inc., a Connecticut corporation ("Subservicer").  Principal and
Subservicer are referred to jointly as the "Parties," or individually as a
"Party."


                                    RECITALS

                 WHEREAS, pursuant to that certain Section 363 Asset Sale
Agreement, amended and restated as of January 4, 1996 (the "Asset Sale
Agreement"), by and between Principal and Subservicer, Principal acquired (the
"Acquisition") from Subservicer the servicing rights to certain mortgage loans,
together with certain other assets, as more fully set forth in the Asset Sale
Agreement; and

                 WHEREAS, Principal and Subservicer desire that, in order to
provide for the orderly transfer and conversion of the servicing rights to
Principal's operations systems, for a period of time following the Acquisition
as set forth herein, Subservicer shall provide the subservicing and other
transition-related services set forth herein;

                 NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, agreements, representations and warranties contained herein,
and intending to be legally bound hereby, the Parties hereto do hereby agree as
follows:


                                   ARTICLE I

                                  DEFINITIONS

                 For all purposes of this Agreement, except as expressly
provided herein or unless the context requires otherwise, the following terms
shall have the meanings specified in this Article I and the Asset Sale
Agreement.  The definitions of such terms are equally applicable to
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the singular and plural forms of such terms and to the masculine, feminine and
neuter genders of such terms.

                 1.1         "Agency":  FHA, VA, FmHA, FNMA, FHLMC, the Texas
Veterans' Land Board or a State Agency, as applicable.

                 1.2         "Agreement":  As defined in the first paragraph of
this Agreement.

                 1.3         "Ancillary Income":  As defined in Section 3.1
hereof.

                 1.4         "Asset Sale Agreement":  As defined in the
recitals hereof.

                 1.5         "Business Day":  Any day other than (a) a Saturday
or Sunday, or (b) a day on which banking institutions in the State of Texas are
authorized or obligated by law or by executive order to be closed.

                 1.6         "Conventional Loan":  A Mortgage Loan which is not
insured by FHA or FmHA or guaranteed by VA.

                 1.7         "Conversion Date":  For any Mortgage Loan, the
date the servicing of such Mortgage Loan shall have been fully converted and
transferred from Subservicer's operating systems to those of Principal.

                 1.8         "Effective Date":  January 31, 1996.

                 1.9         "Custodial Accounts":  All escrow, impound,
suspense (loan level and other) and custodial accounts maintained with respect
to the Mortgage Loans for purposes of receiving and disbursing payments of
principal, interest, taxes, insurance, assessments and similar charges (and
interest, if any, accrued on such funds for the benefit of mortgagors) relating
to Mortgage Loans.

                 1.10        "Custodial Interest Amount":  As defined in
Section 3.4 hereof.

                 1.11        "FHA":  The Federal Housing Administration of the
Department of Housing and Urban Development of the United States of America or
their respective successors.

                 1.12        "FHLMC":  The Federal Home Loan Mortgage
Corporation or any successor thereto.




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                 1.13        "FmHA":  The Farmers Home Administration, now
known as the Rural Housing and Community Development Service.

                 1.14        "FNMA":  The Federal National Mortgage Association
or any successor thereto.

                 1.15        "Government Loan":  A Mortgage Loan the payments
of which are partially or fully insured by FHA or FmHA or guaranteed by VA.

                 1.16        "Guides":  All Mortgage Loan-related published
guidance of FHA, FHLMC, FmHA, FNMA, HUD, VA and any private mortgage insurers,
including without limitation mortgagee letters, announcements, circulars,
handbooks and manuals which establish requirements or procedures applicable to
the origination, administration, pooling, servicing or subservicing of the
Mortgage Loans or claims against FHA or FmHA, VA or a provider of private
mortgage insurance in connection therewith.

                 1.17        "Investor":  Any Person who owns a Mortgage Loan
or mortgage-backed securities backed by a Mortgage Loan, or the servicing
rights or master servicing rights to a Mortgage Loan or mortgage-backed
securities backed by a Mortgage Loan, subserviced, serviced or master serviced
by Principal pursuant to a Servicing Agreement.

                 1.18        "IRS":  United States Internal Revenue Service.

                 1.19        "Loan Documents":  As defined in the Asset Sale
Agreement.

                 1.20        "Mortgage" -- With respect to a Mortgage Loan, a
mortgage, deed of trust or other security instrument creating a lien upon real
property and any other property described therein which secures a Note,
together with any assignment, reinstatement, extension, endorsement or
modification of any thereof.

                 1.21        "Mortgage Insurance":  A contract with FHA, FmHA,
VA or a private mortgage insurer insuring or guaranteeing full or partial
payment of principal, interest and related expenses of a Mortgage Loan.

                 1.22        "Mortgage Loan":  Any "Mortgage Loan" as such term
is defined in the Asset Sale Agreement.





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                 1.23        "Mortgage Pool Insurance":  A contract of
insurance issued with respect to a pool of Mortgage Loans generally covering
Investor losses not covered by PMI.

                 1.24        "Mortgagor":  The Person(s) obligated to make the
payments under the terms of the Mortgage Loan.

                 1.25        "Note" -- with respect to a Mortgage Loan, a
promissory note or notes, or other evidence of indebtedness, with respect to
such Mortgage Loan secured by a Mortgage or Mortgages, together with any
assignment, reinstatement, extension, endorsement or modification thereof.

                 1.26        "NSF Fees":  Fees charged to Mortgagors for checks
returned for insufficient funds.

                 1.27        "Party":  As defined in the first paragraph of
this Agreement.

                 1.28        "Person":  Any individual, corporation, company,
partnership (limited or general), joint venture, association, trust or other
entity.

                 1.29        "PMI":  Private mortgage insurance excluding FHA,
FmHA or VA coverage.

                 1.30        "Principal":  As defined in the first paragraph of
this Agreement.

                 1.31        "Private Investors":  Any Investor other than an
Agency.

                 1.32        "Private Servicing Agreements":  The agreements or
arrangements between Principal and a Private Investor pursuant to which
Principal services the Mortgage Loans owned by the Private Investor.

