HOME LOAN TRUST 2001-HI1

                                     Issuer

                                       AND

                            THE CHASE MANHATTAN BANK

                                Indenture Trustee



                                    INDENTURE

                          Dated as of February 22, 2001



                             HOME LOAN-BACKED NOTES





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                                TABLE OF CONTENTS

Section                                                                                   Page

ARTICLE I

        Definitions

<S>     <C>                                                                                 <C>
        1.01.      Definitions...............................................................2
        1.02.      Incorporation by Reference of Trust Indenture Act.........................2
        1.03.      Rules of Construction.....................................................2

ARTICLE II

        Original Issuance of Notes
        2.01.      Form......................................................................4
        2.02.      Execution, Authentication and Delivery....................................4

ARTICLE III

        Covenants

        3.01.      Collection of Payments with respect to the Home Loans.....................5
        3.02.      Maintenance of Office or Agency...........................................5
        3.03.      Money for Payments To Be Held in Trust; Paying Agent......................5
        3.04.      Existence.................................................................6
        3.05.      Payment of Principal and Interest; Defaulted Interest.....................7
        3.06.      Protection of Trust Estate................................................9
        3.07.      Opinions as to Trust Estate...............................................9
        3.08.      Performance of Obligations; Servicing Agreement..........................10
        3.09.      Negative Covenants.......................................................10
        3.10.      Annual Statement as to Compliance........................................11
        3.11.      Recording of Assignments.................................................11
        3.12.      Representations and Warranties Concerning the Home Loans.................11
        3.13.      Assignee of Record of the Home Loans.....................................11
        3.14.      Master Servicer as Agent and Bailee of the Indenture Trustee.............12
        3.15.      Investment Company Act...................................................12
        3.16.      Issuer May Consolidate, etc..............................................12
        3.17.      Successor or Transferee..................................................14
        3.18.      No Other Business........................................................14
        3.19.      No Borrowing.............................................................14
        3.20.      Guarantees, Loans, Advances and Other Liabilities........................14
        3.21.      Capital Expenditures.....................................................14
        3.22.      Owner Trustee Not Liable for Certificates or Related Documents...........14
        3.23.      Restricted Payments......................................................15
        3.24.      Notice of Events of Default..............................................15


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        3.25.      Further Instruments and Acts.............................................15
        3.26.      Statements to Noteholders................................................15
        3.27.      Payments under the Credit Enhancement Instrument.........................15
        3.28.      Payments under the Limited Reimbursement Agreement.......................16

ARTICLE IV

        The Notes; Satisfaction and Discharge of Indenture

        4.01.      The Notes................................................................17
        4.02.      Registration of and Limitations on Transfer and Exchange of Notes;
                   Appointment of Certificate Registrar.....................................17
        4.03.      Mutilated, Destroyed, Lost or Stolen Notes...............................18
        4.04.      Persons Deemed Owners....................................................19
        4.05.      Cancellation.............................................................19
        4.06.      Book-Entry Notes.........................................................19
        4.07.      Notices to Depository....................................................20
        4.08.      Definitive Notes.........................................................21
        4.09.      Tax Treatment............................................................21
        4.10.      Satisfaction and Discharge of Indenture..................................21
        4.11.      Application of Trust Money...............................................22
        4.12.      Subrogation and Cooperation..............................................22
        4.13.      Repayment of Monies Held by Paying Agent.................................23
        4.14.      Temporary Notes..........................................................23

ARTICLE V

        Default and Remedies
        5.01.      Events of Default........................................................25
        5.02.      Acceleration of Maturity; Rescission and Annulment.......................25
        5.03.      Collection of Indebtedness and Suits for Enforcement by Indenture Trustee
                    ........................................................................26
        5.04.      Remedies; Priorities.....................................................27
        5.05.      Optional Preservation of the Trust Estate................................29
        5.06.      Limitation of Suits......................................................29
        5.07.      Unconditional Rights of Noteholders to Receive Principal and Interest....30
        5.08.      Restoration of Rights and Remedies.......................................30
        5.09.      Rights and Remedies Cumulative...........................................30
        5.10.      Delay or Omission Not a Waiver...........................................31
        5.11.      Control by Noteholders...................................................31
        5.12.      Waiver of Past Defaults..................................................31
        5.13.      Undertaking for Costs....................................................32
        5.14.      Waiver of Stay or Extension Laws.........................................32
        5.15.      Sale of Trust Estate.....................................................32
        5.16.      Action on Notes..........................................................34
        5.17.      Performance and Enforcement of Certain Obligations.......................34


                                              ii

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ARTICLE VI

        The Indenture Trustee

        6.01.      Duties of Indenture Trustee..............................................36
        6.02.      Rights of Indenture Trustee..............................................37
        6.03.      Individual Rights of Indenture Trustee...................................37
        6.04.      Indenture Trustee's Disclaimer...........................................37
        6.05.      Notice of Event of Default...............................................37
        6.06.      Reports by Indenture Trustee to Holders..................................38
        6.07.      Compensation and Indemnity...............................................38
        6.08.      Replacement of Indenture Trustee.........................................38
        6.09.      Successor Indenture Trustee by Merger....................................39
        6.10.      Appointment of Co-Indenture Trustee or Separate Indenture Trustee........40
        6.11.      Eligibility; Disqualification............................................41
        6.12.      Preferential Collection of Claims Against Issuer.........................41
        6.13.      Representations and Warranties...........................................41
        6.14.      Directions to Indenture Trustee..........................................42
        6.15.      Indenture Trustee May Own Securities.....................................42

ARTICLE VII

        Noteholders' Lists and Reports

        7.01.      Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders...43
        7.02.      Preservation of Information; Communications to Noteholders...............43
        7.03.      Reports by Issuer........................................................43
        7.04.      Reports by Indenture Trustee.............................................44

ARTICLE VIII

        Accounts, Disbursements and Releases

        8.01.      Collection of Money......................................................45
        8.02.      Trust Accounts...........................................................45
        8.03.      Officer's Certificate....................................................45
        8.04.      Termination Upon Distribution to Noteholders.............................45
        8.05.      Release of Trust Estate..................................................46
        8.06.      Surrender of Notes Upon Final Payment....................................46

ARTICLE IX

        Supplemental Indentures

        9.01.      Supplemental Indentures Without Consent of Noteholders...................47


                                             iii

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        9.02.      Supplemental Indentures With Consent of Noteholders......................48
        9.03.      Execution of Supplemental Indentures.....................................50
        9.04.      Effect of Supplemental Indenture.........................................50
        9.05.      Conformity with Trust Indenture Act......................................50
        9.06.      Reference in Notes to Supplemental Indentures............................50

ARTICLE X

        Miscellaneous

        10.01.     Compliance Certificates and Opinions, etc................................51
        10.02.     Form of Documents Delivered to Indenture Trustee.........................52
        10.03.     Acts of Noteholders......................................................53
        10.04.     Notices, etc., to Indenture Trustee, Issuer, Credit Enhancer and Rating Agencies
                                                                                            53
        10.05.     Notices to Noteholders; Waiver...........................................54
        10.06.     Alternate Payment and Notice Provisions..................................55
        10.07.     Conflict with Trust Indenture Act........................................55
        10.08.     Effect of Headings.......................................................55
        10.09.     Successors and Assigns...................................................55
        10.10.     Separability.............................................................55
        10.11.     Benefits of Indenture....................................................55
        10.12.     Legal Holidays...........................................................56
        10.13.     GOVERNING LAW............................................................56
        10.14.     Counterparts.............................................................56
        10.15.     Recording of Indenture...................................................56
        10.16.     Issuer Obligation........................................................56
        10.17.     No Petition..............................................................56
        10.18.     Inspection...............................................................57

Signatures and Seals ....................................................................   81
Acknowledgments .........................................................................   82

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                                              iv

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EXHIBITS

Exhibit A             Form of Notes

Appendix A            Definitions


                                              v

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               This is the  Indenture,  dated as of February 22,  2001,  between
HOME LOAN TRUST 2001-HI1,  a Delaware  business trust, as Issuer (the "Issuer"),
and The Chase Manhattan Bank, as Indenture Trustee (the "Indenture Trustee"),

                                       WITNESSETH THAT:

               Each party hereto  agrees as follows for the benefit of the other
party and for the equal and  ratable  benefit  of the  Holders  of the  Issuer's
Series 2001-HI1 Home Loan-Backed Notes (the "Notes").

                                 GRANTING CLAUSE

               The Issuer hereby Grants to the Indenture  Trustee at the Closing
Date,  as  trustee  for the  benefit of the  Holders  of the  Notes,  all of the
Issuer's  right,  title and interest in and to whether now existing or hereafter
created  (a) the Home Loans,  (b) all funds on deposit  from time to time in the
Payment  Account  and  in all  proceeds  thereof;  (c)  the  Credit  Enhancement
Instrument and (d) all present and future claims,  demands, causes and choses in
action in respect of any or all of the  foregoing  and all payments on or under,
and all proceeds of every kind and nature  whatsoever  in respect of, any or all
of the  foregoing  and all payments on or under,  and all proceeds of every kind
and nature whatsoever in the conversion thereof, voluntary or involuntary,  into
cash or other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts,  acceptances,  checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables,  instruments and
other  property  which at any time  constitute all or part of or are included in
the proceeds of any of the foregoing  (collectively,  the "Trust  Estate" or the
"Collateral").

               The  foregoing  Grant is made in trust to secure  the  payment of
principal  of and interest  on, and any other  amounts  owing in respect of, the
Notes,  equally and ratably without prejudice,  priority or distinction,  and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.

               The  foregoing  Grant  shall  inure to the  benefit of the Credit
Enhancer  in  respect of draws made on the  Credit  Enhancement  Instrument  and
amounts owing from time to time pursuant to the Insurance Agreement  (regardless
of whether such amounts relate to the Notes or the Certificates), and such Grant
shall  continue in full force and effect for the benefit of the Credit  Enhancer
until all such amounts owing to it have been repaid in full.

               The Indenture Trustee, as trustee on behalf of the Holders of the
Notes,  acknowledges  such  Grant,  accepts the trust  under this  Indenture  in
accordance  with the  provisions  hereof  and  agrees to  perform  its duties as
Indenture Trustee as required herein.




                                              1

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                                    ARTICLE I

                                   Definitions

        Section 1.01. Definitions. For all purposes of this Indenture, except as
otherwise  expressly  provided herein or unless the context otherwise  requires,
capitalized  terms not otherwise defined herein shall have the meanings assigned
to such  terms  in the  Definitions  attached  hereto  as  Appendix  A which  is
incorporated by reference herein.  All other capitalized terms used herein shall
have the meanings specified herein.

        Section  1.02.  Incorporation  by  Reference  of  Trust  Indenture  Act.
Whenever this  Indenture  refers to a provision of the Trust  Indenture Act (the
"TIA"),  the provision is  incorporated  by reference in and made a part of this
Indenture.  The  following TIA terms used in this  Indenture  have the following
meanings:

               "Commission" means the Securities and Exchange Commission.

               "indenture securities" means the Notes.

               "indenture security holder" means a Noteholder.

               "indenture to be qualified" means this Indenture.

               "indenture   trustee"  or   "institutional   trustee"  means  the
               Indenture Trustee.

               "obligor" on the  indenture  securities  means the Issuer and any
               other obligor on the indenture securities.

                All other TIA terms used in this  Indenture  that are defined by
        the TIA,  defined  by TIA  reference  to  another  statute or defined by
        Commission rule have the meaning assigned to them by such definitions.

          Section 1.03.  Rules of  Construction.  Unless the  context  otherwise
               requires:

                    (i  a term has the meaning assigned to it;

                   (ii an accounting term not otherwise  defined has the meaning
        assigned  to  it  in  accordance  with  generally  accepted   accounting
        principles as in effect from time to time;

                  (iii  "or" is not exclusive;

                   (iv  "including" means including without limitation;

                    (v words in the singular include the plural and words in the
               plural include the singular; and



                                              2

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                   (vi any agreement,  instrument or statute defined or referred
        to herein or in any  instrument or  certificate  delivered in connection
        herewith  means such  agreement,  instrument  or statute as from time to
        time  amended,  modified or  supplemented  and  includes (in the case of
        agreements or  instruments)  references to all  attachments  thereto and
        instruments incorporated therein; references to a Person are also to its
        permitted successors and assigns.



                                              3

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                                          ARTICLE II

                                  Original Issuance of Notes

        Section 2.01.  Form.  The Notes,  together with the Indenture  Trustee's
certificate of  authentication,  shall be in substantially the form set forth in
Exhibit A, with such appropriate insertions, omissions,  substitutions and other
variations  as are  required or permitted  by this  Indenture  and may have such
letters,   numbers  or  other  marks  of  identification  and  such  legends  or
endorsements placed thereon as may, consistently  herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.

        The Notes shall be  typewritten,  printed,  lithographed  or engraved or
produced by any  combination  of these methods  (with or without steel  engraved
borders),  all as determined by the Authorized Officers executing such Notes, as
evidenced by their execution of such Notes.

        The terms of the  Notes set forth in  Exhibit A are part of the terms of
this Indenture.

     Section 2.02.  Execution,  Authentication and Delivery.  The Notes shall be
executed  on  behalf  of the  Issuer  by any of  its  Authorized  Officers.  The
signature  of any  such  Authorized  Officer  on the  Notes  may  be  manual  or
facsimile.

        Notes bearing the manual or facsimile  signature of individuals who were
at  any  time  Authorized   Officers  of  the  Issuer  shall  bind  the  Issuer,
notwithstanding  that such  individuals  or any of them have ceased to hold such
offices prior to the  authentication  and delivery of such Notes or did not hold
such offices at the date of such Notes.

        The Indenture Trustee shall upon Issuer Request authenticate and deliver
the Class A Notes for original issue in an aggregate initial principal amount of
$250,000,000.00.

        The  Notes  shall be dated the date of their  authentication.  The Notes
shall be  issuable  as  registered  Notes and the Notes shall be issuable in the
minimum  initial  Note  Balances of $25,000 and in integral  multiples  of $1 in
excess thereof.

        No Note shall be  entitled  to any benefit  under this  Indenture  or be
valid or  obligatory  for any  purpose,  unless  there  appears  on such  Note a
certificate  of  authentication  substantially  in the form  provided for herein
executed  by  the  Indenture  Trustee  by  the  manual  signature  of one of its
authorized  signatories,  and such certificate upon any Note shall be conclusive
evidence, and the only evidence,  that such Note has been duly authenticated and
delivered hereunder.


                                              4

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                                   ARTICLE III

                                    Covenants

        Section 3.01. Collection of Payments with respect to the Home Loans. The
Indenture  Trustee shall  establish and maintain with itself the Payment Account
in which the Indenture  Trustee shall,  subject to the terms of this  paragraph,
deposit,  on the  same day as it is  received  from the  Master  Servicer,  each
remittance received by the Indenture Trustee with respect to the Home Loans. The
Indenture  Trustee  shall make all  payments of principal of and interest on the
Notes,  subject to Section  3.03, as provided in Section 3.05 herein from monies
on deposit in the Payment Account.

        Section 3.02.  Maintenance of Office or Agency. The Issuer will maintain
in the City of New York, an office or agency where,  subject to  satisfaction of
conditions  set forth  herein,  Notes may be  surrendered  for  registration  of
transfer  or  exchange,  and where  notices and demands to or upon the Issuer in
respect  of the  Notes and this  Indenture  may be  served.  The  Issuer  hereby
initially appoints the Indenture Trustee to serve as its agent for the foregoing
purposes.  If at any time the Issuer  shall fail to maintain  any such office or
agency or shall fail to furnish the Indenture  Trustee with the address thereof,
such  surrenders,  notices and  demands  may be made or served at the  Corporate
Trust Office,  and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.

        Section 3.03. Money for Payments To Be Held in Trust;  Paying Agent. (a)
As  provided in Section  3.01,  all  payments  of amounts  due and payable  with
respect to any Notes that are to be made from amounts withdrawn from the Payment
Account  pursuant  to Section  3.01 shall be made on behalf of the Issuer by the
Indenture  Trustee or by the Paying Agent,  and no amounts so withdrawn from the
Payment Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section 3.03.

        The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute  and deliver to the  Indenture  Trustee an  instrument  in which such
Paying  Agent  shall  agree with the  Indenture  Trustee  (and if the  Indenture
Trustee acts as Paying Agent it hereby so agrees),  subject to the provisions of
this Section 3.03, that such Paying Agent will:

                    (i hold all sums held by it for the  payment of amounts  due
        with  respect  to the  Notes in trust  for the  benefit  of the  Persons
        entitled  thereto  until  such  sums  shall be paid to such  Persons  or
        otherwise  disposed  of as  herein  provided  and pay such  sums to such
        Persons as herein provided;

                   (ii  give  the  Indenture  Trustee  and the  Credit  Enhancer
        written  notice of any  default  by the  Issuer  of which it has  actual
        knowledge in the making of any payment  required to be made with respect
        to the Notes;

                  (iii at any time during the  continuance  of any such default,
        upon the written request of the Indenture Trustee,  forthwith pay to the
        Indenture Trustee all sums so held in trust by such Paying Agent;



                                              5

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                   (iv  immediately  resign as Paying Agent and forthwith pay to
        the  Indenture  Trustee  all sums held by it in trust for the payment of
        Notes if at any time it ceases to meet the standards  required to be met
        by a Paying Agent at the time of its appointment;

                    (v comply with all  requirements of the Code with respect to
        the  withholding  from  any  payments  made  by it on any  Notes  of any
        applicable  withholding  taxes  imposed  thereon and with respect to any
        applicable reporting requirements in connection therewith; and

                   (vi deliver to the Indenture  Trustee a copy of the report to
        Noteholders  prepared  with  respect to each  Payment Date by the Master
        Servicer pursuant to Section 4.01 of the Servicing Agreement.

        The  Issuer  may  at  any  time,   for  the  purpose  of  obtaining  the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Request direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent,  such sums to be held by the Indenture  Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such  payment by any Paying  Agent to the  Indenture  Trustee,  such Paying
Agent shall be released from all further liability with respect to such money.

        Subject to applicable  laws with respect to escheat of funds,  any money
held by the  Indenture  Trustee or any Paying  Agent in trust for the payment of
any amount due with  respect to any Note and  remaining  unclaimed  for one year
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer  Request;  and the Holder of such Note shall
thereafter,  as an  unsecured  general  creditor,  look only to the  Issuer  for
payment  thereof  (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture  Trustee or such Paying Agent with respect to
such trust money shall thereupon cease;  provided,  however,  that the Indenture
Trustee or such Paying Agent,  before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published  once, in
an  Authorized  Newspaper,  notice that such money  remains  unclaimed and that,
after a date  specified  therein,  which shall not be less than 30 days from the
date of such  publication,  any unclaimed  balance of such money then  remaining
will be repaid to the Issuer.  The Indenture  Trustee may also adopt and employ,
at the  expense  and  direction  of the Issuer,  any other  reasonable  means of
notification of such repayment (including, but not limited to, mailing notice of
such  repayment  to  Holders  whose  Notes  have been  called  but have not been
surrendered  for  redemption  or whose  right to or  interest  in monies due and
payable  but not  claimed is  determinable  from the  records  of the  Indenture
Trustee  or of any  Paying  Agent,  at the last  address of record for each such
Holder).

        Section  3.04.  Existence.  The  Issuer  will  keep in full  effect  its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized  under the laws of any other state or of the United States of America,
in which case the Issuer  will keep in full  effect  its  existence,  rights and
franchises  under  the laws of such  other  jurisdiction)  and will  obtain  and
preserve its  qualification  to do business in each  jurisdiction  in which such
qualification   is  or  shall  be   necessary   to  protect  the   validity  and
enforceability  of this  Indenture,  the  Notes,  the Home  Loans and each other
instrument or agreement included in the Trust Estate.