                 1.33        "Regulations":  (i) Federal, state and local laws,
rules and regulations with respect to the origination, insuring, purchase,
sale, pooling, servicing, subservicing, master servicing or filing of claims in
connection with a Mortgage Loan, (ii) the responsibilities and obligations
relating to the Mortgage Loans set forth in any agreement between Principal and
an Agency, Investor or Mortgage Insurer (including, without limitation,
Servicing Agreements and Guides), (iii) the laws, rules, regulations,
guidelines, handbooks and other





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requirements of an Investor, Agency, Mortgage Insurer, public housing program
or Investor program with respect to the origination, insuring, purchase, sale,
pooling, servicing, subservicing, master servicing or filing of claims in
connection with a Mortgage Loan and (iv) the terms and provisions of the Loan
Documents.

                 1.34        "Servicing":  The rights and obligations with
respect to servicing the Mortgage Loans under the Guides and the Servicing
Agreements.

                 1.35        "Servicing Advance":  An advance of funds which is
required or permitted pursuant to applicable Regulations to be made in
connection with the performance of the Subservicing Functions, including
advances related to the maintenance of hazard insurance, payment of property
taxes or Mortgage Insurance premiums, advances to pay reasonable expenditures
related to foreclosure proceedings, reasonable expenditures related to the
defense of any lawsuit to defend title to any property subject to a Mortgage
Loan or to defend title to any property acquired as a result of a foreclosure,
and all expenses incurred in making repairs to any property subject to a
Mortgage Loan, advances necessary due to deficiencies in the amount of
principal, interest or escrow payments received by Subservicer, and other
advances to pay third party expenses related to the servicing of Mortgage
Loans.

                 1.36        "Servicing Agreements":  The Agency contracts and
Private Servicing Agreements pursuant to which the Mortgage Loans are serviced,
master serviced and subserviced.

                 1.37        "State Agency":  Any state agency with
authority to regulate the business of Subservicer or Principal, determine the
investment or servicing requirements with regard to loans originated, purchased
or serviced by Subservicer or Principal, or otherwise participate in or promote
mortgage lending.

                 1.38        "Subservicer":  As defined in the first paragraph
of this Agreement.

                 1.39        "Subservicing Functions":  The Servicing functions
to be performed by Subservicer with respect to the Mortgage Loans, as specified
in Section 2.1.

                 1.40        "Term":   As defined in Section 7.3





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                 1.41        "VA":  The Department of Veteran's Affairs of the
United States of America or any successor thereto.

                 1.42        "VA Loans" -- Mortgage Loans which are guaranteed
by the VA, or which were intended by the Subservicer to be guaranteed by the
VA, or with respect to which a representation has been made to the mortgagor
(in a commitment letter, truth-in-lending disclosure statement or otherwise in
writing) that such Mortgage Loan is or will be guaranteed by the VA.

                 1.43        "VA No-Bid" -- A delinquent VA Loan with respect
to which the VA has notified Principal or Subservicer that the VA intends to
exercise its option to pay the amount guaranteed by the VA and relinquish all
rights in the collateral securing such VA Loan to Principal or Subservicer.


                                   ARTICLE II

                             SUBSERVICING FUNCTIONS

                 2.1         Subservicing Functions.  Commencing on the
Effective Date, and continuing throughout the Term, Subservicer shall perform
certain services, referred to herein as the "Subservicing Functions", with
respect to each Mortgage Loan, as follows:

                             (a)    distribute payment media to Mortgagors and
         receive and process daily all Mortgage Loan payments through, if
         servicer so elects, Subservicer's existing depository bank
         relationships;

                             (b)    set up and manage Custodial Accounts,
         including accounting for custodial funds and reconciling balances in
         accordance with Investor reporting requirements;

                             (c)    timely make all appropriate escrow deposits
         and disbursements including taxes, assessments and other public
         charges, hazard and flood insurance premiums, FHA, FmHA or PMI
         insurance premiums and (subject to Section 3.3 hereof) Servicing
         Advances;





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                             (d)    prepare, balance and submit Mortgage Loan
         reports required under the Servicing Agreements and the Guides;

                             (e)    where required by the Investor, prepare and
         forward to Investors all remittances with respect to the Mortgage
         Loans;

                             (f)    provide Principal with all information
         necessary or reasonably requested by Principal to enable Principal to
         file IRS reports covering Mortgage Loan payments and remittances and
         file all IRS reports incident to the Servicing of the Mortgage Loans
         covering the period comprising the Term;

                             (g)    provide and handle all Mortgage Insurance
         delinquency notices;

                             (h)    handle or, as appropriate, supervise,
         monitor and carry out, collection actions, delinquency management
         activities, bankruptcy actions, foreclosure proceedings, workouts and
         other loss mitigation activities and Mortgage Insurance claim
         submissions with respect to the Mortgage Loans;

                             (i)    timely and accurately process Mortgage Loan
         payoffs and provide for the timely release of mortgages;

                             (j)    assure that the improvements on the
         premises securing each Mortgage Loan are insured by a hazard insurance
         policy and, if applicable, using its best efforts, a flood insurance
         policy that satisfies the applicable Regulations;

                             (k)    furnish to Principal standard monthly
         management reports substantially in the form of Schedule I and any
         special reports which Principal and Subservicer may agree, with the
         cost of such special reports to be paid by Principal;

                             (l)    provide customer service, including without
         limitation, answering telephone calls, responding to inquiries from
         customers regarding their respective accounts, correcting customers'
         accounts, notifying Mortgagors and processing ARM adjustments,
         handling assumptions and partial re-





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         leases, performing escrow analysis and providing reports and
         remittances to Investors;

                             (m)    timely and accurately perform all master
         servicing functions with respect to those Mortgage Loans for which
         Principal owns the rights to the master servicing thereof; and

                             (n)    such other functions as are necessary and
         consistent with subservicing of mortgage loans that are generally
         accepted in the mortgage industry.