                                              6

<PAGE>



        Section 3.05. Payment of Principal and Interest; Defaulted Interest. (a)
On each Payment Date from amounts on deposit in the Payment Account,  the Paying
Agent shall pay to the Noteholders,  the Certificate  Paying Agent, on behalf of
the  Certificateholders,  and to other  Persons  the  amounts  to which they are
entitled,  as set forth in the  statements  delivered to the  Indenture  Trustee
pursuant to Section 4.01 of the Servicing  Agreement,  as set forth below in the
following order of priority:

                    (i to the  Noteholders,  interest  at the Note  Rate for the
        related  Interest  Accrual  Period  on the  Note  Balance  of the  Notes
        immediately prior to such Payment Date;

                   (ii to the  Noteholders,  as  principal  on  the  Notes,  the
        Principal  Collection  Distribution  Amount for such Payment Date, until
        the Note Balance thereof has been reduced to zero;

                  (iii  to the  Noteholders,  as  principal  on the  Notes,  the
        Liquidation  Loss  Distribution  Amount  for such  Payment  Date and any
        Excess Loss Amount  included  in the Credit  Enhancement  Draw Amount on
        such Payment  Date,  until the Note Balance  thereof has been reduced to
        zero;

                   (iv on a pro rata  basis,  (A) to the  Credit  Enhancer,  the
        Premium Amount for the Credit  Enhancement  Instrument,  plus any unpaid
        Premium  Amount from any prior  Payment Date (with  interest  thereon as
        provided  in the  Insurance  Agreement),  and  (B) to  the  designee  or
        designees of the Credit Enhancer pursuant to Section 3.28, the amount of
        any  payments  for the Limited  Reimbursement  Agreement,  plus any such
        unpaid  payments from any prior Payment Date (with  interest  thereon as
        provided in the Limited Reimbursement Agreement);

                    (v to the Credit  Enhancer,  to reimburse it for prior draws
        made on the Credit  Enhancement  Instrument  (with  interest  thereon as
        provided in the Insurance  Agreement)  (except for draws attributable to
        Excess Loss Amounts) provided,  that no such reimbursement shall be made
        in respect of amounts that were paid to the Indenture  Trustee under the
        Limited  Reimbursement  Agreement,  or for which the Credit  Enhancer is
        entitled to reimbursement under the Limited Reimbursement Agreement;

                   (vi to the  Noteholders,  as  principal  on  the  Notes,  the
        Reserve  Increase  Amount for such Payment Date,  until the Note Balance
        thereof has been reduced to zero;

          (vii to the  Credit  Enhancer,  any other  amounts  owed to the Credit
     Enhancer pursuant to the Insurance Agreement;

          (viii to the  Indenture  Trustee,  any amounts  owing to the Indenture
     Trustee pursuant to Section 6.07 remaining unpaid; and

          (ix any remaining amount,  to the Certificate  Paying Agent, on behalf
     of the holders of the Certificates.



                                              7

<PAGE>



provided, however, in the event that on a Payment Date a Credit Enhancer Default
shall have  occurred  and be  continuing,  (a) no  payments  will be made to the
Credit  Enhancer  pursuant to clause (iv)(A) above until all Credit  Enhancement
Draw Amounts that are due and required to be paid by the Credit  Enhancer on the
Notes on such  Payment  Date or were due and  required  to be paid by the Credit
Enhancer  on any prior  Payment  Date have  been paid in full,  (b) any  amounts
payable  to the Credit  Enhancer  pursuant  to clause (v) shall  instead be paid
pursuant to clause  (vii) and (c) any Excess Loss  Amounts  will be allocated to
the Notes,  in  reduction of the Note  Balance  thereof,  until the Note Balance
thereof has been reduced to zero. In addition, on the Final Insured Payment Date
or other final Payment Date  (including  the Payment Date following any purchase
by the  Master  Servicer  of the Home  Loans  pursuant  to  Section  8.08 of the
Servicing Agreement),  the amount to be paid pursuant to clause (ii) above shall
be equal to the aggregate  Note Balance of the Notes  immediately  prior to such
Payment Date.

        On each Payment Date, the Certificate  Paying Agent shall deposit in the
Certificate  Distribution  Account  all  amounts it  received  pursuant  to this
Section   3.05   for  the   purpose   of   distributing   such   funds   to  the
Certificateholders.

         Interest  will  accrue  on the  Notes on the  basis of a  360-day  year
consisting of twelve 30-day months.

        Any  installment of interest or principal,  if any,  payable on any Note
that is  punctually  paid or duly  provided for by the Issuer on the  applicable
Payment  Date shall,  if such Holder  holds Notes of an  aggregate  initial Note
Balance  of at  least  $1,000,000,  be paid  to each  Holder  of  record  on the
preceding  Record Date, by wire  transfer to an account  specified in writing by
such Holder reasonably satisfactory to the Indenture Trustee as of the preceding
Record Date or in all other cases or if no such instructions have been delivered
to the Indenture  Trustee,  by check or money order to such Noteholder mailed to
such Holder's  address as it appears in the Note Register the amount required to
be  distributed  to such Holder on such Payment Date  pursuant to such  Holder's
Securities;  provided, however, that the Indenture Trustee shall not pay to such
Holders any amount  required to be withheld from a payment to such Holder by the
Code.

        (b)  [Reserved].

        (c) The  principal  of each Note shall be due and payable in full on the
Final Insured  Payment Date as provided in the related form of Note set forth in
Exhibit A. All principal  payments on the Notes shall be made to the Noteholders
entitled thereto in accordance with the Percentage Interests represented by such
Notes.  Upon written  notice to the  Indenture  Trustee by the Issuer (or by the
Master  Servicer  on behalf of the Issuer,  pursuant  to Section  8.08(e) of the
Servicing  Agreement) of the Final  Insured  Payment Date for the Notes or other
final Payment Date, the Indenture  Trustee shall notify the related  Noteholders
of record of the Final Insured Payment Date or other final Payment Date, by mail
or  facsimile,  no later  than five  Business  Days  prior to the Final  Insured
Payment Date or other final Payment Date and shall specify:

          (i that the Record Date  otherwise  applicable to such Payment Date is
     not applicable;



                                              8

<PAGE>



                   (ii that payment of the principal amount and any interest due
        with  respect to such Note at the Final  Insured  Payment  Date or other
        final Payment Date will be payable only upon  presentation and surrender
        of such  Note  and  shall  specify  the  place  where  such  Note may be
        presented and surrendered for such final payment; and

                  (iii  the amount of any such final payment, if known.

        Section 3.06.  Protection of Trust Estate. (a) The Issuer will from time
to time execute and deliver all such  supplements and amendments  hereto and all
such  financing  statements,  continuation  statements,  instruments  of further
assurance and other  instruments,  and will take such other action  necessary or
advisable to:

                    (i maintain or preserve the lien and security  interest (and
        the priority  thereof) of this  Indenture or carry out more  effectively
        the purposes hereof;

          (ii  perfect,  publish  notice of or protect the validity of any Grant
     made or to be made by this Indenture;

                  (iii  cause the Trust to enforce any of the Home Loans; or

                   (iv  preserve  and defend  title to the Trust  Estate and the
        rights of the Indenture Trustee and the Noteholders in such Trust Estate
        against the claims of all persons and parties.

        (b)  Except as  otherwise  provided  in this  Indenture,  the  Indenture
Trustee  shall not remove any portion of the Trust Estate that consists of money
or is  evidenced  by an  instrument,  certificate  or  other  writing  from  the
jurisdiction  in which it was held at the  date of the most  recent  Opinion  of
Counsel delivered pursuant to Section 3.07 (or from the jurisdiction in which it
was held as  described  in the Opinion of Counsel  delivered at the Closing Date
pursuant to Section  3.07(a),  if no Opinion of Counsel  has yet been  delivered
pursuant to Section  3.07(b))  unless the Trustee  shall have first  received an
Opinion of Counsel to the effect that the lien and security  interest created by
this  Indenture  with respect to such  property  will  continue to be maintained
after giving effect to such action or actions.

        The  Issuer  hereby  designates  the  Indenture  Trustee  its  agent and
attorney-in-fact to execute any financing statement,  continuation  statement or
other instrument required to be executed pursuant to this Section 3.06.

        Section 3.07.  Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the  Indenture  Trustee and the Owner Trustee an Opinion
of Counsel at the expense of the Issuer  either  stating that, in the opinion of
such  counsel,  such  action has been taken with  respect to the  recording  and
filing of this  Indenture,  any indentures  supplemental  hereto,  and any other
requisite  documents,  and with  respect  to the  execution  and  filing  of any
financing  statements and continuation  statements,  as are necessary to perfect
and make effective the lien and security interest in the Home Loans and reciting
the details of such action, or stating that, in the opinion of such counsel,  no
such action is necessary to make such lien and security interest effective.



                                              9

<PAGE>



        (b) On or before December 31st in each calendar year, beginning in 2001,
the Issuer shall furnish to the  Indenture  Trustee an Opinion of Counsel at the
expense of the Issuer either stating that, in the opinion of such counsel,  such
action has been taken with respect to the recording,  filing,  re- recording and
refiling of this  Indenture,  any indentures  supplemental  hereto and any other
requisite  documents  and  with  respect  to the  execution  and  filing  of any
financing statements and continuation statements as is necessary to maintain the
lien and  security  interest in the Home Loans and  reciting the details of such
action  or  stating  that in the  opinion  of such  counsel  no such  action  is
necessary to maintain such lien and security  interest.  Such Opinion of Counsel
shall also describe the  recording,  filing,  re-recording  and refiling of this
Indenture,  any indentures supplemental hereto and any other requisite documents
and the  execution  and  filing of any  financing  statements  and  continuation
statements  that will, in the opinion of such  counsel,  be required to maintain
the lien and  security  interest  in the Home  Loans  until  December  31 in the
following calendar year.

     Section 3.08.  Performance of  Obligations;  Servicing  Agreement.  (a) The
Issuer will punctually perform and observe all of its obligations and agreements
contained in this  Indenture,  the Basic  Documents and in the  instruments  and
agreements included in the Trust Estate.

        (b)  The  Issuer  may  contract  with  other  Persons  to  assist  it in
performing its duties under this  Indenture,  and any performance of such duties
by a Person identified to the Indenture  Trustee in an Officer's  Certificate of
the Issuer shall be deemed to be action taken by the Issuer.

        (c) The Issuer will not take any action or permit any action to be taken
by others which would release any Person from any of such Person's  covenants or
obligations  under any of the documents  relating to the Home Loans or under any
instrument included in the Trust Estate, or which would result in the amendment,
hypothecation,  subordination,  termination  or  discharge  of,  or  impair  the
validity or effectiveness of, any of the documents relating to the Home Loans or
any such  instrument,  except such  actions as the Master  Servicer is expressly
permitted to take in the Servicing Agreement.

        (d) The Issuer may retain an administrator  and may enter into contracts
with other Persons for the  performance of the Issuer's  obligations  hereunder,
and  performance  of such  obligations  by such  Persons  shall be  deemed to be
performance of such obligations by the Issuer.

     Section 3.09. Negative Covenants. So long as any Notes are Outstanding, the
Issuer shall not:

                    (i except as expressly  permitted by this  Indenture,  sell,
        transfer,  exchange or  otherwise  dispose of the Trust  Estate,  unless
        directed to do so by the Indenture Trustee;

                   (ii  claim any  credit  on,  or make any  deduction  from the
        principal  or  interest  payable in respect  of, the Notes  (other  than
        amounts  properly  withheld from such payments under the Code) or assert
        any claim  against  any  present or former  Noteholder  by reason of the
        payment  of the  taxes  levied  or  assessed  upon any part of the Trust
        Estate;

                  (iii  (A)  permit  the  validity  or   effectiveness  of  this
        Indenture  to be  impaired,  or permit the lien of this  Indenture to be
        amended, hypothecated, subordinated, terminated or


                                              10

<PAGE>



        discharged,  or permit any Person to be released  from any  covenants or
        obligations with respect to the Notes under this Indenture except as may
        be expressly  permitted  hereby,  (B) permit any lien,  charge,  excise,
        claim, security interest,  mortgage or other encumbrance (other than the
        lien of this Indenture) to be created on or extend to or otherwise arise
        upon or burden  the Trust  Estate or any part  thereof  or any  interest
        therein or the proceeds thereof or (C) permit the lien of this Indenture
        not to constitute a valid first priority  security interest in the Trust
        Estate; or

                   (iv waive or impair,  or fail to assert rights under the Home
        Loans,  or cause to be impaired the Home Loans or the Issuer's  interest
        in the Home  Loans,  the Home Loan  Purchase  Agreement  or in any Basic
        Document,  if any such action would  materially and adversely affect the
        interests of the Noteholders.

        Section 3.10. Annual Statement as to Compliance. The Issuer will deliver
to the Indenture  Trustee,  within 120 days after the end of each fiscal year of
the Issuer  (commencing  with the fiscal year 2001),  an  Officer's  Certificate
stating, as to the Authorized Officer signing such Officer's Certificate, that:

                    (i a review of the activities of the Issuer during such year
        and of its performance  under this Indenture and the Trust Agreement has
        been made under such Authorized Officer's supervision; and

                   (ii to the best of such Authorized Officer's knowledge, based
        on such  review,  the  Issuer  has  complied  with  all  conditions  and
        covenants under this Indenture and the provisions of the Trust Agreement
        throughout  such year, or, if there has been a default in its compliance
        with any such condition or covenant,  specifying each such default known
        to such Authorized Officer and the nature and status thereof.

        Section  3.11.  Recording of  Assignments.  The Issuer shall enforce the
obligation  of the Seller  under the Home Loan  Purchase  Agreement to submit or
cause to be submitted for recording all Assignments of Mortgages  within 60 days
of receipt of recording information by the Master Servicer.

        Section 3.12.  Representations and Warranties Concerning the Home Loans.
The  Indenture  Trustee,  as pledgee of the Home  Loans,  has the benefit of the
representations  and warranties made by the Seller in Section 3.1(a) and Section
3.1(b) of the Home Loan  Purchase  Agreement  concerning  the Home Loans and the
right to enforce the remedies against the Seller provided in such Section 3.1(a)
or  Section  3.1(b)  to the same  extent  as  though  such  representations  and
warranties were made directly to the Indenture Trustee.

        Section  3.13.  Assignee of Record of the Home Loans.  The Issuer hereby
directs and  authorizes  the Indenture  Trustee to hold record title to the Home
Loans by being  named as payee in the  endorsements  of the  Mortgage  Notes and
assignee in the  Assignments of Mortgage to be recorded under Section 2.1 of the
Home Loan  Purchase  Agreement.  Except as  expressly  provided in the Home Loan
Purchase  Agreement or in the Servicing  Agreement  with respect to any specific
Home Loan, the Indenture Trustee shall not execute any endorsement or assignment
or otherwise


                                              11

<PAGE>



release or transfer  such record  title to any of the Home Loans until such time
as the remaining Trust Estate may be released  pursuant to Section 8.05(b).  The
Indenture  Trustee's  holding of such  record  title  shall in all  respects  be
subject to its fiduciary obligations to the Noteholders hereunder.

        Section  3.14.  Master  Servicer  as Agent and  Bailee of the  Indenture
Trustee.  Solely for purposes of  perfection  under Section 9-305 of the Uniform
Commercial Code or other similar applicable law, rule or regulation of the state
in which  such  property  is held by the  Master  Servicer,  the  Issuer and the
Indenture  Trustee  hereby  acknowledges  that the Master  Servicer is acting as
agent and bailee of the Indenture  Trustee in holding  amounts on deposit in the
Custodial  Account pursuant to Section 3.02 of the Servicing  Agreement that are
allocable  to the Home  Loans,  as well as its agent and bailee in  holding  any
Related Documents released to the Master Servicer pursuant to Section 3.06(c) of
the Servicing  Agreement,  and any other items  constituting a part of the Trust
Estate which from time to time come into the possession of the Master  Servicer.
It is intended that, by the Master Servicer's acceptance of such agency pursuant
to Section 3.02 of the Servicing Agreement,  the Indenture Trustee, as a pledgee
of the Home Loans, will be deemed to have possession of such Related  Documents,
such  monies and such other items for  purposes of Section  9-305 of the Uniform
Commercial  Code of the  state  in which  such  property  is held by the  Master
Servicer.

        Section  3.15.  Investment  Company  Act. The Issuer shall not become an
"investment  company" or "controlled by" an investment company as such terms are
defined in the  Investment  Company Act of 1940, as amended (or any successor or
amendatory  statute),  and the rules and  regulations  thereunder  (taking  into
account not only the general  definition  of the term  "investment  company" but
also any available  exceptions to such general definition);  provided,  however,
that the Issuer shall be in  compliance  with this Section 3.15 if it shall have
obtained an order  exempting it from  regulation as an  "investment  company" so
long as it is in compliance with the conditions imposed in such order.

     Section  3.16.  Issuer  May  Consolidate,  etc.  (a) The  Issuer  shall not
consolidate or merge with or into any other Person, unless:

                    (i the  Person  (if  other  than the  Issuer)  formed  by or
        surviving such  consolidation  or merger shall be a Person organized and
        existing  under the laws of the United States of America or any state or
        the District of Columbia  and shall  expressly  assume,  by an indenture
        supplemental hereto, executed and delivered to the Indenture Trustee, in
        form  reasonably  satisfactory  to the  Indenture  Trustee,  the due and
        punctual  payment of the  principal  of and interest on all Notes and to
        the Certificate  Paying Agent, on behalf of the  Certificateholders  and
        the  performance  or observance of every  agreement and covenant of this
        Indenture on the part of the Issuer to be performed or observed,  all as
        provided herein;

               (ii immediately after giving effect to such transaction, no Event
          of Default shall have occurred and be continuing;

                  (iii the Issuer  receives  consent of the Credit  Enhancer and
        the Rating Agencies shall have notified the Issuer that such transaction
        shall  not  cause the  rating  of the  Notes or the  Certificates  to be
        reduced, suspended or withdrawn or to be considered by either Rating


                                              12

<PAGE>



          Agency to be below  investment  grade without  taking into account the
          Credit Enhancement Instrument;

                   (iv the Issuer shall have received an Opinion of Counsel (and
        shall have  delivered  copies  thereof to the Indenture  Trustee and the
        Credit  Enhancer) to the effect that such  transaction will not have any
        material  adverse tax  consequence to the Issuer,  any Noteholder or any
        Certificateholder;

                    (v any action that is  necessary  to  maintain  the lien and
        security interest created by this Indenture shall have been taken; and

                   (vi the Issuer shall have delivered to the Indenture  Trustee
        an  Officer's  Certificate  and an Opinion of Counsel  each stating that
        such consolidation or merger and such supplemental indenture comply with
        this Article III and that all conditions  precedent  herein provided for
        relating to such  transaction  have been  complied with  (including  any
        filing required by the Exchange Act).

        (b) The Issuer  shall not convey or transfer  any of its  properties  or
assets, including those included in the Trust Estate, to any Person, unless:

                    (i the Person that  acquires by  conveyance  or transfer the
        properties  and assets of the Issuer the conveyance or transfer of which
        is hereby  restricted  shall (A) be a United States  citizen or a Person
        organized and existing under the laws of the United States of America or
        any state, (B) expressly  assume, by an indenture  supplemental  hereto,
        executed and delivered to the Indenture Trustee, in form satisfactory to
        the Indenture Trustee,  the due and punctual payment of the principal of
        and interest on all Notes and the  performance  or  observance  of every
        agreement and covenant of this Indenture on the part of the Issuer to be
        performed or observed,  all as provided  herein,  (C) expressly agree by
        means of such supplemental  indenture that all right, title and interest
        so  conveyed or  transferred  shall be subject  and  subordinate  to the
        rights of Holders of the Notes,  (D) unless  otherwise  provided in such
        supplemental  indenture,  expressly agree to indemnify,  defend and hold
        harmless  the Issuer  against  and from any loss,  liability  or expense
        arising  under  or  related  to this  Indenture  and the  Notes  and (E)
        expressly agree by means of such supplemental indenture that such Person
        (or if a group of Persons,  then one  specified  Person)  shall make all
        filings with the Commission (and any other appropriate  Person) required
        by the Exchange Act in connection with the Notes;

               (ii  immediately  after  giving  effect to such  transaction,  no
          Default or Event of Default shall have occurred and be continuing;

                  (iii the Issuer  receives  consent of the Credit  Enhancer and
        the Rating Agencies shall have notified the Issuer that such transaction
        shall not cause the  rating of the Notes,  without  regard to the Credit
        Enhancement Instrument, to be reduced, suspended or withdrawn;



                                              13

<PAGE>



                   (iv the Issuer shall have received an Opinion of Counsel (and
        shall have  delivered  copies  thereof to the Indenture  Trustee) to the
        effect  that such  transaction  will not have any  material  adverse tax
        consequence to the Issuer or any Noteholder;

                    (v any action that is  necessary  to  maintain  the lien and
        security interest created by this Indenture shall have been taken; and

                   (vi the Issuer shall have delivered to the Indenture  Trustee
        an  Officer's  Certificate  and an Opinion of Counsel  each stating that
        such conveyance or transfer and such supplemental  indenture comply with
        this Article III and that all conditions  precedent  herein provided for
        relating to such  transaction  have been  complied with  (including  any
        filing required by the Exchange Act).

        Section 3.17.  Successor or Transferee.  (a) Upon any  consolidation  or
merger of the Issuer in accordance with Section 3.16(a), the Person formed by or
surviving such  consolidation or merger (if other than the Issuer) shall succeed
to, and be  substituted  for,  and may  exercise  every  right and power of, the
Issuer  under this  Indenture  with the same  effect as if such  Person had been
named as the Issuer herein.

        (b) Upon a conveyance  or transfer of all the assets and  properties  of
the Issuer pursuant to Section  3.16(b),  the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee of such conveyance or transfer.

        Section  3.18.  No Other  Business.  The Issuer  shall not engage in any
business other than financing,  purchasing,  owning and selling and managing the
Home  Loans  and the  issuance  of the  Notes  and  Certificates  in the  manner
contemplated  by this  Indenture  and the  Basic  Documents  and all  activities
incidental thereto.

     Section  3.19.  No Borrowing.  The Issuer shall not issue,  incur,  assume,
guarantee  or  otherwise  become  liable,   directly  or  indirectly,   for  any
indebtedness except for the Notes.