Subservicer shall perform all Subservicing Functions only in accordance in all
material respects with applicable law, the appropriate FHA, FmHA, VA and Agency
requirements, the Servicing Agreements, the FNMA/FHLMC servicing guides, all
other applicable Regulations and generally accepted prudent mortgage banking
practices.  In subservicing the Mortgage Loans for Principal, Subservicer shall
exercise at least the same degree of care and skill it presently exercises in
servicing loans for Investors.  Without limiting the foregoing, where
applicable, Subservicer shall comply in all material respects with the
regulations of FHA, FmHA, VA and providers of PMI, as applicable, including
without limitation the giving of all notices and submitting of all claims
required to be given or submitted to FHA, FmHA, VA or a provider of PMI, as
applicable, to the end that the full benefit of the insurance or guaranty in
connection with Mortgage Loans that are insured or guaranteed by FHA, FmHA, VA
or a provider of PMI will inure to the Investor, Principal or Subservicer, as
their interests may appear.

                 2.2         Title to Servicing.  The Parties agree that legal
title to the Servicing is held by Principal. Any obligations established in the
Servicing Agreements incident to the origination, sale or servicing of the
Mortgage Loans and not specifically set forth in this Agreement shall be the
responsibility of Principal.  Principal shall be responsible for complying with
any repurchase obligations as may be required by the Servicing Agreements,
provided that Subservicer shall provide to Principal, within five (5) Business
Days following its receipt of a repurchase demand from an Investor, notice of
such repurchase demand and any instructions with respect to such repurchase
demands.





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                 2.3         Additional Services.  If there are services in
addition to the Subservicing Functions which Principal desires Subservicer to
perform with respect to the Mortgage Loans, Principal shall present a request
to Subservicer identifying the services to be performed. Such additional
services shall be performed on the terms agreed to by the Parties.

                 2.4         Foreclosure/Bankruptcy Administration Expenses.
Principal shall be responsible for any Servicing Advances or any
nonreimbursable expenses, including attorney fees, or losses incurred in
connection with, or as a result of, foreclosure and bankruptcy proceedings
involving the Mortgage Loans.  Subservicer may utilize the same outside counsel
and third party services for foreclosure and bankruptcy proceedings as are
utilized in servicing its own servicing portfolio unless specifically requested
by Principal to discontinue the use of any such vendor.  Subservicer will
prepare a final accounting of each foreclosure and Principal will reimburse
Subservicer as to any unreimbursed expenses and losses on such Mortgage Loans.
Provided however, Subservicer shall not be reimbursed for losses or expenses
incurred as a result of its material non-performance nor shall subservicing
fees be paid to Subservicer on Mortgage Loans in foreclosure or in bankruptcy
for those additional months required to finalize cases as a result of
Subservicer's non-performance.

                 2.5         Property Disposition.  If so directed by
Principal, Subservicer will perform tasks associated with property disposition
including property management, maintenance, marketing and repairs, on terms
agreed to by the Parties.

                 2.6         Notice to Investors/Principal.  Subservicer shall
notify the Investor and Principal when it becomes aware of any matter,
condition or event that would, in Subservicer's reasonable judgment, materially
impair an Investor's security with respect to the Mortgage Loan (including,
without limitations, VA No-bids and denied mortgage insurance or guaranty
claims), or Principal's interest in the Servicing on such Mortgage Loan.

                 2.7         Litigation.  Any litigation with respect to the
Mortgage Loans shall be managed by Principal unless it is agreed by the Parties
that other arrangements should be made.  Any transmittal of litigation to





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Principal shall be made in writing directed to the attention of the Principal's
in-house counsel in accordance with the notice provisions hereof.  Subservicer
shall cooperate in obtaining or making available information or documents
respecting Mortgage Loans involved in litigation as may be reasonably requested
by Principal or its counsel.  Subservicer shall not be responsible for any
costs, expenses or liabilities, including attorneys' fees, related to
litigation unless such arises as a result of Subservicer not complying in all
material respects with the terms of this Agreement or Investor requirements and
guidelines.


                                  ARTICLE III

                 PAYMENT OF FEES, INCOME, EXPENSES AND ADVANCES

                 3.1         Ancillary Income.  Subservicer may charge
Mortgagors ancillary fees related to the performance of the Subservicing
Functions and for services or products provided, including late charges, NSF
fees, assumption fees and other incidental fees or charges, in all cases in a
manner consistent with its past practices (collectively, "Ancillary Income") as
are permitted by all applicable Regulations.  Principal shall be entitled to
all such Ancillary Income.

                 3.2         Payment of Servicing Fees.  Subservicer shall
remit to Principal all servicing fees collected on any Mortgage Loan no later
than the second Business Day following the day on which such fees are received,
net of amounts due Subservicer, if any, under Sections 3.3 or 3.4 and net of
any guarantee fee.  Subservicer shall provide to Principal a daily statement of
the servicing fees collected on the Mortgage Loans based on the Mortgagor
payments received by Subservicer.  No later than the fifth Business Day after
the applicable Investor cut-off date of each month Subservicer shall provide a
statement setting forth in reasonable detail the prior month's servicing fees.

                 3.3         Advances.  (a) Principal shall be responsible for
funding all Servicing Advances required to be made by Subservicer pursuant to
this Agreement by forwarding to Subservicer, within one (1) Business Day
following Subservicer's written notice to Principal requesting such funding
(which notice shall include reasonable documentation of all such Servicing
Advances for which





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funding is requested) the amount of Servicing Advances for which funding is
requested by Subservicer.  Subservicer shall utilize funds received from
Principal in accordance with this Section 3.3(a) solely to fund Servicing
Advances required to be made by Subservicer under this Agreement or otherwise
under applicable requirements and in accordance with the purposes set forth in
its written request to Principal, and for no other purposes whatsoever.  Upon
collection of Servicing Advances by Subservicer from time to time, such
collections shall be promptly applied in full, to the extent thereof, in the
following order of priority:  (i) to reimburse Principal for any unrecouped
Servicing Advances disbursed to Subservicer and (ii) to reimburse Subservicer
for any unrecouped Servicing Advances disbursed by Subservicer from
Subservicer's corporate resources if Subservicer has elected in any instance to
fund Servicing Advances from its own corporate resources.

                 (b) Subservicer shall diligently endeavor to collect and
recover from Mortgagors all Servicing Advances made by Subservicer which are
not timely paid by, but which are the ultimate obligations of, the Mortgagors.

                 3.4         Interest on Custodial Accounts.  Subservicer shall
be responsible for calculating and posting in Mortgagors' respective accounts
on behalf of Principal any interest due to such Mortgagors on funds deposited
in the Custodial Accounts as may be required by applicable Regulations.
Principal shall be responsible for funding such amount (the "Custodial Interest
Amount") of all such interest advances by forwarding to Subservicer within one
(1) Business Day following Subservicer's written notice to Principal requesting
such funding (which notice shall include reasonable documentation of such
Custodial Interest Amount for which funding is requested) the Custodial
Interest Amount for which funding is requested by Subservicer.  Subservicer
shall utilize funds received from Principal in accordance with this Section 3.4
solely to fund Custodial Interest Amount required to be made by Subservicer
under this Agreement or otherwise under applicable requirements and in
accordance with the purposes set forth in its written request to Principal, and
for no other purposes whatsoever.  No later than the fifth Business Day of each
month, Subservicer shall provide Principal with a schedule setting forth in
reasonable detail the calculation of the Custodial Interest Amount for the
prior month.





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                 3.5         Subservicing Fee.  In consideration for
Subservicer's performance of the Subservicing Functions and the other
administrative and transition-related services provided for herein, Principal
shall pay to Subservicer on a monthly basis, with respect to those active
Mortgage Loans for which Subservicer performs the Subservicing Functions and
other services hereunder at the beginning of such month (A) for all such
Mortgage Loans with respect to which Principal owns the rights to the primary
servicing thereof, an amount equal to the product of (i) $7.08 multiplied by
(ii) the total number of such Mortgage Loans, (B) for all such Mortgage Loans
with respect to which Principal owns the rights to the subservicing thereof, an
amount equal to the aggregate of all monthly fees which Principal shall be
entitled to receive as the subservicer of such Mortgage Loans and (C) for all
such Mortgage Loans with respect to which Principal owns the rights to the
master servicing thereof, an amount equal to the sum of (i) the aggregate
amount of all costs actually incurred by Subservicer during such month in
performing its obligations hereunder with respect to such Mortgage Loans
(including a reasonable allocation of Subservicer's personnel costs, it being
understood that such allocation may include certain personnel costs not
historically allocated to master servicing functions) plus (ii) an amount equal
to $5,000.00 multiplied by the number of business days in such month (the
amount payable by Principal on a monthly basis pursuant to this Section 3.5 is
referred to herein as the "Subservicing Fee"), provided, however, that the
portion of the Subservicing Fee attributable to any Mortgage Loan, for any
month in which the Conversion Date with respect to such Mortgage Loan shall
have occurred, shall be prorated for the number of calendar days elapsed in the
month prior to and including the Conversion Date.  No later than the fifth
Business Day of each month, Subservicer shall provide Principal with a
statement detailing the calculation of the Subservicing Fee for the prior
month.  Within three (3) Business Days following its receipt of such statement,
Principal shall pay the Subservicing Fee for the previous month to Subservicer.


                                   ARTICLE IV

                                   INSURANCE

                 4.1         Maintenance of Fidelity Bond and Errors and
Omissions Insurance.  Principal and Subservicer each





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hereby agrees to obtain and maintain at its own expense, and shall furnish each
other with satisfactory evidence of, a blanket fidelity bond and errors and
omission/mortgage impairment insurance policy which shall be maintained in full
force and effect throughout the Term covering their respective officers and
employees and other Persons acting on their behalf in their respective
capacities as Principal and Subservicer with regard to the Mortgage Loans.  The
issuer, type and amount of coverage shall be at least equal to the most
restrictive of the Agencies' requirements, if such party were servicing the
Mortgage Loans for such Agency in addition to other mortgage loans being
serviced by such party for such Agency.  In the event that any such bond or
policy shall cease to be in effect, Principal and Subservicer, as the case may
be, shall obtain from an insurer a replacement bond and policy meeting the
above requirements.  No provision of this Section shall operate to diminish,
restrict or otherwise limit Principal's or Subservicer's responsibilities and
obligations as set forth in this Agreement.


                                   ARTICLE V

                              TRANSITION SERVICES

                 5.1         Conversion Procedures.  Subservicer shall comply
with Principal's reasonable instructions for conversion of all mortgage data to
Principal's data processing and record keeping systems, at Principal's expense.
Delivery of all documents and data requested by Principal shall be in
accordance with procedures set forth herein and such other procedures as
Principal may reasonably request.

                 5.2         Transfer of Loan Documents.  During the Term, at
such time and in such manner as Principal shall reasonably request in advance,
Subservicer shall deliver to Principal, and shall bear the cost of the transfer
and delivery of, the Loan Documents other than any Loan Documents held by a
custodian in a custodial file.  Subservicer shall comply with all reasonable
requirements of Principal relating to such delivery.  Subservicer shall pay for
insured shipping by bulk transfer or other customary industry practice of any
Loan Documents, and such documents shall be delivered to the location specified
by Principal within five (5) Business Days after Principal's request for such
deliv- ery, or as soon as





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practicable given the size of the request, except for foreclosure files, which
shall be so delivered within twenty (20) Business Days.  All Loan Documents or
other documents transferred from Subservicer to Principal from time to time in
connection herewith shall be appropriately boxed or packaged and all transfers
shall be accompanied by an inventory sheet specifically listing and identifying
each enclosed item.

                 5.3         Custodial Files.  Subservicer shall assign to
Principal any custodial agreements which Principal shall elect to assume during
the Term.  Principal shall be responsible for obtaining any necessary Investor
approvals regarding any new custodial arrangements required by Principal with
respect to the Mortgage Loans.  Any fees charged by Subservicer's custodians
due to termination of existing custodial agreements during the  Term (including
terminations made at the request of Principal), and any costs incurred in
transferring files or documents to or from any custodian shall be borne by
Subservicer.  Principal shall pay all custodial fees of any custodian engaged
by Principal.  At least thirty (30) days prior to the date on which Principal
intends to move any custodial files, Principal shall provide Subservicer with
written notice of the name and address of the custodian to which control of any
custodial files is to be transferred.