        Section 3.20. Guarantees, Loans, Advances and Other Liabilities.  Except
as contemplated by this Indenture or the Basic  Documents,  the Issuer shall not
make any loan or advance or credit to, or guarantee  (directly or  indirectly or
by an instrument having the effect of assuring  another's payment or performance
on any obligation or capability of so doing or otherwise),  endorse or otherwise
become  contingently  liable,  directly or  indirectly,  in connection  with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or
agree contingently to do so) any stock, obligations, assets or securities of, or
any other interest in, or make any capital contribution to, any other Person.

     Section  3.21.  Capital  Expenditures.   The  Issuer  shall  not  make  any
expenditure  (by long- term or operating  lease or otherwise) for capital assets
(either realty or personalty).

     Section  3.22.  Owner  Trustee  Not  Liable  for  Certificates  or  Related
Documents. The recitals contained herein shall be taken as the statements of the
Depositor, and the Owner Trustee assumes


                                              14

<PAGE>



no  responsibility  for the  correctness  thereof.  The Owner  Trustee  makes no
representations  as to the validity or  sufficiency  of this  Indenture,  of any
Basic  Document or of the  Certificates  (other than the signatures of the Owner
Trustee on the  Certificates)  or the Notes,  or of any Related  Documents.  The
Owner Trustee shall at no time have any responsibility or liability with respect
to the  sufficiency  of the Owner Trust  Estate or its  ability to generate  the
payments to be distributed to  Certificateholders  under the Trust  Agreement or
the Noteholders under this Indenture, including, the compliance by the Depositor
or the Seller with any warranty or representation  made under any Basic Document
or  in  any  related   document  or  the  accuracy  of  any  such   warranty  or
representation,  or any action of the Certificate  Paying Agent, the Certificate
Registrar or the Indenture Trustee taken in the name of the Owner Trustee.

        Section 3.23.  Restricted  Payments.  The Issuer shall not,  directly or
indirectly,  (i) pay any  dividend or make any  distribution  (by  reduction  of
capital or otherwise),  whether in cash,  property,  securities or a combination
thereof,  to the Owner  Trustee  or any owner of a  beneficial  interest  in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer,  (ii) redeem,  purchase,  retire or  otherwise  acquire for
value any such  ownership  or equity  interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose;  provided,  however,  that
the Issuer may make, or cause to be made, (x) distributions to the Owner Trustee
and the  Certificateholders  as  contemplated  by, and to the  extent  funds are
available  for such purpose under the Trust  Agreement,  and (y) payments to the
Master  Servicer  pursuant to the terms of the Servicing  Agreement.  The Issuer
will not,  directly or indirectly,  make payments to or  distributions  from the
Custodial  Account  except  in  accordance  with  this  Indenture  and the Basic
Documents.

        Section  3.24.  Notice of Events of Default.  The Issuer  shall give the
Indenture  Trustee,  the Credit  Enhancer and the Rating Agencies prompt written
notice of each Event of Default hereunder and under the Trust Agreement.

        Section  3.25.  Further  Instruments  and  Acts.  Upon  request  of  the
Indenture Trustee,  the Issuer will execute and deliver such further instruments
and do such further acts as may be  reasonably  necessary or proper to carry out
more effectively the purpose of this Indenture.

        Section 3.26.  Statements  to  Noteholders.  On each Payment  Date,  the
Indenture  Trustee  and  the  Certificate  Registrar  shall  forward  by mail or
otherwise make available electronically to each Noteholder and Certificateholder
and the ISDA Counterparty,  respectively,  the statement delivered to it, on the
Business Day following the related  Determination  Date pursuant to Section 4.01
of the Servicing Agreement.

        Section 3.27. Payments under the Credit Enhancement  Instrument.  (a) On
any Payment  Date,  including  the Final  Insured  Payment  Date,  the Indenture
Trustee shall make a draw on the Credit Enhancement  Instrument in an amount, if
any, equal to the Credit  Enhancement  Draw Amount.  On any Dissolution  Payment
Date,  the  Indenture  Trustee  shall  make a draw  on  the  Credit  Enhancement
Instrument  in an  amount,  if any,  equal  to the  Dissolution  Draw,  less any
payments  made to the  Indenture  Trustee  with  respect  to that date under the
Limited Reimbursement Agreement.



                                              15

<PAGE>



        (b) To the extent (i) a valid claim is made on the Indenture  Trustee by
the ISDA  Counterparty for  reimbursement or other payment of amounts paid under
the Limited Reimbursement Agreement in error or otherwise not in accordance with
the  terms of this  Indenture,  in each  case  with the  consent  of the  Credit
Enhancer,  which consent shall not be unreasonably  withheld, or (ii) a court of
competent jurisdiction orders the repayment by the Indenture Trustee to the ISDA
Counterparty  under the  Limited  Reimbursement  Agreement  of the amount of any
payment made pursuant to Section 3.28,  the Indenture  Trustee shall make a draw
on the Credit Enhancement Instrument pursuant to the terms hereof as if the ISDA
Counterparty under the Limited Reimbursement  Agreement had not made any payment
to the Indenture Trustee.

        (c) The Indenture  Trustee shall submit,  if a Credit  Enhancement  Draw
Amount or Dissolution Draw is specified in any Servicing Certificate prepared by
the Master  Servicer  pursuant to Section 4.01 of the Servicing  Agreement,  the
Notice of Non  Payment  and Demand for  Payment of Insured  Amounts (in the form
attached as Exhibit A to the Credit Enhancement Instrument) in the amount of the
Credit  Enhancement  Draw Amount or Dissolution  Draw to the Credit  Enhancer no
later than 2:00 P.M.,  New York City time,  on the second  Business Day prior to
the applicable Payment Date. Upon receipt of such Credit Enhancement Draw Amount
in accordance with the terms of the Credit Enhancement Instrument or Dissolution
Draw, the Indenture Trustee shall deposit such Credit Enhancement Draw Amount in
the Payment Account for distribution to Noteholders pursuant to Section 3.05 and
shall distribute such Dissolution Draw in accordance with Section 5.04.

        Section 3.28. Payments under the Limited  Reimbursement  Agreement.  The
Indenture   Trustee  shall  deposit  any  amounts   received  from  the  Limited
Reimbursement  Agreement  into the Payment  Account.  Any such amounts  shall be
distributed  on the  immediately  following  Payment  Date  pursuant  to Section
3.05(a).  The  Indenture  Trustee  shall make the  payments  to the  designee or
designees of the Credit  Enhancer under Section  3.05(a)(iv)(B)  pursuant to the
letter from the Credit Enhancer to the Indenture Trustee dated as of the Closing
Date.



                                              16

<PAGE>



                                          ARTICLE IV

                      The Notes; Satisfaction and Discharge of Indenture

        Section 4.01. The Notes.  The Notes shall be registered in the name of a
nominee  designated by the Depository.  Beneficial Owners will hold interests in
the Notes as set forth in Section 4.06 herein in minimum  initial Note  Balances
of $25,000 and integral multiples of $1 in excess thereof.

        The  Indenture  Trustee may for all  purposes  (including  the making of
payments  due  on  the  Notes)  deal  with  the  Depository  as  the  authorized
representative  of the  Beneficial  Owners  with  respect  to the  Notes for the
purposes  of  exercising  the rights of Holders  of Notes  hereunder.  Except as
provided in the next  succeeding  paragraph of this Section 4.01,  the rights of
Beneficial  Owners  with  respect  to  the  Notes  shall  be  limited  to  those
established  by law  and  agreements  between  such  Beneficial  Owners  and the
Depository  and  Depository  Participants.  Except as provided in Section  4.08,
Beneficial Owners shall not be entitled to definitive certificates for the Notes
as to which they are the Beneficial  Owners.  Requests and directions  from, and
votes of, the Depository as Holder of the Notes shall not be deemed inconsistent
if they are made with  respect to different  Beneficial  Owners.  The  Indenture
Trustee may establish a reasonable record date in connection with  solicitations
of consents from or voting by  Noteholders  and give notice to the Depository of
such record date.  Without the consent of the Issuer and the Indenture  Trustee,
no Note may be transferred by the  Depository  except to a successor  Depository
that agrees to hold such Note for the account of the Beneficial Owners.

        In the event the  Depository  Trust  Company  resigns  or is  removed as
Depository,  the Indenture Trustee with the approval of the Issuer may appoint a
successor  Depository.  If no successor  Depository has been appointed within 30
days of the effective  date of the  Depository's  resignation  or removal,  each
Beneficial  Owner shall be entitled to  certificates  representing  the Notes it
beneficially owns in the manner prescribed in Section 4.08.

        The Notes shall,  on original issue, be executed on behalf of the Issuer
by the  Owner  Trustee,  not in its  individual  capacity  but  solely  as Owner
Trustee,  authenticated  by the Note  Registrar  and  delivered by the Indenture
Trustee to or upon the order of the Issuer.

        Section 4.02.  Registration  of and Limitations on Transfer and Exchange
of Notes;  Appointment  of Certificate  Registrar.  The Issuer shall cause to be
kept at the Indenture Trustee's Corporate Trust Office a Note Register in which,
subject to such reasonable  regulations as it may prescribe,  the Note Registrar
shall  provide for the  registration  of Notes and of transfers and exchanges of
Notes as herein provided.

        Subject  to the  restrictions  and  limitations  set forth  below,  upon
surrender  for  registration  of  transfer  of any Note at the  Corporate  Trust
Office,  the Issuer shall execute and the Note Registrar shall  authenticate and
deliver,  in the name of the designated  transferee or transferees,  one or more
new Notes in authorized  initial Note  Balances  evidencing  the same  aggregate
Percentage Interests.

        Subject to the foregoing, at the option of the Noteholders, Notes may be
exchanged  for other Notes of like tenor,  in  authorized  initial Note Balances
evidencing the same aggregate Percentage


                                              17

<PAGE>



Interests  upon  surrender of the Notes to be exchanged at the  Corporate  Trust
Office  of the  Note  Registrar.  Whenever  any  Notes  are so  surrendered  for
exchange,  the  Indenture  Trustee shall  execute and the Note  Registrar  shall
authenticate  and deliver the Notes which the Noteholder  making the exchange is
entitled to receive.  Each Note presented or  surrendered  for  registration  of
transfer  or  exchange  shall (if so  required  by the Note  Registrar)  be duly
endorsed  by, or be  accompanied  by a written  instrument  of  transfer in form
reasonably  satisfactory  to the Note  Registrar  duly  executed  by, the Holder
thereof  or  his  attorney  duly  authorized  in  writing  with  such  signature
guaranteed  by  a  commercial   bank  or  trust  company  located  or  having  a
correspondent  located in the city of New York.  Notes  delivered  upon any such
transfer or exchange will evidence the same obligations, and will be entitled to
the same rights and privileges, as the Notes surrendered.

        No service charge shall be imposed for any  registration  of transfer or
exchange  of  Notes,  but the Note  Registrar  shall  require  payment  of a sum
sufficient  to cover  any tax or  governmental  charge  that may be  imposed  in
connection with any registration of transfer or exchange of Notes.

        All Notes surrendered for registration of transfer and exchange shall be
cancelled  by the Note  Registrar  and  delivered to the  Indenture  Trustee for
subsequent destruction without liability on the part of either.

        The  Issuer  hereby  appoints  the  Indenture   Trustee  as  Certificate
Registrar to keep at its Corporate Trust Office a Certificate  Register pursuant
to Section  3.09 of the Trust  Agreement  in which,  subject to such  reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges  thereof pursuant to
Section 3.05 of the Trust Agreement.  The Indenture  Trustee hereby accepts such
appointment.

        Each purchaser of a Note, by its acceptance of the Note, shall be deemed
to have  represented that either (i) it is not a Plan nor is it acquiring a Note
with Plan Assets or (2) the  acquisition  of such Note by the purchaser does not
constitute or give rise to a prohibited  transaction  under Section 406 of ERISA
or  Section  4975  of  the  Code,   for  which  no   statutory,   regulatory  or
administrative exemption is available.

        Section 4.03.  Mutilated,  Destroyed,  Lost or Stolen Notes.  If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives  evidence to its satisfaction of the destruction,  loss or theft of any
Note,  and (ii) there is delivered  to the  Indenture  Trustee such  security or
indemnity as may be required by it to hold the Issuer and the Indenture  Trustee
harmless,  then, in the absence of notice to the Issuer,  the Note  Registrar or
the Indenture Trustee that such Note has been acquired by a bona fide purchaser,
and  provided  that the  requirements  of Section  8-405 of the UCC are met, the
Issuer  shall  execute,  and  upon  its  request  the  Indenture  Trustee  shall
authenticate  and  deliver,  in exchange  for or in lieu of any such  mutilated,
destroyed,  lost or stolen Note, a replacement Note; provided,  however, that if
any such destroyed,  lost or stolen Note, but not a mutilated  Note,  shall have
become or within  seven  days  shall be due and  payable,  instead  of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or  payable  without  surrender  thereof.  If,  after the  delivery  of such
replacement Note or payment of a destroyed,  lost or stolen Note pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Note in
lieu of which  such  replacement  Note was  issued  presents  for  payment  such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such


                                              18

<PAGE>



payment)  from the Person to whom it was  delivered  or any Person  taking  such
replacement Note from such Person to whom such replacement Note was delivered or
any assignee of such Person, except a bona fide purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in
connection therewith.

        Upon the issuance of any  replacement  Note under this Section 4.03, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other  governmental  charge  that may be  imposed  in  relation
thereto and any other  reasonable  expenses  (including the fees and expenses of
the Indenture Trustee) connected therewith.

        Every   replacement  Note  issued  pursuant  to  this  Section  4.03  in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original  additional  contractual  obligation of the Issuer,  whether or not the
mutilated,  destroyed,  lost or stolen Note shall be at any time  enforceable by
anyone,  and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.

        The provisions of this Section 4.03 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.

        Section  4.04.  Persons  Deemed  Owners.  Prior to due  presentment  for
registration of transfer of any Note, the Issuer,  the Indenture Trustee and any
agent of the Issuer or the Indenture  Trustee may treat the Person in whose name
any Note is  registered  (as of the day of  determination)  as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever,  whether or not such Note be
overdue,  and none of the  Issuer,  the  Indenture  Trustee  or any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.

        Section  4.05.   Cancellation.   All  Notes   surrendered  for  payment,
registration  of transfer,  exchange or redemption  shall, if surrendered to any
Person other than the Indenture  Trustee,  be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee.  The Issuer may at any
time deliver to the  Indenture  Trustee for  cancellation  any Notes  previously
authenticated and delivered  hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes  cancelled  as  provided in this  Section  4.05,  except as  expressly
permitted by this  Indenture.  All cancelled Notes may be held or disposed of by
the  Indenture  Trustee in  accordance  with its standard  retention or disposal
policy as in effect at the time  unless  the  Issuer  shall  direct by an Issuer
Request that they be destroyed or returned to it;  provided  however,  that such
Issuer Request is timely and the Notes have not been  previously  disposed of by
the Indenture Trustee.

        Section 4.06.  Book-Entry  Notes. Each Class of Notes shall initially be
issued as one or more Notes held by the Book-Entry Custodian or, if appointed to
hold such Notes as provided  below,  the Depository  Trust Company,  the initial
Depository,  and  registered  in the name of its  nominee  Cede & Co.  Except as
provided below, registration of such Notes may not be transferred by the


                                              19

<PAGE>



Indenture  Trustee except to another  Depository  that agrees to hold such Notes
for the respective  Beneficial Owners. The Indenture 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
and, if the Indenture  Trustee is not the  Book-Entry  Custodian,  the Indenture
Trustee,  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  new
appointment,  except  if the  Depository  is  the  successor  to the  Book-Entry
Custodian. If the Indenture 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 Notes
held as Book-Entry Notes by the Book-Entry  Custodian.  No Beneficial Owner will
receive a Definitive Note representing such Beneficial  Owner's interest in such
Note,  except as provided in Section 4.08.  Unless and until  definitive,  fully
registered Notes (the "Definitive  Notes") have been issued to Beneficial Owners
pursuant to Section 4.08:

     (i) the provisions of this Section 4.06 shall be in full force and effect;

     (ii) the Note Registrar and the Indenture Trustee shall be entitled to deal
with the Depository for all purposes of this Indenture (including the payment of
principal  of and  interest  on the Notes  and the  giving  of  instructions  or
directions  hereunder)  as the sole  holder  of the  Notes,  and  shall  have no
obligation to the Owners of Notes;

     (iii) to the extent that the  provisions of this Section 4.06 conflict with
any other  provisions  of this  Indenture,  the  provisions of this Section 4.06
shall control;

     (iv) the rights of  Beneficial  Owners shall be exercised  only through the
Depository  and shall be  limited  to those  established  by law and  agreements
between  such  Owners  of  Notes  and  the  Depository   and/or  the  Depository
Participants.  Unless and until  Definitive Notes are issued pursuant to Section
4.08, the initial Depository will make book-entry transfers among the Depository
Participants  and receive and transmit  payments of principal of and interest on
the Notes to such Depository Participants; and

     (v) whenever this Indenture  requires or permits  actions to be taken based
upon  instructions  or  directions  of Holders of Notes  evidencing  a specified
percentage of the aggregate Note Balance of the Notes,  the Depository  shall be
deemed to  represent  such  percentage  only to the extent that it has  received
instructions   to  such  effect  from   Beneficial   Owners  and/or   Depository
Participants owning or representing,  respectively,  such required percentage of
the beneficial  interest in the Notes and has delivered such instructions to the
Indenture Trustee.

        Section  4.07.  Notices  to  Depository.  Whenever  a  notice  or  other
communication  to the Note Holders is required under this Indenture,  unless and
until Definitive  Notes shall have been issued to Beneficial  Owners pursuant to
Section 4.08, the Indenture Trustee shall give all such notices and


                                              20

<PAGE>



communications  specified  herein  to be given to  Holders  of the  Notes to the
Depository, and shall have no obligation to the Beneficial Owners.

        Section 4.08.  Definitive Notes. If (i) the Indenture Trustee determines
that the  Depository  is no longer  willing or able to  properly  discharge  its
responsibilities  with respect to the Notes and the Indenture  Trustee is unable
to locate a qualified successor,  (ii) the Indenture Trustee elects to terminate
the book-entry system through the Depository or (iii) after the occurrence of an
Event of Default,  Owners of Notes representing beneficial interests aggregating
at least a  majority  of the  aggregate  Note  Balance  of the Notes  advise the
Depository in writing that the  continuation of a book- entry system through the
Depository is no longer in the best interests of the Beneficial Owners, then the
Depository shall notify all Beneficial  Owners and the Indenture  Trustee of the
occurrence  of any such event and of the  availability  of  Definitive  Notes to
Beneficial  Owners  requesting the same. Upon surrender to the Indenture Trustee
of the typewritten  Notes  representing  the Book-Entry  Notes by the Book-Entry
Custodian  or  the  Depository,  as  applicable,   accompanied  by  registration
instructions,   the  Issuer  shall  execute  and  the  Indenture  Trustee  shall
authenticate  the Definitive  Notes in accordance  with the  instructions of the
Depository.  None of the Issuer,  the Note  Registrar or the  Indenture  Trustee
shall  be  liable  for  any  delay  in  delivery  of such  instructions  and may
conclusively  rely on, and shall be protected in relying on, such  instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
Holders of the Definitive Notes as Noteholders.

        Section 4.09. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued,  with the intention  that, for federal,  state and
local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness of the Issuer. The Issuer, by entering into this Indenture,  and
each Noteholder, by its acceptance of its Note (and each Beneficial Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat the
Notes for federal,  state and local  income,  single  business and franchise tax
purposes as indebtedness of the Issuer.