                 5.4         Forwarding Post-Conversion Date Items.  With
respect to any checks, other funds or documents in respect of any Mortgage Loan
which are received by Subservicer or made payable to Subservicer and provided
to Subservicer within thirty (30) calendar days after the applicable Conversion
Date, and which relate to any payments due under the Mortgage Loans and
collectible by the servicer under the terms of the Servicing Agreements,
Subservicer shall, after identification, promptly endorse such checks or
transfer such other funds to Principal without recourse and send the same to
Principal via overnight mail.  Any checks or other funds in respect of any
Mortgage Loan which are received by Subservicer after such thirty (30) day
period shall be endorsed without recourse by Subservicer to Principal and sent
by first class mail to Principal within five (5) Business Days of receipt,
without identification.  Except as otherwise provided herein, Subservicer shall
promptly forward by first class mail to Principal all borrower correspondence,
insurance notices, tax bills or any other correspondence or documentation
related to the Mortgage Loans





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which are received by Subservicer after the applicable Conversion Date.
Subservicer shall have no obligation with respect to forwarding post-Conversion
Date items to Principal after one-hundred and twenty (120) calendar days
following the applicable Conversion Date.

                 5.5         Notice to Mortgagors, Insurers and Others.
Subservicer shall, at its own expense (no later than fifteen (15) days prior to
the applicable Conversion Date in the case of (d) below), and in each case in
accordance with applicable Regulations:

                             (a)  notify all mortgage insurers, including FHA,
FmHA, VA and all issuers of private mortgage insurance, by certified mail,
return receipt requested, that all insurance premium billings for the Mortgage
Loans must be sent to Principal after the applicable Conversion Date, request
that such mortgage insurers change the endorsement of applicable insurance
policies to read in favor of Principal and provide Principal with copies of the
certified mail receipts;

                             (b)  transmit to applicable tax service agents or
applicable taxing authorities, as appropriate, notification of the transfer of
the Servicing to Principal and instructions to deliver all notices and tax
bills and insurance statements, as the case may be, to Principal from and after
the applicable Conversion Date;

                             (c)  transmit to applicable hazard or flood
insurance companies and/or agents notification of the transfer of Servicing to
Principal and instructions to deliver all notices and insurance statements to
Principal from and after the applicable Conversion Date.  Such notification
shall request that any applicable hazard or flood insurance companies and/or
agents make any notations necessary to indicate the changed mortgagee; and

                             (d)  mail to the mortgagor of each mortgage
securing a Mortgage Loan a letter advising the mortgagor of the transfer of the
Servicing to Principal, the form and content of which letter shall have been
approved by Principal.

                 5.6         Assignment of Mortgages and Endorsement of Notes.
To the extent required by applicable law or the applicable Investor or Insurer,
immediately following the Effective Date, Subservicer shall prepare, execute





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and (i) record with the appropriate state or local recording offices
assignments to Principal of the Mortgages securing the Mortgage Loans,
including, without limitation, blanket assignments wherever possible and
permitted by the applicable Investor and (ii) provide Principal with an
endorsement of each of the Notes.  Subservicer shall arrange for each
assignment to be forwarded to Principal after recordation.  Subservicer shall
cooperate with Principal with respect to Principal's obligation to assign
Mortgages to Investors, including providing Principal with the identity of any
contractors preparing assignments of Mortgages to Principal on behalf of
Subservicer.


                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

                 6.1         Principal. Principal represents and warrants to 
Subservicer that:

                             (a)    Principal is (i) a corporation duly
         organized, validly existing and in good standing under the laws of the
         State of Delaware and (ii) duly qualified to transact any and all of
         its business, including the Servicing of the Mortgage Loans;

                             (b)    the execution, delivery and performance of
         this Agreement have been duly authorized by all necessary corporate
         action on the part of Principal and the execution and delivery of this
         Agreement by Principal and the performance of and compliance with the
         terms hereof by it will not (i) violate, contravene or create a
         default under any applicable federal, state or local laws, licenses or
         permits or (ii) violate, contravene or create a default under (x) any
         organizational document of the Principal or (y) any contract,
         agreement or instrument to which the Principal is a party or by which
         Principal or any of its property is bound, except, in the case of
         clause (y), for such violations, contravention or defaults which would
         not, individually or in the aggregate, have a material adverse effect
         on Principal's ability to perform its obligations hereunder;

                             (c)    the execution and delivery of this Agreement
         by Principal and the performance of and





                                       16
<PAGE>   17
         compliance with its obligations and covenants do not require the
         consent or approval of any governmental authority or, if such consent
         or approval is required, it has been obtained as of the date of this
         Agreement;

                             (d)    assuming the due authorization and valid
         execution and delivery of this Agreement by Subservicer, this
         Agreement, when executed and delivered by Principal, will constitute a
         valid, legal and binding obligation of Principal, enforceable against
         Principal in accordance with its terms, except as the enforcement may
         be limited by applicable debtor relief laws and except as certain
         equitable remedies may not be available regardless of whether
         enforcement is sought in equity or law.

                 6.2         Subservicer.  Subservicer represents and warrants
to Principal that:

                             (a)    Subservicer is (i) a corporation duly
         organized, validly existing and in good standing under the laws of the
         State of Connecticut and (ii) duly qualified to transact any and all
         of its business, including the Subservicing Functions assumed in this
         Agreement;

                             (b)    the execution, delivery and performance of
         this Agreement have been duly authorized by all necessary corporate
         action on the part of Subservicer and the execution and delivery of
         this Agreement by Subservicer and the performance of and compliance
         with the terms hereby by it will not (i) violate, contravene or create
         a default under any applicable federal, state or local laws, licenses
         or permits or (ii) violate, contravene or create a default under (x)
         any charter document or bylaw of Subservicer or (y) any contract,
         agreement or instrument to which the Subservicer is a party or by
         which Subservicer or any of its property is bound, except, in the case
         of clause (y), for such violations, contravention or defaults which
         would not, individually or in the aggregate, have a material adverse
         effect on Subservicer's ability to perform the Subservicing Functions
         or any of its other obligations hereunder;

                             (c)    the execution and delivery of this
         Agreement by Subservicer and the performance of and





                                       17
<PAGE>   18
         compliance with its obligations and covenants do not require the
         consent or approval of any governmental authority or, if such consent
         or approval is required, it has been obtained as of the date of this
         Agreement;

                             (d)    assuming the due authorization and valid
         execution and delivery of this Agreement by Principal, this Agreement,
         when executed and delivered by Subservicer, will constitute a valid,
         legal and binding obligation of Subservicer, enforceable against
         Subservicer in accordance with its terms, except as the enforcement
         may be limited by applicable debtor relief laws and except as certain
         equitable remedies may not be available regardless of whether
         enforcement is sought in equity or law;

                             (e)    there is no litigation pending or, to
         Subservicer's knowledge, threatened, which, if determined adversely to
         Subservicer, would adversely affect the execution, delivery or
         enforceability of this Agreement or Subservicer's ability to perform
         its obligations hereunder;

                             (f)    Subservicer (i) is qualified (A) by FHA as
         a mortgagee and servicer for FHA Loans, (B) by the VA as a lender and
         servicer for VA Loans, (C) by FNMA and FHLMC as a seller/servicer of
         first mortgages to FNMA and FHLMC, and (D) by FmHA as required in
         connection with the origination and servicing of FmHA Loans; and (ii)
         has all other certifications, authorizations, licenses, permits and
         other approvals (together with the items set forth in clause (i)
         above, the "Licenses") necessary to conduct the Subservicing
         Functions, and is in good standing under all applicable federal, state
         and local laws and regulations thereunder as a mortgage lender and
         servicer, and has complied with all such Licenses, and knows of no
         threatened suspension, cancellation or invalidation of, or penalties
         (including fines or refunds) under, any such License; and

                             (g)    Subservicer has in full force and effect
         all insurance necessary to perform its obligations hereunder,
         including without limitation (i) an adequate errors and omissions
         policy or policies satisfying the requirements of all applicable
         regulatory authorities, other governmental entities or





                                       18
<PAGE>   19
         other third parties with respect to its operations and (ii) a standard
         mortgage banker's blanket bond.


                                  ARTICLE VII

                         DEFAULT; TERM AND TERMINATION

                 7.1         Default by Subservicer.  Principal may terminate
this Agreement upon the happening of any one or more of the following events:

                             (a)    any inaccuracy when made in any material
         respect of any representation or warranty of Subservicer contained in
         this Agreement and failure of Subservicer to cure the condition or
         event causing any such representation or warranty to be inaccurate
         within thirty (30) days or such longer period as may be required by
         Subservicer acting with due diligence after Subservicer's receipt of
         written notice from Principal requesting that such inaccuracy be cured
         or corrected; or

                             (b)    failure of Subservicer to duly observe or
         perform in any material respect any covenant, condition or term in
         this Agreement which breach continues for a period of thirty (30) days
         or such longer period as may be required by Subservicer acting with
         due diligence after receipt of written notice by Subservicer from
         Principal specifying such failure and requesting that it be remedied.

If any of the events giving rise to a termination right specified in (a) or (b)
above shall occur, Subservicer shall give notice of such occurrence to
Principal promptly following the occurrence of such event. Any such termination
shall be effective as of the date stated in a written notice delivered to
Subservicer.

                 7.2         Default by Principal.  Subservicer may terminate
this agreement upon the happening of any one or more of the following events:

                             (a)    any inaccuracy when made in any material
         respect of any representation or warranty of Principal contained in
         this Agreement and failure of Principal to cure the condition or event
         causing any such representation or warranty to be inaccurate within
         thirty (30) days or such longer period as may





                                       19
<PAGE>   20
         be required by Principal acting with due diligence after Principal's
         receipt of written notice from Subservicer requesting that such
         inaccuracy be cured or corrected; or

                             (b)    failure of Principal to duly observe or
         perform in any material respect any covenant, condition or term of
         this Agreement which breach shall continue for a period of thirty (30)
         days or such longer period as may be required by Principal acting with
         due diligence after receipt of written notice by Principal from
         Subservicer, specifying such breach and requesting that it be
         remedied.

If any of the events giving rise to a termination right specified in (a) or (b)
above shall occur, Principal shall give notice of such occurrence to
Subservicer promptly following the occurrence of such event. Any such
termination shall be effective as of the date stated in a written notice
delivered to Principal.

                 7.3         Term.  The term of this Agreement (the "Term")
shall commence on the Effective Date and shall continue through, and this
Agreement shall terminate on  the earlier of (a) any termination of this
Agreement in accordance with the provisions of Section 7.1 or Section 7.2, or
(b) 90 days following the final Conversion Date, but in no event later than
June 30, 1996, provided, however, that, notwithstanding the foregoing,
Subservicer's obligations hereunder with respect to all Mortgage Loans for
which Principal owns the rights to the master servicing thereof shall terminate
upon the earlier to occur of (i) the effective date of any agreement between
Principal and Residential Information Services Limited Partnership ("RIS") with
respect to the master servicing of such Mortgage Loans and (ii) the final
Conversion Date for the Mortgage Loans (other than those for which Principal
owns the rights to the master servicing).  Upon any termination of this
Agreement, each Party shall assist the other Party in the orderly termination
of this Agreement and shall take all reasonable actions necessary for the
orderly and undisrupted continuation of business by all parties affected
hereby.





                                       20
<PAGE>   21
                 7.4         Loss of License, Qualifications.  In the event
that, at any time during the Term, Subservicer ceases to be licensed and
qualified by any of the Agencies as set forth in clause (i) of Section 6.2(f)
hereof, then Subservicer shall cease to be a "subservicer" of the Mortgage
Loans but shall continue to perform all of its obligations under this
Agreement, including without limitation those obligations referred to as
"Subservicing Functions," except that, (a) within thirty days following
Subservicer's notice to Principal of its failure to be so licensed or
qualified, Subservicer shall notify all Mortgagors in accordance with
applicable Regulations that Principal will be responsible for servicing the
Mortgage Loans thereafter and that checks to be mailed for purposes of
remitting payments to Principal shall be made payable to Principal, (b)
Subservicer shall provide all other notices to such other Persons and (c) the
Parties shall cooperate with each other and take all such further action as
shall be necessary to properly service the Mortgage Loans in accordance with
all applicable Regulations.