        Section 4.10.  Satisfaction  and Discharge of Indenture.  This Indenture
shall cease to be of further  effect with  respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.09,
3.16, 3.18 and 3.19, (v) the rights, obligations and immunities of the Indenture
Trustee  hereunder  (including the rights of the Indenture Trustee under Section
6.07 and the  obligations of the Indenture  Trustee under Section 4.11) and (vi)
the rights of Noteholders as  beneficiaries  hereof with respect to the property
so deposited with the Indenture  Trustee  payable to all or any of them, and the
Indenture Trustee, on demand of and at the expense of the Issuer,  shall execute
proper  instruments  acknowledging  satisfaction and discharge of this Indenture
with respect to the Notes, when

               (A)    either

               (1) the Notes theretofore authenticated and delivered (other than
        (i) Notes  that have been  destroyed,  lost or stolen and that have been
        replaced or paid as  provided  in Section  4.03 and (ii) Notes for whose
        payment money has theretofore  been deposited in trust or segregated and
        held in trust by the  Issuer  and  thereafter  repaid  to the  Issuer or
        discharged  from such  trust,  as  provided  in Section  3.03) have been
        delivered to the Indenture Trustee for cancellation; or


                                              21

<PAGE>



     (2) the  Notes not  theretofore  delivered  to the  Indenture  Trustee  for
cancellation

                      a.     have become due and payable,

               b. will become due and payable at the Final Insured  Payment Date
          within one year, or

               c. have been  declared  immediately  due and payable  pursuant to
          Section 5.02.

        and the Issuer, in the case of a. or b. above, has irrevocably deposited
        or caused to be irrevocably deposited with the Indenture Trustee cash or
        direct obligations of or obligations  guaranteed by the United States of
        America  (which will mature prior to the date such amounts are payable),
        in trust for such purpose,  in an amount sufficient to pay and discharge
        the entire  indebtedness on such Notes then  outstanding not theretofore
        delivered  to the  Indenture  Trustee for  cancellation  when due on the
        Final Insured Payment Date;

               (B) the  Issuer  has paid or  caused  to be paid all  other  sums
        payable hereunder and under the Insurance Agreement by the Issuer; and

               (C) the Issuer has  delivered  to the  Indenture  Trustee and the
        Credit Enhancer an Officer's Certificate and an Opinion of Counsel, each
        meeting the  applicable  requirements  of Section 10.01 and each stating
        that all  conditions  precedent  herein  provided  for  relating  to the
        satisfaction  and  discharge of this  Indenture  have been complied with
        and, if the Opinion of Counsel  relates to a deposit made in  connection
        with Section  4.10(A)(2)b.  above,  such opinion shall further be to the
        effect  that  such  deposit  will  not  have any  material  adverse  tax
        consequences to the Issuer, any Noteholders or any Certificateholders.

        Section 4.11.  Application of Trust Money. All monies deposited with the
Indenture  Trustee  pursuant to Section  4.10 hereof  shall be held in trust and
applied  by it,  in  accordance  with  the  provisions  of the  Notes  and  this
Indenture,  to the  payment,  either  directly  or through  any Paying  Agent or
Certificate Paying Agent, as the Indenture Trustee may determine, to the Holders
of  Securities,  of all sums due and to become due  thereon  for  principal  and
interest;  but such monies need not be segregated from other funds except to the
extent required herein or required by law.

        Section  4.12.  Subrogation  and  Cooperation.  (a) The  Issuer  and the
Indenture  Trustee  acknowledge that (i) to the extent the Credit Enhancer makes
payments under the Credit  Enhancement  Instrument on account of principal of or
interest on the Home Loans,  the Credit Enhancer will be fully subrogated to the
rights of the  Noteholders  to receive such principal and interest from the Home
Loans,  and (ii) the Credit  Enhancer  shall be paid such principal and interest
but only from the sources and in the manner provided herein and in the Insurance
Agreement for the payment of such principal and interest.

        The  Indenture   Trustee  shall  cooperate  in  all  respects  with  any
reasonable  request by the Credit Enhancer for action to preserve or enforce the
Credit  Enhancer's  rights or interest  under this  Indenture  or the  Insurance
Agreement, consistent with this Indenture and without limiting the rights


                                              22

<PAGE>



of the Noteholders as otherwise set forth in the Indenture,  including,  without
limitation, upon the occurrence and continuance of a default under the Insurance
Agreement, a request to take any one or more of the following actions:

                    (i institute  Proceedings  for the collection of all amounts
        then  payable on the Notes,  or under this  Indenture  in respect to the
        Notes and all  amounts  payable  under the  Insurance  Agreement  and to
        enforce  any  judgment  obtained  and  collect  from the  Issuer  monies
        adjudged due;

                   (ii sell the Trust Estate or any portion thereof or rights or
        interest therein,  at one or more public or private Sales (as defined in
        Section 5.15  hereof)  called and  conducted in any manner  permitted by
        law;

               (iii file or record all assignments that have not previously been
          recorded;

               (iv institute  Proceedings  from time to time for the complete or
          partial foreclosure of this Indenture; and

                    (v  exercise  any  remedies  of a  secured  party  under the
        Uniform Commercial Code and take any other appropriate action to protect
        and enforce the rights and remedies of the Credit Enhancer hereunder.

               Following the payment in full of the Notes,  the Credit  Enhancer
shall  continue  to have all rights  and  privileges  provided  to it under this
Section and in all other  provisions of this Indenture,  until all amounts owing
to the Credit Enhancer have been paid in full.

        Section 4.13.  Repayment of Monies Held by Paying  Agent.  In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all monies then held by any Person other than the  Indenture  Trustee  under the
provisions of this  Indenture  with respect to such Notes shall,  upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.05 and thereupon  such Paying Agent shall be released from all further
liability with respect to such monies.

        Section 4.14. Temporary Notes. Pending the preparation of any Definitive
Notes,  the Issuer may  execute and upon its written  direction,  the  Indenture
Trustee may authenticate  and make available for delivery,  temporary Notes that
are printed,  lithographed,  typewritten,  photocopied or otherwise produced, in
any denomination,  substantially of the tenor of the Definitive Notes in lieu of
which  they  are  issued  and  with  such  appropriate  insertions,   omissions,
substitutions  and other  variations  as the officers  executing  such Notes may
determine, as evidenced by their execution of such Notes.

        If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without  unreasonable delay. After the preparation of the Definitive
Notes,  the temporary  Notes shall be  exchangeable  for  Definitive  Notes upon
surrender  of the  temporary  Notes at the  office or  agency  of the  Indenture
Trustee,  without charge to the Holder.  Upon surrender for  cancellation of any
one or more temporary Notes, the Issuer shall execute and the Indenture  Trustee
shall authenticate and make


                                              23

<PAGE>



available for delivery,  in exchange  therefor,  Definitive  Notes of authorized
denominations  and of like  tenor  and  aggregate  principal  amount.  Until  so
exchanged,  such  temporary  Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.


                                              24

<PAGE>



                                    ARTICLE V

                              Default and Remedies

        Section  5.01.  Events of  Default.  The  Issuer  shall  deliver  to the
Indenture  Trustee and the Credit  Enhancer,  within five days after learning of
the  occurrence  any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (iii) of the  definition of "Event
of Default" written notice in the form of an Officer's Certificate of its status
and what action the Issuer is taking or proposes to take with respect thereto.

        Section 5.02. Acceleration of Maturity;  Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case the
Indenture Trustee or the Holders of Notes  representing not less than a majority
of the  aggregate  Note  Balance  of all Notes with the  written  consent of the
Credit Enhancer,  or the Credit Enhancer may declare the Notes to be immediately
due and  payable,  by a notice in writing to the  Issuer  (and to the  Indenture
Trustee  if given by  Noteholders),  and upon any such  declaration  the  unpaid
principal  amount of such  Notes,  together  with  accrued  and unpaid  interest
thereon  through the date of  acceleration,  shall  become  immediately  due and
payable.

        At any time after such  declaration  of  acceleration  of maturity  with
respect to an Event of Default has been made and before a judgment or decree for
payment  of the  money  due  has  been  obtained  by the  Indenture  Trustee  as
hereinafter  in this  Article V provided,  the Holders of Notes  representing  a
majority of the aggregate  Note Balance of all Notes,  by written  notice to the
Issuer  and the  Indenture  Trustee  with  the  written  consent  of the  Credit
Enhancer,  or the Credit  Enhancer,  may in writing  waive the related  Event of
Default and rescind and annul such declaration and its consequences if:

               (i the Issuer has paid or deposited with the Indenture  Trustee a
          sum sufficient to pay:

                      (A) all payments of principal of and interest on the Notes
               and all other  amounts  that would then be due  hereunder or upon
               the  Notes  if  the  Event  of  Default   giving   rise  to  such
               acceleration had not occurred; and

                      (B) all sums paid or  advanced  by the  Indenture  Trustee
               hereunder   and   the    reasonable    compensation,    expenses,
               disbursements  and  advances  of the  Indenture  Trustee  and its
               agents and counsel; and

                   (ii all Events of Default,  other than the  nonpayment of the
        principal of the Notes that has become due solely by such  acceleration,
        have been cured or waived as provided in Section 5.12.

        No such  rescission  shall affect any  subsequent  default or impair any
right consequent thereto.


                                              25

<PAGE>




               Section  5.03.   Collection   of   Indebtedness   and  Suits  for
                    Enforcement by Indenture Trustee.

        (a) The  Issuer  covenants  that if  default  in the  payment of (i) any
interest on any Note when the same  becomes due and  payable,  and such  default
continues for a period of five days, or (ii) the principal of or any installment
of the  principal of any Note when the same becomes due and payable,  the Issuer
shall, upon demand of the Indenture  Trustee,  pay to it, for the benefit of the
Holders  of  Notes,  the  whole  amount  then due and  payable  on the Notes for
principal  and  interest,  with  interest  upon the  overdue  principal,  and in
addition  thereto such further  amount as shall be sufficient to cover the costs
and expenses of  collection,  including the reasonable  compensation,  expenses,
disbursements and advances of the Indenture Trustee and its agents and counsel.

        (b) In case the Issuer  shall fail  forthwith  to pay such  amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust,  subject to the  provisions  of Section  10.17  hereof  may  institute  a
Proceeding for the  collection of the sums so due and unpaid,  and may prosecute
such  Proceeding to judgment or final  decree,  and may enforce the same against
the Issuer or other obligor upon the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor upon the Notes,  wherever
situated, the monies adjudged or decreed to be payable.

        (c) If an Event of  Default  occurs  and is  continuing,  the  Indenture
Trustee  subject  to the  provisions  of  Section  10.17  hereof  may,  as  more
particularly provided in Section 5.04, in its discretion, proceed to protect and
enforce  its  rights  and the  rights of the  Noteholders,  by such  appropriate
Proceedings  as the Indenture  Trustee shall deem most  effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement  in this  Indenture  or in aid of the  exercise  of any power  granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Indenture Trustee by this Indenture or by law.

        (d) In case there shall be pending,  relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust  Estate,  Proceedings  under Title 11 of the United States Code or any
other applicable  federal or state bankruptcy,  insolvency or other similar law,
or in case a receiver,  assignee  or trustee in  bankruptcy  or  reorganization,
liquidator,  sequestrator  or similar  official shall have been appointed for or
taken  possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial  Proceedings  relative to the Issuer
or other  obligor upon the Notes,  or to the creditors or property of the Issuer
or such other  obligor,  the  Indenture  Trustee,  irrespective  of whether  the
principal of any Notes shall then be due and payable as therein  expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any  demand  pursuant  to the  provisions  of this  Section,  shall be
entitled and empowered, by intervention in such Proceedings or otherwise:

                    (i to file and prove a claim or claims for the whole  amount
        of principal  and interest  owing and unpaid in respect of the Notes and
        to file such other  papers or documents as may be necessary or advisable
        in order to have the  claims of the  Indenture  Trustee  (including  any
        claim for  reasonable  compensation  to the  Indenture  Trustee and each
        predecessor  Indenture Trustee,  and their respective agents,  attorneys
        and counsel,  and for  reimbursement  of all  expenses  and  liabilities
        incurred, and all advances made, by the


                                              26

<PAGE>



        Indenture Trustee and each predecessor  Indenture  Trustee,  except as a
        result  of  negligence,  willful  misconduct  or bad  faith)  and of the
        Noteholders allowed in such Proceedings;

                   (ii unless  prohibited by applicable law and regulations,  to
        vote on behalf of the Holders of Notes in any  election of a trustee,  a
        standby  trustee  or Person  performing  similar  functions  in any such
        Proceedings;

                  (iii to  collect  and  receive  any  monies or other  property
        payable or  deliverable on any such claims and to distribute all amounts
        received  with  respect  to the  claims  of the  Noteholders  and of the
        Indenture Trustee on their behalf; and

                   (iv to  file  such  proofs  of  claim  and  other  papers  or
        documents  as may be  necessary or advisable in order to have the claims
        of the Indenture Trustee or the Holders of Notes allowed in any judicial
        proceedings relative to the Issuer, its creditors and its property;

and any trustee,  receiver,  liquidator,  custodian or other similar official in
any such  Proceeding is hereby  authorized by each of such  Noteholders  to make
payments to the Indenture Trustee,  and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders,  to pay to
the Indenture  Trustee such amounts as shall be  sufficient to cover  reasonable
compensation to the Indenture  Trustee,  each predecessor  Indenture Trustee and
their  respective  agents,  attorneys  and counsel,  and all other  expenses and
liabilities  incurred,  and all advances made, by the Indenture Trustee and each
predecessor  Indenture  Trustee  except  as  a  result  of  negligence,  willful
misconduct or bad faith.

        (e) Nothing herein  contained shall be deemed to authorize the Indenture
Trustee to  authorize  or consent to or vote for or accept or adopt on behalf of
any  Noteholder  any  plan  of   reorganization,   arrangement,   adjustment  or
composition  affecting  the Notes or the  rights  of any  Holder  thereof  or to
authorize  the  Indenture  Trustee  to  vote  in  respect  of the  claim  of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.

        (f) All rights of action and of asserting  claims under this  Indenture,
or under any of the Notes, may be enforced by the Indenture  Trustee without the
possession of any of the Notes or the  production  thereof in any trial or other
Proceedings relative thereto,  and any such action or proceedings  instituted by
the Indenture  Trustee shall be brought in its own name as trustee of an express
trust,  and any  recovery of judgment,  subject to the payment of the  expenses,
disbursements  and  compensation  of the  Indenture  Trustee,  each  predecessor
Indenture  Trustee and their respective  agents and attorneys,  shall be for the
ratable benefit of the Holders of the Notes.

        (g) In any  Proceedings  brought by the Indenture  Trustee (and also any
Proceedings  involving the  interpretation of any provision of this Indenture to
which the Indenture  Trustee shall be a party),  the Indenture  Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.

     Section 5.04. Remedies;  Priorities.  (a) If an Event of Default shall have
occurred and be continuing,  the Indenture  Trustee subject to the provisions of
Section 10.17 hereof may with the


                                              27

<PAGE>



written consent of the Credit Enhancer, or shall at the written direction of the
Credit Enhancer, do one or more of the following (subject to Section 5.05):

                    (i institute  Proceedings  in its own name and as trustee of
        an express  trust for the  collection of all amounts then payable on the
        Notes  or  under  this  Indenture  with  respect  thereto,   whether  by
        declaration  or otherwise,  and all amounts  payable under the Insurance
        Agreement,  enforce any judgment  obtained,  and collect from the Issuer
        and any other obligor upon such Notes monies adjudged due;

                   (ii institute  Proceedings from time to time for the complete
        or  partial  foreclosure  of this  Indenture  with  respect to the Trust
        Estate;

                  (iii  exercise any  remedies of a secured  party under the UCC
        and take any other appropriate  action to protect and enforce the rights
        and remedies of the Indenture Trustee and the Holders of the Notes; and

                   (iv sell the Trust Estate or any portion thereof or rights or
        interest  therein,  at one or more  public or private  sales  called and
        conducted in any manner permitted by law;

provided,  however,  that  the  Indenture  Trustee  may not  sell  or  otherwise
liquidate  the  Trust  Estate  following  an Event of  Default,  unless  (A) the
Indenture  Trustee  obtains the consent of the Holders of 100% of the  aggregate
Note  Balance of the Notes and the Credit  Enhancer,  which  consent will not be
unreasonably  withheld,  (B) the proceeds of such Sale  distributable to Holders
are  sufficient  to  discharge  in full all amounts then due and unpaid upon the
Notes for principal  and interest and to reimburse  the Credit  Enhancer for any
amounts drawn under the Credit Enhancement  Instrument and any other amounts due
the Credit Enhancer under the Insurance  Agreement or (C) the Indenture  Trustee
determines that the Home Loans will not continue to provide sufficient funds for
the payment of  principal of and interest on the Notes as they would have become
due if the  Notes  had not been  declared  due and  payable,  and the  Indenture
Trustee  obtains the consent of the Credit  Enhancer,  which consent will not be
unreasonably  withheld,  and of the  Holders  of 66 2/3% of the  aggregate  Note
Balance of the Notes.  In determining  such  sufficiency or  insufficiency  with
respect to clause (B) and (C), the Indenture  Trustee may, but need not,  obtain
and rely upon an opinion of an Independent investment banking or accounting firm
of national  reputation as to the  feasibility of such proposed action and as to
the  sufficiency  of the Trust  Estate for such  purpose.  Following an Event of
Liquidation, on the related Dissolution Payment Date the Indenture Trustee shall
make a draw on the  Credit  Enhancement  Instrument  in an  amount  equal to the
Dissolution  Draw, less any payments made to the Indenture  Trustee with respect
to that date under the Limited Reimbursement Agreement, pursuant to Section 3.27
and  shall  distribute  such  amount  as set  forth in  Section  5.04(b)  below.
Notwithstanding the foregoing,  so long as a Servicing Default has not occurred,
any Sale of the Trust Estate shall be made subject to the continued servicing of
the Home Loans by the Master Servicer as provided in the Servicing Agreement.

        (b) If the Indenture  Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following order:

               FIRST:  to the  Indenture  Trustee for amounts due under  Section
               6.07;


                                              28

<PAGE>



               SECOND: to the Holders of the Notes for amounts due and unpaid on
               the Notes for interest,  according to the amounts due and payable
               on such Notes for interest  from  amounts  available in the Trust
               Estate for such Noteholders;

               THIRD:  to Holders of the Notes for amounts due and unpaid on the
               Notes for principal,  from amounts  available in the Trust Estate
               for such Noteholders, according to the amounts due and payable on
               the Notes for  principal,  until the related Note Balances of the
               Notes are reduced to zero;

               FOURTH:     [reserved];

               FIFTH:  to the payment of all amounts due and owing to the Credit
               Enhancer under the Insurance Agreement;

               SIXTH:  to the  Certificate  Paying  Agent for  amounts due under
               Article VIII of the Trust Agreement; and

               SEVENTH:  to the payment of the remainder,  if any, to the Issuer
               or any other person legally entitled thereto.

        The  Indenture  Trustee may fix a record  date and payment  date for any
payment to  Noteholders  pursuant to this Section  5.04. At least 15 days before
such record date, the Indenture  Trustee shall mail to each  Noteholder a notice
that states the record date, the payment date and the amount to be paid.

        Section  5.05.Optional  Preservation  of the Trust Estate.  If the Notes
have been declared to be due and payable  under Section 5.02  following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled,  the  Indenture  Trustee may, but need not,  (but shall at the written
direction of the Credit  Enhancer) elect to take and maintain  possession of the
Trust Estate.  It is the desire of the parties hereto and the  Noteholders  that
there be at all times  sufficient  funds for the  payment  of  principal  of and
interest on the Notes and other  obligations of the Issuer including  payment to
the Credit  Enhancer,  and the  Indenture  Trustee  shall take such  desire into
account when determining  whether or not to take and maintain  possession of the
Trust  Estate.  In  determining  whether to take and maintain  possession of the
Trust Estate,  the Indenture  Trustee may, but need not, obtain and rely upon an
opinion of an  Independent  investment  banking or  accounting  firm of national
reputation  as to  the  feasibility  of  such  proposed  action  and  as to  the
sufficiency of the Trust Estate for such purpose.

        Section  5.06.Limitation  of Suits. No Holder of any Note shall have any
right to institute any Proceeding,  judicial or otherwise,  with respect to this
Indenture,  or for the  appointment  of a receiver or trustee,  or for any other
remedy hereunder, unless and subject to the provisions of Section 10.17 hereof:

               (i  such  Holder  has  previously  given  written  notice  to the
          Indenture Trustee of a continuing Event of Default;



                                              29

<PAGE>



                  (ii the  Holders  of not less than 25% of the  aggregate  Note
        Balance of the Notes have made written request to the Indenture  Trustee
        to institute such  Proceeding in respect of such Event of Default in its
        own name as Indenture Trustee hereunder;

                 (iii such  Holder or  Holders  have  offered  to the  Indenture
        Trustee reasonable indemnity against the costs, expenses and liabilities
        to be incurred in complying with such request;

                  (iv the  Indenture  Trustee  for 60 days after its  receipt of
        such notice, request and offer of indemnity has failed to institute such
        Proceedings; and

                   (v no direction  inconsistent  with such written  request has
        been given to the  Indenture  Trustee  during such 60-day  period by the
        Holders of a majority of the  aggregate  Note Balance of the Notes or by
        the Credit Enhancer.

It is  understood  and intended  that no one or more Holders of Notes shall have
any right in any manner  whatever by virtue of, or by availing of, any provision
of this  Indenture  to  affect,  disturb  or  prejudice  the rights of any other
Holders of Notes or to obtain or to seek to obtain  priority or preference  over
any other  Holders or to enforce any right under this  Indenture,  except in the
manner herein provided.

        In  the  event  the  Indenture  Trustee  shall  receive  conflicting  or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each  representing  less than a majority of the  aggregate  Note  Balance of the
Notes,  the Indenture  Trustee in its sole discretion may determine what action,
if any, shall be taken, notwithstanding any other provisions of this Indenture.

        Section  5.07.Unconditional  Rights of Noteholders to Receive  Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note  shall have the  right,  which is  absolute  and  unconditional,  to
receive  payment of the  principal of and  interest,  if any, on such Note on or
after  the  respective  due  dates  thereof  expressed  in such  Note or in this
Indenture and to institute  suit for the  enforcement  of any such payment,  and
such right shall not be impaired without the consent of such Holder.