                 7.5         Principal's Right to Supplement Services.
Notwithstanding anything to the contrary contained herein, in the event that
Subservicer shall fail to observe or perform in any material respect any
covenant, condition or term in this Agreement which breach continues for 30
days after notice to Subservicer from Principal, Principal shall have the
right, in lieu of terminating this Agreement in accordance with Section 7.1, to
take any and all actions necessary or appropriate to allow it to perform the
services or other obligations of Subservicer under this Agreement for such
period as Subservicer shall continue to fail to perform such covenants or
obligations (including, without limitations, hiring additional employees to
perform functions which would otherwise be the responsibilities of
Subservicer's employees or contracting with third parties to provide those
services and functions which Subservicer has failed to continue providing
hereunder).  Principal shall be entitled to a reduction of any Subservicing Fee
otherwise payable by it under this Agreement in an amount equal to all
reasonably documented out-of-pocket costs and expenses incurred by Principal in
connection with any actions taken by it pursuant to its rights under this
Section 7.5 during such month to which the Subservicing Fee relates.


                                  ARTICLE VIII





                                       21
<PAGE>   22
                                INDEMNIFICATION

                 8.1         Indemnification by Principal.  Principal shall
indemnify and hold Subservicer harmless from and shall reimburse Subservicer
for any losses, damages, claims, causes of action or expenses of any nature
(including reasonable attorney's fees) incurred by Subservicer which arise out
of or result from:

                             (a)    the inaccuracy of any representation of
         Principal contained in this Agreement or breach of any warranty made
         by, or the failure to observe or perform any covenant or agreement
         made or to be performed by, Principal pursuant to this Agreement; or

                             (b)    Principal's failure to fulfill the
         Servicing responsibilities not assumed by Subservicer.

                 8.2         Indemnification by Subservicer.  Subservicer shall
indemnify and hold Principal harmless from and shall reimburse Principal for
any losses, damages, claims, causes of action or expenses of any nature
(including reasonable attorney's fees) incurred by Principal which arise out of
or result from:

                             (a)    the inaccuracy of any representation of
         Subservicer contained in this Agreement or breach of any warranty made
         by, or the failure to observe or perform any covenant or agreement
         made or to be performed by, Subservicer pursuant to this Agreement; or

                             (b)    Subservicer's failure to perform the
         Subservicing Functions assumed by Subservicer;

provided, however, that the limitations set forth in Section 7.1(h) of the
Asset Sale Agreement shall not be applicable to this Section 8.2.


                                   ARTICLE IX

                                 MISCELLANEOUS

                 9.1         Non-Solicitation.  From and after the date hereof,
neither Subservicer nor any of its affiliates shall, during the remaining term
of any of the





                                       22
<PAGE>   23
Mortgage Loans (i) take any action, by telephone, by mail or otherwise, to
solicit the prepayment of the Mortgage Loans by the Mortgagors, in whole or in
part, (ii) take any action intended to facilitate or encourage the
correspondents of Subservicer or any of its affiliates that originated the
Mortgage Loans to solicit the prepayment of the Mortgage Loans by the
Mortgagors, in whole or in part, or (iii) disseminate to any third party, for
compensation or otherwise, any complete or partial list of the Mortgagors on
the Mortgage Loans, for the purpose of soliciting the prepayment of Mortgage
Loans; provided, that this provision shall not prohibit Subservicer or any of
its affiliates from providing such lists in any judicial proceedings or in
response to a request by a government entity, Agency or Investor.

                 9.2         Books and Records; Access.

                             (a)     Subservicer shall maintain the Loan
         Documents in accordance with applicable requirements.

                             (b)     During the Term, Principal and its
         officers, employees, representatives and agents shall have full and
         complete access to all of the properties, books, records, computer
         discs and tapes and all other information involving the business and
         operations of Subservicer relating to the Mortgage Loans and to
         Subservicer's procedures and Subservicer shall cause its officers,
         directors, employees, representatives and agents, during normal
         business hours and upon reasonable notice, to discuss the business
         affairs, operations, assets and liabilities of Subservicer with
         Principal and its directors, officers, employees, agents and others,
         as Principal considers necessary or appropriate for the purpose of
         overseeing and supervising the operations of Subservicer pursuant to
         this Agreement.

                             (c)     In order to facilitate the oversight and
         supervisory functions of Principal, Subservicer shall provide to
         Principal (and its agents and representatives), without charge (except
         with respect to online computer access), office space at Subservicer's
         servicing facility in Dallas, Texas and reasonable use of all
         facilities available at that site, including without limitation desks
         and chairs, telephones, personal computer equipment and





                                       23
<PAGE>   24
         telecopy and copying machines.  Such space and facilities shall be
         provided throughout the Term.

                             (d)    Subservicer shall furnish Principal with
         its internally prepared financial statements on a monthly basis, and
         promptly furnish annually its audited financial statements, uniform
         single audit and Investor compliance audits which relate to
         Subservicer's residential servicing portfolio as they may be performed
         from time to time. Subservicer shall also furnish Principal any
         "management letters" prepared by its outside accountants which reflect
         on internal controls and procedures relating to Subservicer respon-
         sibilities to Principal. Subservicer shall work with its outside
         accountants and Principal to ensure that work done by the outside
         accountants relating to the annual Investor compliance audits may be
         relied upon to the maximum extent possible by Principal's outside
         auditors.

                             (e)    Subservicer shall advise Principal in
         writing of any pending, or to the best of Subservicer's knowledge
         threatened, action, by way of a proceeding or otherwise, to revoke or
         limit any license, permit, authorization or approval issued or granted
         by any federal, state or local government quasi- governmental body, or
         any agency or instrumentally thereof, including without limitation the
         Agencies, necessary for Subservicer to conduct its business, or to
         impose any penalty or other disciplinary sanction in connection with
         any of them, or any sanction that would materially adversely affect
         Subservicer's business.  Subservicer shall immediately notify
         Principal of any failure or anticipated failure on its part to observe
         or perform any warranty, representation, covenant or agreement
         required to be observed or performed by it hereunder.