        Section  5.08.Restoration  of  Rights  and  Remedies.  If the  Indenture
Trustee or any  Noteholder has instituted any Proceeding to enforce any right or
remedy  under  this  Indenture  and such  Proceeding  has been  discontinued  or
abandoned  for any  reason or has been  determined  adversely  to the  Indenture
Trustee  or to such  Noteholder,  then and in every  such case the  Issuer,  the
Indenture  Trustee and the Noteholders  shall,  subject to any  determination in
such  Proceeding,  be restored  severally and  respectively to their  respective
former  positions  hereunder,  and  thereafter  all rights and  remedies  of the
Indenture  Trustee  and  the  Noteholders  shall  continue  as  though  no  such
Proceeding had been instituted.

        Section 5.09.Rights and Remedies  Cumulative.  No right or remedy herein
conferred upon or reserved to the Indenture  Trustee,  the Credit Enhancer or to
the  Noteholders  is intended to be exclusive of any other right or remedy,  and
every right and remedy shall, to the extent  permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or


                                              30

<PAGE>



hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

        Section 5.10.Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Credit Enhancer or any Holder of any Note to exercise any
right or remedy  accruing  upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein.  Every  right  and  remedy  given  by this  Article  V or by law to the
Indenture  Trustee or to the Noteholders may be exercised from time to time, and
as  often  as may  be  deemed  expedient,  by the  Indenture  Trustee  or by the
Noteholders, as the case may be.

        Section  5.11.Control by  Noteholders.  The Holders of a majority of the
aggregate Note Balance of Notes with the consent of the Credit Enhancer,  or the
Credit  Enhancer (so long as no Credit  Enhancer  Default exists) shall have the
right to direct the time,  method and place of conducting any Proceeding for any
remedy  available  to  the  Indenture  Trustee  with  respect  to the  Notes  or
exercising any trust or power conferred on the Indenture Trustee; provided that:

               (i such  direction  shall not be in conflict with any rule of law
          or with this Indenture;

                  (ii  subject  to  the  express  terms  of  Section  5.04,  any
        direction to the Indenture Trustee to sell or liquidate the Trust Estate
        shall be by  Holders  of Notes  representing  not less  than 100% of the
        aggregate Note Balance of Notes with the consent of the Credit Enhancer,
        or the Credit Enhancer (so long as no Credit Enhancer Default exists);

                 (iii if the  conditions  set  forth in  Section  5.05 have been
        satisfied  and the Indenture  Trustee  elects to retain the Trust Estate
        pursuant to such Section, then any direction to the Indenture Trustee by
        Holders  of Notes  representing  less  than 100% of the  aggregate  Note
        Balance of Notes to sell or  liquidate  the Trust  Estate shall be of no
        force and effect; and

                  (iv the  Indenture  Trustee may take any other  action  deemed
        proper  by the  Indenture  Trustee  that is not  inconsistent  with such
        direction.

Notwithstanding the rights of Noteholders set forth in this Section,  subject to
Section 6.01, the Indenture  Trustee need not take any action that it determines
might involve it in liability or might materially adversely affect the rights of
any Noteholders not consenting to such action.

        Section  5.12.Waiver of Past Defaults.  Prior to the  declaration of the
acceleration  of the  maturity  of the Notes as provided  in Section  5.02,  the
Holders of Notes of not less than a majority of the  aggregate  Note  Balance of
the Notes with the consent of the Credit  Enhancer,  or the Credit  Enhancer (so
long as no Credit  Enhancer  Default exists) may waive any past Event of Default
and its  consequences  except an Event of Default (a) with respect to payment of
principal  of or interest on any of the Notes or (b) in respect of a covenant or
provision  hereof which cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver,  the Issuer,  the Indenture
Trustee and the Holders of the Notes shall be restored to their former positions
and


                                              31

<PAGE>



rights  hereunder,  respectively;  but  no  such  waiver  shall  extend  to  any
subsequent or other Event of Default or impair any right consequent thereto.

        Upon any such waiver,  any Event of Default  arising  therefrom shall be
deemed to have been cured and not to have  occurred,  for every  purpose of this
Indenture;  but no such waiver shall extend to any  subsequent or other Event of
Default or impair any right consequent thereto.

        Section 5.13.Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's  acceptance thereof shall be deemed
to have agreed,  that any court may in its discretion  require,  in any suit for
the  enforcement  of any right or remedy  under this  Indenture,  or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture  Trustee,  the  filing  by any  party  litigant  in  such  suit  of an
undertaking  to pay the  costs of such  suit,  and that  such  court  may in its
discretion  assess  reasonable  costs,  including  reasonable  attorneys'  fees,
against  any party  litigant  in such suit,  having due regard to the merits and
good  faith of the  claims or  defenses  made by such  party  litigant;  but the
provisions  of this Section 5.13 shall not apply to (a) any suit  instituted  by
the Indenture  Trustee,  (b) any suit instituted by any Noteholder,  or group of
Noteholders,  in  each  case  holding  in the  aggregate  more  than  10% of the
aggregate Note Balance of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture.

        Section  5.14.Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension  law  wherever  enacted,  now or at any time  hereafter in
force,  that may affect the covenants or the performance of this Indenture;  and
the Issuer (to the extent that it may  lawfully do so) hereby  expressly  waives
all  benefit  or  advantage  of any such law,  and  covenants  that it shall not
hinder,  delay or impede  the  execution  of any  power  herein  granted  to the
Indenture Trustee,  but will suffer and permit the execution of every such power
as though no such law had been enacted.

        Section  5.15.Sale  of Trust  Estate.  (a) The power to effect any sale,
liquidation  or other  disposition (a "Sale") of any portion of the Trust Estate
pursuant to Section 5.04 is expressly  subject to the provisions of Section 5.05
and this Section 5.15.  The power to effect any such Sale shall not be exhausted
by any one or more Sales as to any portion of the Trust Estate remaining unsold,
but shall continue unimpaired until the entire Trust Estate shall have been sold
or all  amounts  payable  on the Notes and under  this  Indenture  and under the
Insurance Agreement shall have been paid. The Indenture Trustee may from time to
time postpone any public Sale by public  announcement made at the time and place
of such Sale.  The Indenture  Trustee hereby  expressly  waives its right to any
amount fixed by law as compensation for any Sale.

        (b) The  Indenture  Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless:

     (1) the Holders of all Notes and the Credit Enhancer  consent to, or direct
the Indenture Trustee to make, such Sale, or



                                       32

<PAGE>



               (2) the  proceeds  of such Sale would be not less than the entire
amount  which  would  be  payable  to  the  Noteholders  under  the  Notes,  the
Certificateholders  under the Certificates and the Credit Enhancer in respect of
amounts drawn under the Credit Enhancement  Instrument and any other amounts due
the Credit  Enhancer under the Insurance  Agreement,  in full payment thereof in
accordance  with Section 5.02, on the Payment Date next  succeeding  the date of
such Sale, or

               (3) the Indenture  Trustee  determines,  in its sole  discretion,
that the  conditions for retention of the Trust Estate set forth in Section 5.05
cannot be satisfied (in making any such determination, the Indenture Trustee may
rely upon an opinion of an  Independent  investment  banking  firm  obtained and
delivered as provided in Section 5.05), and the Credit Enhancer consents to such
Sale,  which  consent  will  not  be  unreasonably   withheld  and  the  Holders
representing at least 66-2/3% of the aggregate Note Balance of the Notes consent
to such Sale.

The purchase by the Indenture  Trustee of all or any portion of the Trust Estate
at a private  Sale shall not be deemed a Sale or other  disposition  thereof for
purposes of this Section 5.15(b).

        (c) Unless the Holders and the Credit Enhancer have otherwise  consented
or directed the Indenture  Trustee,  at any public Sale of all or any portion of
the Trust  Estate at which a minimum  bid equal to or  greater  than the  amount
described in paragraph (2) of  subsection  (b) of this Section 5.15 has not been
established  by the  Indenture  Trustee and no Person bids an amount equal to or
greater than such amount,  the  Indenture  Trustee  shall bid an amount at least
$1.00 more than the highest other bid.

     (d) In connection with a Sale of all or any portion of the Trust Estate:

               (1) any  Holder  or  Holders  of  Notes  may bid for and with the
consent of the Credit Enhancer  purchase the property offered for sale, and upon
compliance  with the terms of sale may hold,  retain and  possess and dispose of
such property,  without further accountability,  and may, in paying the purchase
money therefor, deliver any Notes or claims for interest thereon in lieu of cash
up to the amount  which  shall,  upon  distribution  of the net proceeds of such
sale, be payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due  thereon,  shall be  returned  to the  Holders
thereof after being appropriately stamped to show such partial payment;

               (2) the  Indenture  Trustee may bid for and acquire the  property
offered  for Sale in  connection  with any Sale  thereof,  and,  subject  to any
requirements  of, and to the extent  permitted by,  applicable law in connection
therewith,  may  purchase  all or any  portion of the Trust  Estate in a private
sale, and, in lieu of paying cash therefor, may make settlement for the purchase
price by crediting  the gross Sale price against the sum of (A) the amount which
would be  distributable  to the Holders of the Notes and Holders of Certificates
and amounts owing to the Credit  Enhancer as a result of such Sale in accordance
with Section  5.04(b) on the Payment Date next  succeeding the date of such Sale
and (B) the expenses of the Sale and of any Proceedings in connection  therewith
which are  reimbursable  to it,  without being  required to produce the Notes in
order to  complete  any  such  Sale or in  order  for the net  Sale  price to be
credited  against  such Notes,  and any  property  so acquired by the  Indenture
Trustee shall be held and dealt with by it in accordance  with the provisions of
this Indenture;


                                              33

<PAGE>



               (3)  the   Indenture   Trustee   shall  execute  and  deliver  an
appropriate instrument of conveyance transferring its interest in any portion of
the Trust Estate in connection with a Sale thereof;

               (4) the  Indenture  Trustee is hereby  irrevocably  appointed the
agent and attorney-in- fact of the Issuer to transfer and convey its interest in
any portion of the Trust Estate in connection  with a Sale thereof,  and to take
all action necessary to effect such Sale; and

               (5) no purchaser or  transferee  at such a Sale shall be bound to
ascertain the Indenture  Trustee's  authority,  inquire into the satisfaction of
any conditions precedent or see to the application of any monies.

        Section  5.16.Action on Notes. The Indenture Trustee's right to seek and
recover  judgment on the Notes or under this Indenture  shall not be affected by
the seeking,  obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture  Trustee  against the Issuer or by the levy of any
execution  under such  judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer.  Any money or property  collected by the  Indenture
Trustee shall be applied in accordance with Section 5.04(b).

        Section  5.17.Performance  and Enforcement of Certain  Obligations.  (a)
Promptly  following a written  request from the Credit Enhancer or the Indenture
Trustee with the written consent of the Credit Enhancer to do so, the Issuer, in
its capacity as holder of the Home Loans, shall, with the written consent of the
Credit  Enhancer,  take all such  lawful  action as the  Indenture  Trustee  may
request to cause the Issuer to compel or secure the  performance  and observance
by the  Seller  and the  Master  Servicer,  as  applicable,  of  each  of  their
obligations  to the Issuer under or in  connection  with the Home Loan  Purchase
Agreement  and the  Servicing  Agreement,  and to  exercise  any and all rights,
remedies,  powers and  privileges  lawfully  available to the Issuer under or in
connection with the Home Loan Purchase Agreement and the Servicing  Agreement to
the extent and in the manner  directed by the Indenture  Trustee,  as pledgee of
the Home Loans,  including the transmission of notices of default on the part of
the Seller or the Master  Servicer  thereunder  and the  institution of legal or
administrative  actions or  proceedings  to compel or secure  performance by the
Seller or the Master Servicer of each of their  obligations  under the Home Loan
Purchase Agreement and the Servicing Agreement.

        (b) If an Event of Default has occurred and is continuing, the Indenture
Trustee,  as  pledgee  of the Home  Loans,  subject  to the rights of the Credit
Enhancer  under  the  Servicing  Agreement  may,  and  at the  direction  (which
direction  shall be in writing or by telephone  (confirmed  in writing  promptly
thereafter))  of the  Holders of 66-2/3% of the  aggregate  Note  Balance of the
Notes shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Seller or the Master Servicer under or in connection with the
Home Loan Purchase Agreement and the Servicing Agreement, including the right or
power to take any action to compel or secure  performance  or  observance by the
Seller or the Master Servicer,  as the case may be, of each of their obligations
to the Issuer thereunder and to give any consent,  request,  notice,  direction,
approval,  extension or waiver under the Home Loan  Purchase  Agreement  and the
Servicing  Agreement,  as the case may be,  and any right of the  Issuer to take
such action shall not be suspended. In connection


                                              34

<PAGE>



therewith,  as determined by the  Indenture  Trustee,  the Issuer shall take all
actions  necessary  to effect the  transfer  of the Home Loans to the  Indenture
Trustee.


                                              35

<PAGE>



                                   ARTICLE VI

                              The Indenture Trustee

        Section 6.01.Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing,  the Indenture Trustee shall exercise the rights and
powers vested in it by this  Indenture 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.

        (b)  Except during the continuance of an Event of Default:

                   (i the  Indenture  Trustee  undertakes to perform such duties
        and only such duties as are specifically set forth in this Indenture and
        no implied  covenants or  obligations  shall be read into this Indenture
        against the Indenture Trustee; and

                  (ii in the  absence  of bad faith on its part,  the  Indenture
        Trustee may conclusively rely, as to the truth of the statements and the
        correctness of the opinions  expressed  therein,  upon  certificates  or
        opinions  furnished  to the  Indenture  Trustee  and  conforming  to the
        requirements of this  Indenture;  however,  the Indenture  Trustee shall
        examine the certificates  and opinions to determine  whether or not they
        conform to the requirements of this Indenture.

        (c) The Indenture Trustee may not be relieved from liability for its own
negligent  action,  its  own  negligent  failure  to  act  or  its  own  willful
misconduct, except that:

               (i this  paragraph  does not limit the effect of paragraph (b) of
          this Section 6.01;

                  (ii the Indenture Trustee shall not be liable for any error of
        judgment made in good faith by a Responsible Officer unless it is proved
        that the Indenture  Trustee was negligent in ascertaining  the pertinent
        facts; and

                 (iii the Indenture  Trustee shall not be liable with respect to
        any action it takes or omits to take in good faith in accordance  with a
        direction  received by it (A)  pursuant to Section  5.11 or (B) from the
        Credit  Enhancer,  which it is  entitled  to give under any of the Basic
        Documents.

        (d) The Indenture  Trustee shall not be liable for interest on any money
received by it except as the  Indenture  Trustee  may agree in writing  with the
Issuer.

        (e) Money held in trust by the Indenture  Trustee need not be segregated
from  other  funds  except to the  extent  required  by law or the terms of this
Indenture or the Trust Agreement.

        (f) No provision of this Indenture  shall require the Indenture  Trustee
to expend or risk its own funds or otherwise  incur  financial  liability in the
performance  of any of its duties  hereunder  or in the  exercise  of any of its
rights or powers, if it shall have reasonable  grounds to believe that repayment
of such  funds or  adequate  indemnity  against  such risk or  liability  is not
reasonably assured to it.


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<PAGE>



        (g)  Every  provision  of this  Indenture  relating  to the  conduct  or
affecting  the liability of or affording  protection  to the  Indenture  Trustee
shall be subject to the  provisions of this Section and to the provisions of the
TIA.

        Section 6.02.Rights of Indenture Trustee.  (a) The Indenture Trustee may
rely on any  document  believed  by it to be genuine  and to have been signed or
presented by the proper person.  The Indenture  Trustee need not investigate any
fact or matter stated in the document.

        (b) Before the Indenture  Trustee acts or refrains  from acting,  it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable  for any  action it takes or omits to take in good  faith in
reliance on an Officer's Certificate or Opinion of Counsel.

        (c) The  Indenture  Trustee  may  execute  any of the  trusts  or powers
hereunder  or perform  any duties  hereunder  either  directly  or by or through
agents or attorneys or a custodian or nominee,  and the Indenture  Trustee shall
not be  responsible  for any misconduct or negligence on the part of, or for the
supervision of, any such agent,  attorney,  custodian or nominee  appointed with
due care by it hereunder.

        (d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith  which it believes  to be  authorized  or within its
rights or powers;  provided,  however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.

        (e) The Indenture  Trustee may consult with  counsel,  and the advice or
opinion of counsel with respect to legal matters  relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action  taken,  omitted or  suffered by it  hereunder  in good
faith and in accordance with the advice or opinion of such counsel.

        Section  6.03.Individual  Rights of  Indenture  Trustee.  The  Indenture
Trustee in its  individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates  with the same
rights  it would  have if it were not  Indenture  Trustee.  Any Note  Registrar,
co-registrar or co-paying agent may do the same with like rights.  However,  the
Indenture Trustee must comply with Sections 6.11 and 6.12.

        Section 6.04.Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be (i)  responsible  for and makes no  representation  as to the validity or
adequacy of this Indenture or the Notes,  (ii)  accountable for the Issuer's use
of the proceeds  from the Notes or (iii)  responsible  for any  statement of the
Issuer in the Indenture or in any document issued in connection with the sale of
the Notes or in the Notes  other than the  Indenture  Trustee's  certificate  of
authentication.

        Section  6.05.Notice of Event of Default.  If an Event of Default occurs
and is continuing  and if it is known to a Responsible  Officer of the Indenture
Trustee, the Indenture Trustee shall give notice thereof to the Credit Enhancer.
The  Indenture  Trustee  shall  mail to each  Noteholder  notice of the Event of
Default  within  90 days  after  it  occurs.  Except  in the case of an Event of
Default  in payment of  principal  of or  interest  on any Note,  the  Indenture
Trustee may withhold the notice if and so long as a committee of its Responsible
Officers  in  good  faith  determines  that  withholding  the  notice  is in the
interests of Noteholders.


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<PAGE>



        Section  6.06.Reports  by Indenture  Trustee to Holders.  The  Indenture
Trustee shall deliver to each Noteholder such  information as may be required to
enable  such holder to prepare its  federal  and state  income tax  returns.  In
addition,  upon the  Issuer's  written  request,  the  Indenture  Trustee  shall
promptly  furnish  information  reasonably  requested  by  the  Issuer  that  is
reasonably  available to the  Indenture  Trustee to enable the Issuer to perform
its federal and state income tax reporting obligations.

        Section  6.07.Compensation  and  Indemnity.  The Issuer shall pay to the
Indenture Trustee on each Payment Date reasonable compensation for its services.
The  Indenture  Trustee  shall be  compensated  and  indemnified  by the  Master
Servicer in  accordance  with Section 6.06 of the Servicing  Agreement,  and all
amounts owing to the Indenture  Trustee hereunder in excess of such amount shall
be paid solely as provided in Section 3.05 hereof (subject to the priorities set
forth therein). The Indenture Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Issuer shall reimburse
the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made
by it,  including costs of collection,  in addition to the  compensation for its
services.  Such expenses shall include the reasonable compensation and expenses,
disbursements  and  advances  of  the  Indenture   Trustee's  agents,   counsel,
accountants  and  experts.  The Issuer shall  indemnify  the  Indenture  Trustee
against  any and all loss,  liability  or expense  (including  attorneys'  fees)
incurred  by it in  connection  with the  administration  of this  trust and the
performance  of its duties  hereunder.  The  Indenture  Trustee shall notify the
Issuer  promptly  of any claim for which it may seek  indemnity.  Failure by the
Indenture  Trustee to so notify the Issuer  shall not  relieve the Issuer of its
obligations hereunder. The Issuer shall defend any such claim, and the Indenture
Trustee may have separate counsel and the Issuer shall pay the fees and expenses
of such  counsel.  The  Issuer is not  obligated  to  reimburse  any  expense or
indemnify  against any loss,  liability  or expense  incurred  by the  Indenture
Trustee through the Indenture  Trustee's own willful  misconduct,  negligence or
bad faith.

        The Issuer's  payment  obligations to the Indenture  Trustee pursuant to
this  Section  6.07 shall  survive the  discharge  of this  Indenture.  When the
Indenture  Trustee  incurs  expenses after the occurrence of an Event of Default
specified  in clause (iv) or (v) of the  definition  thereof with respect to the
Issuer, the expenses are intended to constitute expenses of administration under
Title 11 of the  United  States  Code or any other  applicable  federal or state
bankruptcy, insolvency or similar law.

        Section 6.08.Replacement of Indenture Trustee. No resignation or removal
of the Indenture  Trustee and no  appointment of a successor  Indenture  Trustee
shall become  effective  until the  acceptance of  appointment  by the successor
Indenture  Trustee  pursuant to this Section  6.08.  The  Indenture  Trustee may
resign at any time by so  notifying  the  Issuer and the  Credit  Enhancer.  The
Holders of a majority of the  aggregate  Note Balance of the Notes or the Credit
Enhancer may remove the Indenture  Trustee by so notifying the Indenture Trustee
and the Credit  Enhancer  and may appoint a  successor  Indenture  Trustee.  The
Issuer shall remove the Indenture Trustee if:

                   (i  the Indenture Trustee fails to comply with Section 6.11;

                 (ii  the Indenture Trustee is adjudged a bankrupt or insolvent;



                                              38

<PAGE>



               (iii a  receiver  or other  public  officer  takes  charge of the
          Indenture Trustee or its property; or

               (iv the Indenture Trustee otherwise becomes incapable of acting.

        If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of the  Indenture  Trustee for any reason (the  Indenture  Trustee in
such event being  referred to herein as the  retiring  Indenture  Trustee),  the
Issuer shall promptly appoint a successor  Indenture Trustee with the consent of
the  Credit  Enhancer  which  consent  will  not be  unreasonably  withheld.  In
addition,  the  Indenture  Trustee  will  resign  to  avoid  being  directly  or
indirectly controlled by the Issuer.

        A successor  Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer.  Thereupon, the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture.  The successor  Indenture Trustee
shall mail a notice of its  succession to  Noteholders.  The retiring  Indenture
Trustee shall promptly  transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.

        If a successor  Indenture  Trustee  does not take office  within 60 days
after the  retiring  Indenture  Trustee  resigns  or is  removed,  the  retiring
Indenture Trustee, the Issuer or the Holders of a majority of the aggregate Note
Balance of the Notes may petition any court of  competent  jurisdiction  for the
appointment of a successor Indenture Trustee.

        If the  Indenture  Trustee  fails  to  comply  with  Section  6.11,  any
Noteholder may petition any court of competent  jurisdiction  for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.

        Notwithstanding  the  replacement of the Indenture  Trustee  pursuant to
this Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.

        Section  6.09.Successor  Indenture  Trustee by Merger.  If the Indenture
Trustee  consolidates  with,  merges  or  converts  into,  or  transfers  all or
substantially all its corporate trust business or assets to, another corporation
or banking  association,  the  resulting,  surviving or  transferee  corporation
without any further act shall be the successor Indenture Trustee; provided, that
such  corporation  or  banking  association  shall be  otherwise  qualified  and
eligible  under  Section 6.11.  The  Indenture  Trustee shall provide the Rating
Agencies written notice of any such transaction after the Closing Date.

        In case at the time such  successor or successors by merger,  conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such  successor  to the  Indenture  Trustee  may  adopt the  certificate  of
authentication   of  any  predecessor   trustee,   and  deliver  such  Notes  so
authenticated;  and in case at that  time any of the  Notes  shall not have been
authenticated,  any successor to the  Indenture  Trustee may  authenticate  such
Notes  either  in the name of any  predecessor  hereunder  or in the name of the
successor  to the  Indenture  Trustee;  and in all such cases such  certificates
shall have the full


                                              39

<PAGE>



force which it is anywhere in the Notes or in this  Indenture  provided that the
certificate of the Indenture Trustee shall have.

        Section  6.10.Appointment of Co-Indenture  Trustee or Separate Indenture
Trustee.  (a)  Notwithstanding  any other  provisions of this Indenture,  at any
time, for the purpose of meeting any legal  requirement of any  jurisdiction  in
which any part of the Trust  Estate may at the time be  located,  the  Indenture
Trustee  shall have the power and may execute and  deliver  all  instruments  to
appoint one or more Persons to act as a co-trustee or  co-trustees,  or separate
trustee or separate trustees, of all or any part of the Owner Trust, and to vest
in such  Person  or  Persons,  in such  capacity  and  for  the  benefit  of the
Noteholders,  such title to the Trust Estate, or any part thereof,  and, subject
to the other  provisions  of this  Section,  such powers,  duties,  obligations,
rights and trusts as the Indenture Trustee may consider  necessary or desirable.
No co-trustee or separate trustee  hereunder shall be required to meet the terms
of  eligibility  as a  successor  trustee  under  Section  6.11 and no notice to
Noteholders of the  appointment  of any co-trustee or separate  trustee shall be
required under Section 6.08 hereof.

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

                   (i all rights,  powers,  duties and obligations  conferred or
        imposed upon the  Indenture  Trustee  shall be conferred or imposed upon
        and  exercised or performed by the  Indenture  Trustee and such separate
        trustee or co-trustee  jointly (it being  understood  that such separate
        trustee or co-trustee is not  authorized to act  separately  without the
        Indenture  Trustee joining in such act), except to the extent that under
        any law of any  jurisdiction  in which any particular act or acts are to
        be performed the Indenture  Trustee shall be  incompetent or unqualified
        to perform such act or acts, in which event such rights,  powers, duties
        and  obligations  (including the holding of title to the Trust Estate or
        any portion  thereof in any such  jurisdiction)  shall be exercised  and
        performed singly by such separate  trustee or co-trustee,  but solely at
        the direction of the Indenture Trustee;

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

                 (iii  the  Indenture   Trustee  may  at  any  time  accept  the
        resignation of or remove any separate trustee or co-trustee.

        (c) Any notice,  request or other writing given to the Indenture 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 VI. Each separate  trustee and  co-trustee,  upon
its  acceptance  of the trusts  conferred,  shall be vested  with the estates or
property  specified in its  instrument of  appointment,  either jointly with the
Indenture Trustee or separately,  as may be provided therein, subject to all the
provisions of this  Indenture,  specifically  including  every provision of this
Indenture  relating to the conduct of,  affecting the liability of, or affording
protection to, the Indenture Trustee.  Every such instrument shall be filed with
the Indenture Trustee.



                                              40

<PAGE>



        (d) Any separate  trustee or co-trustee  may at any time  constitute the
Indenture 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 Indenture Trustee,  to the extent permitted by law, without the
appointment of a new or successor trustee.

        Section 6.11.Eligibility;  Disqualification. The Indenture Trustee shall
at all times satisfy the requirements of TIA ss. 310(a).  The Indenture  Trustee
shall have a combined  capital and surplus of at least  $50,000,000 as set forth
in its most recent  published  annual  report of condition  and it or its parent
shall have a  long-term  debt rating of A or better by  Moody's.  The  Indenture
Trustee  shall comply with TIA ss.  310(b),  including  the  optional  provision
permitted by the second sentence of TIA ss. 310(b)(9);  provided,  however, that
there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or
indentures  under which other  securities of the Issuer are  outstanding  if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.

        Section  6.12.Preferential  Collection  of Claims  Against  Issuer.  The
Indenture  Trustee  shall  comply with TIA ss.  311(a),  excluding  any creditor
relationship  listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.

        Section  6.13.Representations  and  Warranties.  The  Indenture  Trustee
hereby represents that:

                (i) The Indenture  Trustee is duly organized,  validly  existing
        and in good standing  under the laws of the State of New York with power
        and authority to own its  properties and to conduct its business as such
        properties are currently owned and such business is presently conducted.

               (ii) The Indenture Trustee has the power and authority to execute
        and  deliver  this  Indenture  and to  carry  out  its  terms;  and  the
        execution,  delivery and  performance  of this  Indenture have been duly
        authorized by the Indenture Trustee by all necessary corporate action.

               (iii) The consummation of the  transactions  contemplated by this
        Indenture and the  fulfillment of the terms hereof do not conflict with,
        result  in any  breach  of  any  of the  terms  and  provisions  of,  or
        constitute  (with or without  notice or lapse of time) a default  under,
        the articles of organization  or bylaws of the Indenture  Trustee or any
        agreement or other instrument to which the Indenture  Trustee is a party
        or by which it is bound.

               (iv) To the  Indenture  Trustee's  best  knowledge,  there are no
        proceedings or  investigations  pending or threatened  before any court,
        regulatory   body,   administrative   agency   or   other   governmental
        instrumentality  having  jurisdiction  over the Indenture Trustee or its
        properties:  (A) asserting the  invalidity of this Indenture (B) seeking
        to prevent the consummation of any of the  transactions  contemplated by
        this  Indenture  or (C) seeking any  determination  or ruling that might
        materially and adversely affect the performance by the Indenture Trustee
        of its  obligations  under, or the validity or  enforceability  of, this
        Indenture.



                                              41

<PAGE>



                (v) The  Indenture  Trustee  does not have notice of any adverse
        claim (as such  terms  are used in  Delaware  UCC  Section  8-302)  with
        respect to the Home Loans.

               Section  6.14.Directions  to  Indenture  Trustee.  The  Indenture
                    Trustee is hereby directed:

     (a) to accept the pledge of the Home Loans and hold the assets of the Trust
in trust for the Noteholders and the Credit Enhancer;

     (b) to  authenticate  and  deliver  the  Notes  substantially  in the  form
prescribed by Exhibit A in accordance with the terms of this Indenture; and

     (c) to take all other actions as shall be required to be taken by the terms
of this Indenture.

        Section  6.15.Indenture  Trustee  May  Own  Securities.   The  Indenture
Trustee, in its individual or any other capacity may become the owner or pledgee
of  Securities  with the same  rights  it  would  have if it were not  Indenture
Trustee.


                                              42

<PAGE>



                                   ARTICLE VII

                                Noteholders' Lists and Reports

        Section  7.01.Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders.  The Issuer will furnish or cause to be furnished to the  Indenture
Trustee (a) not more than five days after each Record Date, a list, in such form
as the Indenture Trustee may reasonably  require,  of the names and addresses of
the Holders of Notes as of such Record Date and,  (b) at such other times as the
Indenture Trustee and the Credit Enhancer may request in writing, within 30 days
after  receipt by the  Issuer of any such  request,  a list of similar  form and
content  as of a date not more  than 10 days  prior  to the  time  such  list is
furnished;  provided, however, that so long as the Indenture Trustee is the Note
Registrar, no such list shall be required to be furnished.

        Section 7.02.Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve,  in as current a form as is reasonably
practicable,  the names and  addresses of the Holders of Notes  contained in the
most recent list furnished to the Indenture  Trustee as provided in Section 7.01
and the names and  addresses  of  Holders  of Notes  received  by the  Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in such Section 7.01 upon receipt of a new list
so furnished.

        (b) Noteholders  may  communicate  pursuant to TIA ss. 312(b) with other
Noteholders  with  respect to their  rights  under this  Indenture  or under the
Notes.

        (c) The Issuer,  the Indenture Trustee and the Note Registrar shall have
the protection of TIA ss. 312(c).

        Section 7.03.Reports by Issuer.  (a)  The Issuer shall:

                   (i file with the Indenture Trustee,  within 15 days after the
        Issuer is required to file the same with the  Commission,  copies of the
        annual  reports and the  information,  documents  and other  reports (or
        copies of such  portions of any of the foregoing as the  Commission  may
        from time to time by rules and  regulations  prescribe)  that the Issuer
        may be  required to file with the  Commission  pursuant to Section 13 or
        15(d) of the Exchange Act;

                  (ii file with the  Indenture  Trustee,  and the  Commission in
        accordance  with rules and  regulations  prescribed from time to time by
        the Commission such additional  information,  documents and reports with
        respect to compliance by the Issuer with the conditions and covenants of
        this  Indenture  as may be required  from time to time by such rules and
        regulations; and

                 (iii supply to the Indenture Trustee (and the Indenture Trustee
        shall transmit by mail to all  Noteholders  described in TIA ss. 313(c))
        such summaries of any information,  documents and reports required to be
        filed by the Issuer  pursuant  to clauses  (i) and (ii) of this  Section
        7.03(a) and by rules and regulations prescribed from time to time by the
        Commission.



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<PAGE>



        (b) Unless  the  Issuer  otherwise  determines,  the fiscal  year of the
Issuer shall end on December 31 of each year.

        Section  7.04.Reports  by  Indenture  Trustee.  If  required  by TIA ss.
313(a),  within 60 days after each January 1 beginning with January 1, 2001, the
Indenture  Trustee  shall mail to each  Noteholder as required by TIA ss. 313(c)
and to the Credit  Enhancer a brief report  dated as of such date that  complies
with TIA ss.  313(a).  The  Indenture  Trustee  also shall  comply  with TIA ss.
313(b).

        A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture  Trustee with the Commission and each stock exchange,  if
any,  on which the Notes are  listed.  The Issuer  shall  notify  the  Indenture
Trustee if and when the Notes are listed on any stock exchange.


                                              44

<PAGE>



                                  ARTICLE VIII

                      Accounts, Disbursements and Releases

        Section 8.01.Collection of Money. Except as otherwise expressly provided
herein,  the  Indenture  Trustee may demand  payment or  delivery  of, and shall
receive and collect,  directly and without  intervention  or  assistance  of any
fiscal agent or other  intermediary,  all money and other property payable to or
receivable by the Indenture  Trustee  pursuant to this Indenture.  The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture,  if any default occurs
in the making of any payment or  performance  under any  agreement or instrument
that is part of the Trust Estate,  the Indenture Trustee may take such action as
may be  appropriate  to enforce  such  payment  or  performance,  including  the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.

        Section  8.02.Trust  Accounts.  (a) On or prior to the Closing Date, the
Issuer shall cause the Indenture Trustee to establish and maintain,  in the name
of the Indenture Trustee, for the benefit of the Noteholders and the Certificate
Paying Agent, on behalf of the  Certificateholders  and the Credit Enhancer, the
Payment Account as provided in Section 3.01 of this Indenture.

        (b) All  monies  deposited  from  time to  time in the  Payment  Account
pursuant to the Servicing  Agreement and all deposits  therein  pursuant to this
Indenture  are for the benefit of the  Noteholders  and the  Certificate  Paying
Agent, on behalf of the  Certificateholders  and all investments  made with such
monies  including  all  income or other gain from such  investments  are for the
benefit of the Master Servicer as provided by the Servicing Agreement.

        On each Payment Date, the Indenture Trustee shall distribute all amounts
on deposit in the Payment  Account to Noteholders in respect of the Notes and in
its capacity as Certificate Paying Agent to  Certificateholders  in the order of
priority  set forth in Section  3.05  (except as  otherwise  provided in Section
5.04(b).

        The Master  Servicer  shall direct the  Indenture  Trustee in writing to
invest any funds in the Payment  Account in  Permitted  Investments  maturing no
later than the Business Day preceding each Payment Date and shall not be sold or
disposed of prior to the maturity.

        Section 8.03.Officer's Certificate.  The Indenture Trustee shall receive
at least  seven  days  notice  when  requested  by the Issuer to take any action
pursuant to Section  8.05(a),  accompanied  by copies of any  instruments  to be
executed,  and the Indenture Trustee shall also require,  as a condition to such
action,  an Officer's  Certificate,  in form and substance  satisfactory  to the
Indenture  Trustee,  stating the legal effect of any such action,  outlining the
steps  required  to  complete  the  same,  and  concluding  that all  conditions
precedent to the taking of such action have been complied with.

        Section   8.04.Termination   Upon  Distribution  to  Noteholders.   This
Indenture and the respective  obligations and responsibilities of the Issuer and
the Indenture  Trustee created hereby shall  terminate upon the  distribution to
the Noteholders, the Certificate Paying Agent (on behalf of


                                              45

<PAGE>



the  Certificateholders) and the Indenture Trustee of all amounts required to be
distributed pursuant to Article III; provided,  however,  that in no event shall
the trust created  hereby  continue  beyond the  expiration of 21 years from the
death  of the  survivor  of the  descendants  of  Joseph  P.  Kennedy,  the late
ambassador of the United  States to the Court of St.  James,  living on the date
hereof.

        Section  8.05.Release of Trust Estate. (a) Subject to the payment of its
fees  and  expenses,  the  Indenture  Trustee  may,  and  when  required  by the
provisions of this Indenture shall, execute instruments to release property from
the lien of this Indenture,  or convey the Indenture  Trustee's  interest in the
same, in a manner and under  circumstances  that are not  inconsistent  with the
provisions of this  Indenture.  No party relying upon an instrument  executed by
the Indenture  Trustee as provided in Article VIII  hereunder  shall be bound to
ascertain the Indenture  Trustee's  authority,  inquire into the satisfaction of
any conditions precedent, or see to the application of any monies.

        (b) The Indenture  Trustee shall, at such time as (i) there are no Notes
Outstanding,  (ii) all sums due the Indenture Trustee pursuant to this Indenture
have been  paid,  and (iii) all sums due the  Credit  Enhancer  have been  paid,
release any  remaining  portion of the Trust  Estate that secured the Notes from
the lien of this Indenture.

        (c) The Indenture  Trustee shall release  property from the lien of this
Indenture  pursuant to this Section 8.05 only upon receipt of a request from the
Issuer  accompanied  by an  Officers'  Certificate  and a letter from the Credit
Enhancer, stating that the Credit Enhancer has no objection to such request from
the Issuer.

        (d) The  Indenture  Trustee  shall,  at the request of the Issuer or the
Depositor,  surrender the Credit  Enhancement  Instrument to the Credit Enhancer
for cancellation, upon final payment on the Notes.

        Section 8.06.Surrender of Notes Upon Final Payment. By acceptance of any
Note, the Holder thereof agrees to surrender such Note to the Indenture  Trustee
promptly, prior to such Noteholder's receipt of the final payment thereon.


                                              46

<PAGE>



                                   ARTICLE IX

                             Supplemental Indentures

        Section 9.01.Supplemental Indentures Without Consent of Noteholders. (a)
Without  the  consent of the  Holders of any Notes but with prior  notice to the
Rating Agencies and the Credit Enhancer,  the Issuer and the Indenture  Trustee,
when  authorized by an Issuer  Request,  at any time and from time to time,  may
enter into one or more  indentures  supplemental  hereto (which shall conform to
the  provisions  of the  Trust  Indenture  Act as in  force  at the  date of the
execution  thereof),  in form satisfactory to the Indenture Trustee,  for any of
the following purposes:

                   (i to correct or amplify the  description  of any property at
        any time  subject  to the lien of this  Indenture,  or better to assure,
        convey and confirm unto the  Indenture  Trustee any property  subject or
        required to be subjected to the lien of this Indenture, or to subject to
        the lien of this Indenture additional property;

                  (ii  to  evidence  the  succession,  in  compliance  with  the
        applicable  provisions  hereof, of another person to the Issuer, and the
        assumption  by any such  successor of the covenants of the Issuer herein
        and in the Notes contained;

                 (iii to add to the covenants of the Issuer,  for the benefit of
        the Holders of the Notes or the Credit  Enhancer,  or to  surrender  any
        right or power herein conferred upon the Issuer;

               (iv to convey, transfer,  assign, mortgage or pledge any property
          to or with the Indenture Trustee;

                   (v to cure any ambiguity, to correct any error, or to correct
        or supplement any provision herein or in any supplemental indenture that
        may be inconsistent with any other provision herein, in any supplemental
        indenture or in the Prospectus Supplement;

                  (vi to make any other  provisions  with  respect to matters or
        questions arising under this Indenture or in any supplemental indenture;
        provided, that such action shall not materially and adversely affect the
        interests of the Holders of the Notes or the Credit Enhancer;

                 (vii  to  evidence  and  provide  for  the  acceptance  of  the
        appointment  hereunder by a successor  trustee with respect to the Notes
        and to add to or change any of the provisions of this Indenture as shall
        be necessary to facilitate the administration of the trusts hereunder by
        more than one trustee, pursuant to the requirements of Article VI; or

                (viii to  modify,  eliminate  or add to the  provisions  of this
        Indenture   to  such  extent  as  shall  be   necessary  to  effect  the
        qualification  of this  Indenture  under  the TIA or under  any  similar
        federal  statute  hereafter  enacted and to add to this  Indenture  such
        other provisions as may be expressly required by the TIA;



                                              47

<PAGE>



provided,  however,  that no such  indenture  supplements  shall be entered into
unless the  Indenture  Trustee  shall have  received an Opinion of Counsel  that
entering into such indenture  supplement will not have any material  adverse tax
consequences to the Noteholders.

        The Indenture  Trustee is hereby  authorized to join in the execution of
any such supplemental  indenture and to make any further appropriate  agreements
and stipulations that may be therein contained.

        (b) The Issuer and the Indenture  Trustee,  when authorized by an Issuer
Request,  may,  also  without the consent of any of the Holders of the Notes but
with prior notice to the Rating Agencies and the Credit Enhancer,  enter into an
indenture  or  indentures  supplemental  hereto  for the  purpose  of adding any
provisions  to, or changing in any manner or  eliminating  any of the provisions
of, this  Indenture  or of  modifying in any manner the rights of the Holders of
the Notes under this Indenture;  provided,  however, that such action shall not,
as  evidenced  by an Opinion of Counsel,  (i)  adversely  affect in any material
respect the interests of any Noteholder or the Credit Enhancer or (ii) cause the
Issuer to be subject to an entity level tax.