                 9.3         Management Meetings.  As often as practicable but
not less frequently than once per month, Principal shall cause members of its
senior management team to meet with members of the senior management team of
Subservicer, at Subservicer's headquarters in Dallas, Texas, for the purpose of
reviewing Subservicer's business and operations, the status of the transfer and
conversion of the servicing of the Mortgage Loans to Principal's system and
such other matters as reasonably relate to the business and operations of
Subservicer.





                                       24
<PAGE>   25
                 9.4         Costs and Expenses.  Except as otherwise provided
in this Agreement, each Party shall pay its own costs and expenses.

                 9.5         Confidentiality of Information.  Principal and
Subservicer and their affiliates shall, and shall cause their respective
directors, officers, employees and authorized representatives to hold in strict
confidence and not use or disclose to any other Person or entity, without the
prior written consent of the other Party, all information concerning customers
or proprietary business procedures, servicing fees or prices, policies or plans
of the other Party or any of its affiliates received by them from the other
Party in connection with the transactions contemplated hereby.

                 9.6         Survival.  None of the covenants, representations
or warranties contained herein, or in any document delivered or to be delivered
pursuant hereto, other than those contained in Sections 9.1 and 9.5, shall
survive any termination of this Agreement.

                 9.7         Notices.  All notices, requests, demands and other
communications which are required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given upon delivery.
Notice may be delivered in person, by mail or by express delivery. In the case
of mailing, such notice shall be sent by registered or certified mail, return
receipt requested, postage prepaid, to the address stated in the Asset Sale
Agreement or to such other address as Principal or Subservicer shall have
specified in writing to the other.

                 9.8         Entire Agreement, Amendment.  This Agreement and
the Asset Sale Agreement (including the exhibits and schedules thereto)
constitute the entire agreement between the Parties with respect to the matters
set forth herein and supersede all prior agreements with respect thereto.  This
Agreement may be amended by an instrument in writing signed by the Parties.
Any provision of this Agreement may be waived, but only in a written instrument
signed by the Party against whom such waiver is sought to be enforced.

                 9.9         No Third Party Rights.  Nothing in this Agreement,
express or implied, shall confer on any Person other than the Parties hereto
and their respective suc-





                                       25
<PAGE>   26
cessors and assigns, any rights, obligations, remedies or liabilities.

                 9.10        Headings.  Headings on the Articles and Sections
in the Agreement are for reference purposes only and shall not be deemed to
have any substantive effect.

                 9.11        Applicable Laws.  This Agreement shall be
construed in accordance with and governed by the laws of the state of Texas
without application of its principles covering conflicts of law.

                 9.12        Incorporation of Exhibits.  Any exhibit or
schedule attached hereto shall be incorporated herein and shall be understood
to be a part hereof as though included in the body of this Agreement.

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

                 9.14        Successors; Assignment.  This Agreement shall be
binding upon, and extend to the benefit of the respective successors of the
Parties; provided, however, the rights and obligations of any Party under this
Agreement may not be assigned by such Party without the written consent of the
other Party, which consent shall not be unreasonably withheld.

                 9.15        Severability.  If any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.





                                       26
<PAGE>   27
                 IN WITNESS WHEREOF, each of the undersigned parties to this
Agreement has caused this Agreement to be duly executed by one of its duly
authorized officers, all as of the date first above written.

                                           "SUBSERVICER"
                                           Lomas Mortgage USA, Inc.



                                           By: /s/ MARK M. FELDMAN
                                               ---------------------------------

                                           Name: Mark M. Feldman
                                                 -------------------------------

                                           Title: Executive Vice President
                                                  ------------------------------

                                           "PRINCIPAL"
                                           First Nationwide Mortgage Corporation


                                           By: /s/ STEPHEN SIMCOCK
                                               ---------------------------------

                                           Name: Stephen Simcock
                                                 -------------------------------

                                           Title: Vice - President
                                                  ------------------------------





                                       27
<PAGE>   28
                                   SCHEDULE I

                     OWNED SERVICING -- FNMA/FHLMC/PRIVATES

1.       Investor Cut-Off Reports

         FNMA
         o       Pool to Security Reports and Range Reports
         o       Expected Cash Reports and Range Reports
         o       Pool Deficiency Reports
         o       FNMA Turnaround Reports
         o       FNMA Shortage/Surplus Reconciliations
         o       Standard FNMA Accounting Package (to include trial balance,
                 collection report, paid in full, curtailments paid in advance
                 and delinquent reports)

         FHLMC
         o       Cash Activity Analysis (Remittance Analysis)
         o       FHLMC Adjustment Letters
         o       Expected Cash Reports
         o       Standard FHLMC Accounting Package (to include trial balance,
                 collection report, paid in full, curtailments paid in advance
                 and delinquent reports)

         PRIVATES
         o       Pool to Security Reports and Summaries
         o       Expected Cash Reports and Summaries
         o       Standard Private Accounting Package (to include trial balance,
                 collection report, paid in full, curtailments paid in advance
                 and delinquent reports)

2.       Custodial Reconciliations to Cash Book and Expected Cash

3.       Cash activity summarized from (1) CSM 718 report (provide Monthly
         Remittance Recap and Daily Summary of Advances) and (2) Schedule of
         P&I Advances & Recoveries.

4.       Loan Servicing portfolio activity status, which reflects
         month-to-month changes (beginning balance, new loans, paid in full,
         amortization, ending balance) in number of loans and principal balance
         by Investor (ESSRMF03).

5.       Delinquency report by Investor, which reflects number and balance of
         loans past due by delinquency category with ratios (MRKPR072).

6.       Foreclosure report, which reflects number of loans and principal
         balance by status, i.e., referred, sold, conveyed, etc.





                                       28
<PAGE>   29
7.       Bankruptcy report, which includes relevant information, including past
         due status summary.

8.       Foreclosure claim loss report for each loan case finalized during the
         month.

9.       Reporting on servicing portfolio geographic statistics (ESSRSA08).

10.      REO status report, if applicable.

11.      Reports tracking activities relating to escrow administration, ARM
         adjustments, assumptions, partial releases and other servicing-related
         activities.

12.      P&I Advance to General Ledger Reconciliation

13.      T&I Advance to General Ledger Reconciliation





                                       29