        (c) The Issuer and the  Indenture  Trustee  shall,  as  directed  by the
Holders of  Certificates  which  represent not less than 100% of the Certificate
Percentage Interests thereof, enter into an indenture or indentures supplemental
hereto for the purpose of providing  for the issuance of one or more  additional
classes of Notes  entitled to payments  derived  solely from all or a portion of
the payments to which the  Certificates  issued on the Closing Date  pursuant to
the Trust Agreement are entitled; provided, however, that such action shall not,
as  evidenced  by an Opinion of Counsel,  (i)  adversely  affect in any material
respect the interests of any Noteholder or the Credit Enhancer or (ii) cause the
Issuer to be subject to an entity level tax. Each such class of Notes shall be a
non-recourse  obligation  of the Issuer and shall be entitled  to  interest  and
principal in such amounts,  and to such security for the repayment  thereof,  as
shall be specified in such amendment or amendments. Promptly after the execution
by the  Issuer and the  Indenture  Trustee of any  amendments  pursuant  to this
Section or the creation of a new indenture and the issuance of the related class
or classes of Notes,  the Issuer  shall  require the  Indenture  Trustee to give
notice to the  Holders of the Notes and the  Rating  Agencies  setting  forth in
general terms the substance of the provisions of such amendment.  Any failure of
the  Indenture  Trustee  to  provide  such  notice  as is  required  under  this
paragraph,  or any  defect  therein,  shall not,  however,  in any way impair or
affect the  validity of such  amendment  or any class of Notes  issued  pursuant
thereto.  Unless the Credit Enhancer agrees in writing, (i) any classes of Notes
issued  pursuant  to a  supplemental  indenture  shall  not be  entitled  to the
insurance provided by the Credit Enhancement  Instrument and (ii) the Holders of
any such  classes of Notes shall be  entitled  only to such  distributions  or a
portion of such  distributions  as the Holders would have received as Holders of
Certificates.

        Section  9.02.Supplemental  Indentures With Consent of Noteholders.  The
Issuer and the Indenture  Trustee,  when authorized by an Issuer  Request,  also
may,  with  prior  notice to the  Rating  Agencies  and with the  consent of the
Holders of not less than a majority of the  aggregate  Note Balance of the Notes
affected  thereby and the Credit Enhancer,  by Act of such Holders  delivered to
the Issuer and the  Indenture  Trustee,  enter into an indenture  or  indentures
supplemental  hereto for the purpose of adding any provisions to, or changing in
any  manner or  eliminating  any of the  provisions  of,  this  Indenture  or of
modifying in any manner the rights of the Holders of the Notes


                                              48

<PAGE>



under this Indenture;  provided,  however,  that no such supplemental  indenture
shall, without the consent of the Holder of each Note affected thereby:

                   (i change the date of payment of any installment of principal
        of or interest on any Note,  or reduce the principal  amount  thereof or
        the interest  rate  thereon,  change the  provisions  of this  Indenture
        relating to the  application of  collections  on, or the proceeds of the
        Sale of, the Trust  Estate to payment of principal of or interest on the
        Notes,  or change any place of payment where, or the coin or currency in
        which, any Note or the interest thereon is payable,  or impair the right
        to  institute  suit  for  the  enforcement  of the  provisions  of  this
        Indenture  requiring the  application of funds  available  therefor,  as
        provided  in  Article V, to the  payment  of any such  amount due on the
        Notes on or after the respective due dates thereof;

                  (ii reduce the  percentage  of the related Note Balance of any
        Class of Notes,  the consent of the Holders of which is required for any
        such supplemental  indenture,  or the consent of the Holders of which is
        required for any waiver of  compliance  with certain  provisions of this
        Indenture or certain defaults hereunder and their consequences  provided
        for in this Indenture;

                 (iii  modify  or alter the  provisions  of the  proviso  to the
        definition of the term "Outstanding" or modify or alter the exception in
        the definition of the term "Holder";

                  (iv reduce the percentage of the aggregate Note Balance of the
        Notes  required to direct the Indenture  Trustee to direct the Issuer to
        sell or liquidate the Trust Estate pursuant to Section 5.04;

                   (v  modify  any  provision  of this  Section  9.02  except to
        increase  any  percentage  specified  herein or to provide  that certain
        additional provisions of this Indenture or the Basic Documents cannot be
        modified  or  waived  without  the  consent  of the  Holder of each Note
        affected thereby;

                  (vi modify any of the  provisions  of this  Indenture  in such
        manner as to affect  the  calculation  of the  amount of any  payment of
        interest or principal due on any Note on any Payment Date (including the
        calculation of any of the individual components of such calculation); or

                 (vii permit the creation of any lien  ranking  prior to or on a
        parity with the lien of this  Indenture  with respect to any part of the
        Trust Estate or, except as otherwise  permitted or contemplated  herein,
        terminate the lien of this Indenture on any property at any time subject
        hereto or deprive the Holder of any Note of the security provided by the
        lien of this Indenture;  and provided,  further,  that such action shall
        not,  as  evidenced  by an  Opinion of  Counsel,  cause the Issuer to be
        subject to an entity level tax.

        The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the


                                              49

<PAGE>



Holders  of all Notes,  whether  theretofore  or  thereafter  authenticated  and
delivered  hereunder.  The  Indenture  Trustee  shall not be liable for any such
determination made in good faith.

        It shall not be  necessary  for any Act of  Noteholders  (as  defined in
Section  10.03) under this Section  9.02 to approve the  particular  form of any
proposed  supplemental  indenture,  but it shall be sufficient if such Act shall
approve the substance thereof.

        Promptly after the execution by the Issuer and the Indenture  Trustee of
any supplemental  indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Notes and the Custodian to which such amendment
or  supplemental  indenture  relates a notice setting forth in general terms the
substance of such supplemental  indenture.  Any failure of the Indenture Trustee
to mail such  notice,  or any defect  therein,  shall not,  however,  in any way
impair or affect the validity of any such supplemental indenture.

        Section  9.03.Execution  of Supplemental  Indentures.  In executing,  or
permitting  the  additional  trusts  created  by,  any  supplemental   indenture
permitted by this Article IX or the  modification  thereby of the trusts created
by this  Indenture,  the  Indenture  Trustee  shall be entitled to receive,  and
subject to Sections 6.01 and 6.02,  shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental  indenture is
authorized or permitted by this Indenture.  The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture  Trustee's own rights,  duties,  liabilities or immunities  under this
Indenture or otherwise.

        Section 9.04.Effect of Supplemental Indenture. Upon the execution of any
supplemental  indenture pursuant to the provisions hereof,  this Indenture shall
be and shall be deemed to be modified and amended in accordance  therewith  with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations,  duties, liabilities and immunities under this Indenture of
the Indenture Trustee,  the Issuer and the Holders of the Notes shall thereafter
be determined,  exercised and enforced hereunder subject in all respects to such
modifications  and  amendments,  and all the  terms and  conditions  of any such
supplemental  indenture  shall  be and be  deemed  to be part of the  terms  and
conditions of this Indenture for any and all purposes.

        Section  9.05.Conformity  with Trust  Indenture Act. Every  amendment of
this  Indenture  and every  supplemental  indenture  executed  pursuant  to this
Article IX shall conform to the  requirements of the Trust Indenture Act as then
in effect so long as this  Indenture  shall  then be  qualified  under the Trust
Indenture Act.

        Section  9.06.Reference  in  Notes  to  Supplemental  Indentures.  Notes
authenticated  and delivered after the execution of any  supplemental  indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a  notation  in form  approved  by the  Indenture  Trustee as to any matter
provided  for in such  supplemental  indenture.  If the Issuer or the  Indenture
Trustee shall so determine,  new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental  indenture may
be prepared and executed by the Issuer and  authenticated  and  delivered by the
Indenture Trustee in exchange for Outstanding Notes.


                                              50

<PAGE>



                                    ARTICLE X

                                  Miscellaneous

        Section  10.01Compliance  Certificates  and Opinions,  etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Credit Enhancer (i) an Officer's Certificate stating that all
conditions  precedent,  if any,  provided for in this Indenture  relating to the
proposed  action have been complied with and (ii) an Opinion of Counsel  stating
that in the opinion of such counsel all such conditions precedent,  if any, have
been complied with,  except that, in the case of any such application or request
as to which the  furnishing of such  documents is  specifically  required by any
provision  of this  Indenture,  no  additional  certificate  or opinion  need be
furnished.

        Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:

               (1) a  statement  that  each  signatory  of such  certificate  or
        opinion has read or has caused to be read such covenant or condition and
        the definitions herein relating thereto;

               (2)  a  brief  statement  as to  the  nature  and  scope  of  the
        examination  or  investigation  upon which the  statements  or  opinions
        contained in such certificate or opinion are based;

               (3) a statement that, in the opinion of each such signatory, such
        signatory has made such  examination or investigation as is necessary to
        enable such  signatory  to express an informed  opinion as to whether or
        not such covenant or condition has been complied with;

               (4) a  statement  as to  whether,  in the  opinion  of each  such
          signatory, such condition or covenant has been complied with; and

               (5) if the Signer of such  Certificate  or Opinion is required to
        be  Independent,  the Statement  required by the  definition of the term
        "Independent".

        (b) (i) Prior to the  deposit of any  Collateral  or other  property  or
securities  with the  Indenture  Trustee  that is to be made the  basis  for the
release of any property or securities subject to the lien of this Indenture, the
Issuer  shall,  in addition  to any  obligation  imposed in Section  10.01(a) or
elsewhere  in this  Indenture,  furnish to the  Indenture  Trustee an  Officer's
Certificate  certifying  or stating  the  opinion of each  person  signing  such
certificate  as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.

                  (ii  Whenever  the  Issuer  is  required  to  furnish  to  the
Indenture Trustee an Officer's Certificate  certifying or stating the opinion of
any signer thereof as to the matters  described in clause (i) above,  the Issuer
shall also deliver to the Indenture Trustee an Independent Certificate as to the
same  matters,  if the  fair  value to the  Issuer  of the  securities  to be so
deposited and of all other such securities made the basis of any such withdrawal
or release since the commencement of the then-current fiscal year of the Issuer,
as set forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the aggregate Note Balance of the Notes, but such


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<PAGE>



a certificate need not be furnished with respect to any securities so deposited,
if the fair value  thereof to the Issuer as set forth in the  related  Officer's
Certificate  is less than $25,000 or less than one percent of the aggregate Note
Balance of the Notes.

                 (iii  Whenever  any property or  securities  are to be released
from the lien of this Indenture,  the Issuer shall also furnish to the Indenture
Trustee an  Officer's  Certificate  certifying  or stating  the  opinion of each
person  signing such  certificate  as to the fair value  (within 90 days of such
release) of the property or securities  proposed to be released and stating that
in the opinion of such person the proposed  release will not impair the security
under this Indenture in contravention of the provisions hereof.

                  (iv  Whenever  the  Issuer  is  required  to  furnish  to  the
Indenture Trustee an Officer's Certificate  certifying or stating the opinion of
any signer thereof as to the matters described in clause (iii) above, the Issuer
shall also furnish to the Indenture Trustee an Independent Certificate as to the
same  matters if the fair value of the property or  securities  and of all other
property,  other than property as contemplated by clause (v) below or securities
released  from  the  lien  of  this  Indenture  since  the  commencement  of the
then-current  calendar year, as set forth in the certificates required by clause
(iii)  above and this  clause  (iv),  equals 10% or more of the  aggregate  Note
Balance of the Notes,  but such certificate need not be furnished in the case of
any release of property or  securities if the fair value thereof as set forth in
the related Officer's  Certificate is less than $25,000 or less than one percent
of the then aggregate Note Balance of the Notes.

                   (v  Notwithstanding  any  provision  of this  Indenture,  the
Issuer may, without  compliance with the requirements of the other provisions of
this Section 10.01, (A) collect,  sell or otherwise dispose of the Home Loans as
and to the extent  permitted or required by the Basic Documents or (B) make cash
payments out of the Payment  Account as and to the extent  permitted or required
by the Basic  Documents,  so long as the Issuer shall  deliver to the  Indenture
Trustee every six months,  commencing July 31, 2001, an Officer's Certificate of
the Issuer stating that all the dispositions of Collateral  described in clauses
(A) or (B) above that occurred  during the preceding six calendar months were in
the ordinary course of the Issuer's  business and that the proceeds thereof were
applied in accordance with the Basic Documents.

        Section 10.02Form of Documents  Delivered to Indenture  Trustee.  In any
case where  several  matters are required to be  certified  by, or covered by an
opinion of, any specified  Person,  it is not necessary that all such matters be
certified  by, or covered by the opinion of, only one such Person,  or that they
be so certified or covered by only one document, but one such Person may certify
or give an  opinion  with  respect  to some  matters  and one or more other such
Persons as to other matters,  and any such Person may certify or give an opinion
as to such matters in one or several documents.

        Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or  representations
with respect to the matters upon which his  certificate  or opinion is based are
erroneous.  Any such certificate of an Authorized  Officer or Opinion of Counsel
may be based,  insofar as it relates to factual  matters,  upon a certificate or
opinion of, or representations by, an


                                              52

<PAGE>



officer or officers of the Seller or the Issuer,  stating  that the  information
with respect to such factual  matters is in the  possession of the Seller or the
Issuer,  unless such counsel knows, or in the exercise of reasonable care should
know,  that the certificate or opinion or  representations  with respect to such
matters are erroneous.

        Where any  Person  is  required  to make,  give or  execute  two or more
applications,  requests, consents,  certificates,  statements, opinions or other
instruments  under this Indenture,  they may, but need not, be consolidated  and
form one instrument.

        Whenever  in this  Indenture,  in  connection  with any  application  or
certificate or report to the Indenture  Trustee,  it is provided that the Issuer
shall  deliver any document as a condition of the granting of such  application,
or as evidence of the Issuer's  compliance with any term hereof,  it is intended
that the truth and accuracy,  at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and  opinions  stated in such  document  shall in such case be  conditions
precedent to the right of the Issuer to have such application  granted or to the
sufficiency of such certificate or report. The foregoing shall not, however,  be
construed  to affect the  Indenture  Trustee's  right to rely upon the truth and
accuracy of any statement or opinion  contained in any such document as provided
in Article VI.

        Section   10.03Acts   of   Noteholders.   (a)   Any   request,   demand,
authorization,  direction,  notice,  consent, waiver or other action provided by
this  Indenture  to be  given or taken by  Noteholders  may be  embodied  in and
evidenced by one or more  instruments of  substantially  similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee,  and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such  instrument or of a writing  appointing  any such agent
shall be  sufficient  for any purpose of this  Indenture and (subject to Section
6.01)  conclusive in favor of the Indenture  Trustee and the Issuer,  if made in
the manner provided in this Section 10.03.

        (b) The  fact  and  date of the  execution  by any  person  of any  such
instrument  or writing  may be proved in any manner that the  Indenture  Trustee
deems sufficient.

        (c)  The ownership of Notes shall be proved by the Note Registrar.

        (d) Any request,  demand,  authorization,  direction,  notice,  consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued  upon the  registration  thereof or in exchange  therefor or in lieu
thereof,  in respect of  anything  done,  omitted or  suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon,  whether or not notation of
such action is made upon such Note.

     Section 10.04 Notices, etc., to Indenture Trustee,  Issuer, Credit Enhancer
and Rating Agencies.  Any request,  demand,  authorization,  direction,  notice,
consent, waiver or Act of


                                              53

<PAGE>



Noteholders or other documents  provided or permitted by this Indenture shall be
in  writing  and if such  request,  demand,  authorization,  direction,  notice,
consent,  waiver or Act of Noteholders is to be made upon, given or furnished to
or filed with:

                   (i the Indenture  Trustee by any  Noteholder or by the Issuer
        shall  be  sufficient  for  every  purpose  hereunder  if  made,  given,
        furnished  or filed in writing to or with the  Indenture  Trustee at the
        Corporate Trust Office.  The Indenture  Trustee shall promptly  transmit
        any notice received by it from the Noteholders to the Issuer, or

                  (ii the Issuer by the Indenture  Trustee or by any  Noteholder
        shall be sufficient for every purpose hereunder if in writing and mailed
        first-class, postage prepaid to the Issuer addressed to: Home Loan Trust
        2001-HI1,  in care of Wilmington Trust Company,  or at any other address
        previously  furnished in writing to the Indenture Trustee by the Issuer.
        The Issuer shall  promptly  transmit any notice  received by it from the
        Noteholders to the Indenture Trustee, or

                 (iii the Credit Enhancer by the Issuer,  the Indenture  Trustee
        or by any Noteholders shall be sufficient for every purpose hereunder to
        in writing and mailed,  first- class  postage  pre-paid,  or  personally
        delivered or  telecopied  to:  Ambac  Assurance  Corporation,  One State
        Street Plaza, 19th Floor, New York, New York 10004, Attention:  Consumer
        Asset-Backed  Securities Group,  telecopier  number (212) 363-1459.  The
        Credit  Enhancer shall promptly  transmit any notice received by it from
        the Issuer,  the Indenture  Trustee or the  Noteholders to the Issuer or
        Indenture Trustee, as the case may be.

        Notices  required to be given to the Rating Agencies by the Issuer,  the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified  mail,  return receipt  requested,  to (i) in the case of
Moody's,  at  the  following  address:  Moody's  Investors  Service,  Inc.,  ABS
Monitoring  Department,  99 Church Street,  New York, New York 10007 and (ii) in
the case of Standard & Poor's,  at the following  address:  Standard & Poor's, A
Division of the McGraw-Hill  Companies,  Inc., 55 Water Street - 41st Floor, New
York, New York 10041, Attention of Asset Backed Surveillance  Department;  or as
to each of the  foregoing,  at such  other  address  as shall be  designated  by
written notice to the other parties.

        Section  10.05Notices  to  Noteholders;  Waiver.  Where  this  Indenture
provides  for  notice  to  Noteholders  of  any  event,  such  notice  shall  be
sufficiently  given (unless  otherwise herein expressly  provided) if in writing
and mailed,  first-class,  postage prepaid to each  Noteholder  affected by such
event,  at such Person's  address as it appears on the Note Register,  not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither  the  failure to mail such notice nor any defect in any notice so mailed
to any particular  Noteholder  shall affect the  sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall  conclusively  be presumed to have been duly given  regardless of
whether such notice is in fact actually received.

        Where this Indenture provides for notice in any manner,  such notice may
be waived in writing by any Person  entitled  to  receive  such  notice,  either
before or after the  event,  and such  waiver  shall be the  equivalent  of such
notice. Waivers of notice by Noteholders shall be filed with the


                                              54

<PAGE>



Indenture  Trustee but such filing  shall not be a  condition  precedent  to the
validity of any action taken in reliance upon such a waiver.

        In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity,  it shall be impractical to mail
notice of any event to  Noteholders  when such  notice is  required  to be given
pursuant  to any  provision  of this  Indenture,  then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.

        Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice  shall not affect any other  rights or  obligations  created
hereunder, and shall not under any circumstance constitute an Event of Default.

        Section  10.06Alternate  Payment and Notice Provisions.  Notwithstanding
any provision of this Indenture or any of the Notes to the contrary,  the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment,  or notice by the Indenture  Trustee to such Holder,  that is different
from the methods  provided for in this  Indenture  for such payments or notices.
The Issuer shall furnish to the Indenture  Trustee a copy of each such agreement
and the  Indenture  Trustee  shall  cause  payments to be made and notices to be
given in accordance with such agreements.

        Section  10.07Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this  Indenture by any of the  provisions of the Trust  Indenture
Act, such required provision shall control.

        The  provisions of TIA ss.ss.  310 through 317 that impose duties on any
Person  (including the provisions  automatically  deemed  included herein unless
expressly  excluded by this  Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.

        Section 10.08Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.

        Section  10.09Successors  and Assigns.  All covenants and  agreements in
this  Indenture  and the  Notes by the  Issuer  shall  bind its  successors  and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.

        Section 10.10Separability. In case any provision in this Indenture or in
the Notes 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.

        Section 10.11Benefits of Indenture.  Nothing in this Indenture or in the
Notes,  express or  implied,  shall give to any  Person,  other than the parties
hereto and their successors hereunder, and the Noteholders, the Credit Enhancer,
and any other party  secured  hereunder,  and any other Person with an ownership
interest in any part of the Trust Estate,  any benefit or any legal or equitable
right, remedy or claim under this Indenture.


                                              55

<PAGE>



        Section  10.12Legal  Holidays.  In any case  where the date on which any
payment  is due shall not be a Business  Day,  then  (notwithstanding  any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next  succeeding  Business  Day with the same  force  and
effect as if made on the date on which  nominally  due,  and no  interest  shall
accrue for the period from and after any such nominal date.

        Section  10.13GOVERNING  LAW.  THIS  INDENTURE  SHALL  BE  CONSTRUED  IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW  YORK,  WITHOUT  REFERENCE  TO ITS
CONFLICT OF LAW  PROVISIONS,  AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

        Section 10.14Counterparts.  This Indenture may be executed in any number
of  counterparts,  each of which so executed  shall be deemed to be an original,
but all  such  counterparts  shall  together  constitute  but  one and the  same
instrument.

        Section  10.15Recording  of Indenture.  If this  Indenture is subject to
recording in any appropriate public recording  offices,  such recording is to be
effected by the Issuer and at its expense  accompanied  by an Opinion of Counsel
(which may be counsel to the Indenture  Trustee or any other counsel  reasonably
acceptable  to the  Indenture  Trustee)  to the effect  that such  recording  is
necessary  either for the  protection  of the  Noteholders  or any other  Person
secured  hereunder or for the  enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.

        Section 10.16Issuer  Obligation.  No recourse may be taken,  directly or
indirectly,  with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other  writing  delivered in connection  herewith or therewith,  against (i) the
Indenture  Trustee or the Owner  Trustee in its  individual  capacity,  (ii) any
owner of a  beneficial  interest  in the  Issuer  or (iii) any  partner,  owner,
beneficiary,  agent,  officer,  director,  employee  or agent  of the  Indenture
Trustee  or the  Owner  Trustee  in its  individual  capacity,  any  holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture  Trustee or the Owner Trustee in its
individual  capacity,  except as any such Person may have  expressly  agreed (it
being  understood that the Indenture  Trustee and the Owner Trustee have no such
obligations  in their  individual  capacity)  and except that any such  partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid  consideration  for stock,  unpaid capital  contribution  or
failure to pay any installment or call owing to such entity. For all purposes of
this  Indenture,  in the  performance of any duties or obligations of the Issuer
hereunder,  the Owner  Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.

        Section 10.17No Petition.  The Indenture Trustee,  by entering into this
Indenture,  and each Noteholder,  by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Depositor or the Issuer, or
join in any institution  against the Depositor or the Issuer of, any bankruptcy,
reorganization,  arrangement,  insolvency or liquidation  proceedings,  or other
proceedings  under any United States federal or state  bankruptcy or similar law
in connection with any obligations  relating to the Notes, this Indenture or any
of the Basic Documents.



                                              56

<PAGE>



        Section  10.18Inspection.  The Issuer agrees that,  on reasonable  prior
notice, it shall permit any representative of the Indenture Trustee,  during the
Issuer's normal  business  hours, to examine all the books of account,  records,
reports and other papers of the Issuer,  to make copies and extracts  therefrom,
to cause such books to be audited by Independent  certified public  accountants,
and to discuss the Issuer's  affairs,  finances  and accounts  with the Issuer's
officers,  employees, and Independent certified public accountants,  all at such
reasonable  times and as often as may be  reasonably  requested.  The  Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information  except to the extent  disclosure  may be  required  by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the  extent  that the  Indenture  Trustee  may  reasonably  determine  that such
disclosure is consistent with its obligations hereunder.


                                              57

<PAGE>



        IN WITNESS  WHEREOF,  the Issuer and the  Indenture  Trustee have caused
their names to be signed  hereto by their  respective  officers  thereunto  duly
authorized, all as of the day and year first above written.

                                    HOME LOAN TRUST 2001-HI1,
                                    as Issuer

                                            By: Wilmington Trust Company
                                            not in its individual capacity
                                            but solely as Owner Trustee


                                    By:
                                       -----------------------------------------
                              Name: James P. Lawler
                              Title: Vice President


                                    THE CHASE MANHATTAN BANK,
                                    as Indenture Trustee


                                    By:
                                       -----------------------------------------
                                    Name: Mark McDermott
                                    Title:   Trust Officer


THE CHASE MANHATTAN BANK hereby accepts the appointment as Paying Agent pursuant
to Section 3.03 hereof and as Note Registrar pursuant to Section 4.02 hereof.


By:
   ---------------------------------
Name:  Mark McDermott
Title: Trust Officer


                                              58

<PAGE>



        IN WITNESS  WHEREOF,  the Issuer and the  Indenture  Trustee have caused
their names to be signed  hereto by their  respective  officers  thereunto  duly
authorized, all as of the day and year first above written.

                                    HOME LOAN TRUST 2001-HI1,
                                    as Issuer

                                         By: Wilmington Trust Company
                                            not in its individual capacity
                                            but solely as Owner Trustee


                                    By:     /s/ James P. Lawler
                                       ----------------------------------------
                                Name: James P. Lawler
                                Title: Vice President


                                    THE CHASE MANHATTAN BANK,
                                    as Indenture Trustee


                                    By:       /s/ Mark McDermott
                                       -----------------------------------------
                                    Name: Mark McDermott
                                    Title:Trust Officer


THE CHASE MANHATTAN BANK hereby accepts the appointment as Paying Agent pursuant
to Section 3.03 hereof and as Note Registrar pursuant to Section 4.02 hereof.


By:     /s/ Mark McDermott
   -----------------------------------
Name:    Mark McDermott
Title:     Trust Officer


                                              59

<PAGE>



STATE OF NEW YORK                   )
                                    ) ss.:
COUNTY OF NEW YORK         )

        On this 22nd day of February  2001,  before me personally  appeared Mark
McDermott,  to me known, who being by me duly sworn, did depose and say, that he
resides at New York , NY, that he is the Trust Officer of the Indenture Trustee,
one of the  corporations  described in and which executed the above  instrument;
and that he signed his name thereto by like order.


                                                            Notary Public




                                              60

<PAGE>



STATE OF DELAWARE                   )
                                    ) ss.:
COUNTY OF NEW CASTLE       )

        On this  22nd  day of  February  2001,  before  me  personally  appeared
________________,  to me known,  who being by me duly sworn, did depose and say,
that  he  resides  at  Wilmington,  DE,  that  he is the  __________________  of
Wilmington Trust Company, as Owner Trustee, one of the corporations described in
and which executed the above instrument;  and that he signed his name thereto by
like order.

                                                            Notary Public




NOTARIAL SEAL


                                              61

<PAGE>



                                    Exhibit A

                                  FORM OF NOTES

                                  CLASS A NOTES

               UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED  REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION  ("DTC"),  TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF DTC), ANY
TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

               THE  PRINCIPAL  OF THIS NOTE IS  PAYABLE IN  INSTALLMENTS  AS SET
FORTH HEREIN. ACCORDINGLY,  THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

               THIS NOTE DOES NOT  REPRESENT AN INTEREST IN OR OBLIGATION OF THE
SELLER, THE DEPOSITOR,  THE MASTER SERVICER,  THE INDENTURE  TRUSTEE,  THE OWNER
TRUSTEE OR GMAC  MORTGAGE  GROUP,  INC. OR ANY OF THEIR  RESPECTIVE  AFFILIATES,
EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.

               THE HOLDER OF THIS NOTE IS DEEMED TO HAVE REPRESENTED THAT EITHER
(1) IT IS NOT A PLAN NOR IS IT  ACQUIRING  THIS NOTE WITH PLAN ASSETS OR (2) THE
ACQUISITION  OF THIS NOTE BY THE HOLDER  DOES NOT  CONSTITUTE  OR GIVE RISE TO A
PROHIBITED  TRANSACTION  UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE,
FOR WHICH NO STATUTORY, REGULATORY OR ADMINISTRATIVE EXEMPTION IS AVAILABLE.



                                              1

<PAGE>




                                   HOME LOAN TRUST 2001-HI1
                              Home Loan-Backed Note



Registered                                        Note Balance:  $___________

Class A

No. __                                            Percentage Interest:  _____%

CUSIP No. ___________                             Note Rate:  _____%

               Home Loan Trust  2001-HI1,  a business  trust duly  organized and
existing  under the laws of the State of  Delaware  (herein  referred  to as the
"Issuer"),  for  value  received,  hereby  promises  to  pay to  Cede  & Co.  or
registered assigns,  the principal sum of $___________,  payable on each Payment
Date in an  amount  equal  to the  Percentage  Interest  specified  above of the
aggregate  amount,  if any,  payable  from the  Payment  Account  in  respect of
principal on the Class A Notes  pursuant to Section 3.05 of the Indenture  dated
as of February 22, 2001 (the "Indenture") between the Issuer, as Issuer, and The
Chase Manhattan Bank, as Indenture Trustee (the "Indenture Trustee");  provided,
however,  that the entire unpaid  principal amount of this Note shall be due and
payable on the Payment Date in  __________  20__,  to the extent not  previously
paid on a prior Payment Date.  Capitalized terms used but not defined herein are
defined in Appendix A of the Indenture.

               Interest  on the  Class A Notes  will  be  paid  monthly  on each
Payment  Date at the Note  Rate.  The Note  Rate for the  Class A Notes  will be
_____% per annum. Interest will be computed on the basis of a 30-day month and a
360-day year. Principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof. On the Step-Up Date, the Note Rate on the Class
A Notes will increase by 0.50% per annum.

               Principal  of and  interest on this Note are payable in such coin
or currency  of the United  States of America as at the time of payment is legal
tender for payment of public and private debts.  All payments made by the Issuer
with respect to this Note shall be applied  first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.

               Reference  is made to the  further  provisions  of this  Note set
forth on the reverse  hereof,  which shall have the same effect as though  fully
set forth on the face of this Note.

               Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this Note
shall not be  entitled  to any benefit  under the  Indenture  referred to on the
reverse hereof, or be valid or obligatory for any purpose.

               This  Note is one of a duly  authorized  issue  of  Notes  of the
Issuer,  designated as its Home  Loan-Backed  Notes (herein called the "Notes"),
all  issued  under  the  Indenture,   to  which  Indenture  and  all  indentures
supplemental thereto reference is hereby made for a statement of the


                                              2

<PAGE>



respective  rights and  obligations  thereunder  of the  Issuer,  the  Indenture
Trustee and the holders of the Notes.  The Notes are subject to all terms of the
Indenture.

               The Notes are and will be  equally  and  ratably  secured  by the
collateral pledged as security therefor as provided in the Indenture.

               This Note is  entitled  to the  benefits  of an  irrevocable  and
unconditional  financial  guaranty  insurance  policy issued by Ambac  Assurance
Corporation.

               Principal  of and  interest  on this Note will be payable on each
Payment  Date,  commencing  on March 26, 2001,  as  described in the  Indenture.
"Payment  Date" means the twenty- fifth day of each month,  or, if any such date
is not a Business Day, then the next Business Day.

               The entire unpaid  principal amount of this Note shall be due and
payable in full on the Payment Date in February 2026 pursuant to the  Indenture,
to the extent not previously paid on a prior Payment Date.  Notwithstanding  the
foregoing,  if an Event of Default shall have occurred and be  continuing,  then
the  Indenture  Trustee  or the  holders of Notes  representing  not less than a
majority  of the  aggregate  Note  Balance of all Notes with the  consent of the
Credit Enhancer,  or the Credit Enhancer may declare the Notes to be immediately
due and payable in the manner  provided in Section  5.02 of the  Indenture.  All
principal  payments  on the Notes shall be made pro rata to the holders of Notes
entitled thereto.

               Payments of interest on this Note due and payable on each Payment
Date,  together with the installment of principal,  if any, to the extent not in
full  payment of this Note,  shall be made by check  mailed to the Person  whose
name appears as the Registered  Holder of this Note (or one or more  Predecessor
Notes) on the Note  Register as of the close of  business  on each Record  Date,
except that with respect to Notes  registered  on the Record Date in the name of
the nominee of the Depository Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire  transfer in  immediately  available  funds to the
account  designated by such  nominee.  Such checks shall be mailed to the Person
entitled  thereto  at the  address  of such  Person  as it  appears  on the Note
Register as of the  applicable  Record Date without  requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment  Date shall be binding  upon all future  holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture,  for payment in full of the then remaining  unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee,  in
the name of and on behalf of the  Issuer,  will  notify  the  Person who was the
Registered  Holder hereof as of the Record Date  preceding  such Payment Date by
notice mailed or  transmitted  by facsimile  prior to such Payment Date, and the
amount  then due and  payable  shall  be  payable  only  upon  presentation  and
surrender of this Note at the address specified in such notice of final payment.

               As provided in the Indenture  and subject to certain  limitations
set forth  therein,  the  transfer  of this Note may be  registered  on the Note
Register  upon  surrender  of this  Note for  registration  of  transfer  at the
Corporate Trust Office, duly endorsed by, or accompanied by a written instrument
of transfer in form  satisfactory to the Indenture Trustee duly executed by, the
holder


                                              3

<PAGE>



hereof or such holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible  guarantor  institution"  meeting the requirements of
the Note Registrar,  which  requirements  include membership or participation in
the  Securities  Transfer  Agent's  Medallion  Program  ("STAMP")  or such other
"signature  guarantee  program" as may be  determined  by the Note  Registrar in
addition  to,  or in  substitution  for,  STAMP,  all  in  accordance  with  the
Securities Exchange Act of 1934, as amended, and thereupon one or more new Notes
in authorized  denominations and in the same aggregate  principal amount will be
issued to the designated  transferee or  transferees.  No service charge will be
charged for any  registration of transfer or exchange of this Note, but the Note
Registrar  shall  require  payment  of a sum  sufficient  to  cover  any  tax or
governmental  charge that may be imposed in connection with any  registration of
transfer or exchange of this Note.

               Each holder or  Beneficial  Owner of a Note,  by  acceptance of a
Note, or, in the case of a Beneficial Owner of a Note, a beneficial  interest in
a Note,  covenants  and  agrees  that no  recourse  may be  taken,  directly  or
indirectly,  with respect to the  obligations of the Issuer,  the Owner Trustee,
the Seller,  the Master Servicer,  the Depositor or the Indenture Trustee on the
Notes or under the Indenture or any  certificate  or other writing  delivered in
connection therewith,  against (i) the Indenture Trustee or the Owner Trustee in
its individual  capacity,  (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner,  beneficiary,  agent, officer, director or employee
of the Indenture  Trustee or the Owner Trustee in its individual  capacity,  any
holder  of a  beneficial  interest  in the  Issuer,  the  Owner  Trustee  or the
Indenture  Trustee or of any successor or assign of the Indenture Trustee or the
Owner  Trustee in its  individual  capacity,  except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully  liable,  to  the  extent  provided  by  applicable  law  for  any  unpaid
consideration  for  stock,  unpaid  capital  contribution  or failure to pay any
installment or call owing to such entity.

               Each holder or  Beneficial  Owner of a Note,  by  acceptance of a
Note or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note,  covenants and agrees by accepting the benefits of the Indenture that such
holder or Beneficial Owner of a Note will not at any time institute  against the
Depositor,  the Seller,  the Master Servicer,  GMAC Mortgage Group,  Inc. or the
Issuer, or join in any institution against the Depositor, the Seller, the Master
Servicer,   GMAC  Mortgage  Group,  Inc.  or  the  Issuer  of,  any  bankruptcy,
reorganization,  arrangement,  insolvency or liquidation  proceedings  under any
United States federal or state  bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.

               The Issuer has entered into the Indenture and this Note is issued
with the intention  that, for federal,  state and local income,  single business
and  franchise  tax  purposes,  the Notes will  qualify as  indebtedness  of the
Issuer.  Each holder of a Note,  by  acceptance  of a Note (and each  Beneficial
Owner of a Note by  acceptance  of a beneficial  interest in a Note),  agrees to
treat the Notes  for  federal,  state and  local  income,  single  business  and
franchise tax purposes as indebtedness of the Issuer.

               Prior to the due presentment for registration of transfer of this
Note,  the  Issuer,  the  Indenture  Trustee  and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note is registered (as
of the day of  determination or as of such other date as may be specified in the
Indenture)  as the owner  hereof for all  purposes,  whether or not this Note be
overdue,


                                              4

<PAGE>



and  none of the  Issuer,  the  Indenture  Trustee  or any such  agent  shall be
affected by notice to the contrary.

               The  Indenture  permits,   with  certain  exceptions  as  therein
provided,  the  amendment  thereof  and  the  modification  of  the  rights  and
obligations  of the  Issuer  and the  Indenture  Trustee  and the  rights of the
holders  of the Notes  under the  Indenture  at any time by the  Issuer  and the
Indenture  Trustee  with the  consent  of the  holders of Notes  representing  a
majority of the aggregate Note Balance of all Notes at the time  Outstanding and
the Credit Enhancer and with prior notice to the Rating Agencies.  The Indenture
also contains provisions permitting the holders of Notes representing  specified
percentages of the aggregate Note Balance of all Notes, on behalf of the holders
of all the Notes, to waive  compliance by the Issuer with certain  provisions of
the  Indenture  and  certain  past  defaults   under  the  Indenture  and  their
consequences.  Any such consent or waiver by the holder of this Note (or any one
of more Predecessor  Notes) shall be conclusive and binding upon such holder and
upon  all  future  holders  of  this  Note  and  of any  Note  issued  upon  the
registration  of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note.  The Indenture
also  permits  the Issuer and the  Indenture  Trustee to amend or waive  certain
terms and conditions  set forth in the Indenture  without the consent of holders
of the Notes issued  thereunder but with prior notice to the Rating Agencies and
the Credit Enhancer.

               The term  "Issuer" as used in this Note includes any successor or
the Issuer under the Indenture.

               The  Issuer  is  permitted  by  the   Indenture,   under  certain
circumstances,  to merge or consolidate,  subject to the rights of the Indenture
Trustee and the holders of Notes under the Indenture.

               The Notes are issuable only in registered  form in  denominations
as provided in the Indenture, subject to certain limitations therein set forth.

               This Note and the Indenture shall be construed in accordance with
the laws of the State of New York,  without  reference  to its  conflict  of law
provisions and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.

               No  reference  herein to the  Indenture  and no provision of this
Note or of the Indenture  shall alter or impair,  the  obligation of the Issuer,
which is absolute  and  unconditional,  to pay the  principal of and interest on
this  Note at the  times,  place and rate,  and in the coin or  currency  herein
prescribed.

               Anything  herein  to  the  contrary  notwithstanding,  except  as
expressly  provided in the Basic Documents,  none of Wilmington Trust Company in
its individual  capacity,  The Chase Manhattan Bank, in its individual capacity,
any owner of a  beneficial  interest in the Issuer,  or any of their  respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Note or performance  of, or
omission to  perform,  any of the  covenants,  obligations  or  indemnifications
contained in the Indenture. The holder of this Note by its acceptance


                                              5

<PAGE>



hereof agrees that, except as expressly provided in the Basic Documents,  in the
case of an Event of Default under the Indenture,  the holder shall have no claim
against  any of the  foregoing  for any  deficiency,  loss or  claim  therefrom;
provided,  however,  that  nothing  contained  herein  shall be taken to prevent
recourse to, and enforcement  against,  the assets of the Issuer for any and all
liabilities,  obligations and undertakings contained in the Indenture or in this
Note.


                                              6

<PAGE>



               IN WITNESS  WHEREOF,  the Owner Trustee,  on behalf of the Issuer
and not in its individual capacity, has caused this Note to be duly executed.

                                HOME LOAN TRUST 2001-HI1



                                By    WILMINGTON TRUST COMPANY, not in
                                     its individual capacity but solely as Owner
                                      Trustee


Dated: February 22, 2001


                                By
                                      ------------------------------------------
                                      Authorized Signatory



                          CERTIFICATE OF AUTHENTICATION


This is one of the Class A Notes referred to in the within mentioned Indenture.


                                THE CHASE MANHATTAN BANK, not in
                                its individual capacity but solely as Indenture
                                Trustee


Dated: February 22, 2001


                                 By
                                       ----------------------------------------
                                       Authorized Signatory


                                              7

<PAGE>


                                          ASSIGNMENT


Social Security or taxpayer I.D. or other identifying number of
assignee:__________________________________________________________

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto

==============================================================================
                                (name and address of assignee)

the within Note and all rights thereunder,  and hereby  irrevocably  constitutes
and appoints ___________________________, attorney, to transfer said Note on the
books kept for  registration  thereof,  with full power of  substitution  in the
premises.

Dated:                                                                    */
      ---------------------     ------------------------------------------
                                Signature Guaranteed:


                                                                          */
                                ------------------------------------------

--------

*    NOTICE:  The signature to this  assignment must correspond with the name of
     the registered  owner as it appears on the face of the within Note in every
     particular,  without alteration,  enlargement or any change whatever.  Such
     signature must be guaranteed by an "eligible guarantor institution" meeting
     the  requirements  of  the  Note  Registrar,   which  requirements  include
     membership or  participation  in STAMP or such other  "signature  guarantee
     program" as may be determined  by the Note  Registrar in addition to, or in
     substitution for, STAMP, all in accordance with the Securities Exchange Act
     of 1934, as amended.


                                              8


                                   APPENDIX A

                                   DEFINITIONS

     Administrative  Fees:  The Servicing Fees and the fees payable to the Owner
Trustee and the Indenture Trustee.

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

               Appraised  Value:  For any  Home  Loan the  value of the  related
Mortgaged Property  determined in the appraisal or alternative  valuation method
used in the  origination  of such Home Loan (which may have been  obtained at an
earlier  time);  provided that if such Home Loan was  originated  simultaneously
with or not more than 12 months  after a senior  lien on the  related  Mortgaged
Property,  the appraised value shall be the lesser of the appraised value at the
origination of the senior lien and the sales price for such Mortgaged Property.

               Assignment  of  Mortgage:   With  respect  to  any  Mortgage,  an
assignment,  notice of transfer or equivalent  instrument,  in recordable  form,
sufficient  under the laws of the  jurisdiction  in which the related  Mortgaged
Property  is located  to reflect  the sale of the  Mortgage,  which  assignment,
notice of transfer or  equivalent  instrument  may be in the form of one or more
blanket assignments  covering Mortgages secured by Mortgaged  Properties located
in the same jurisdiction.

               Authorized  Officer:  With respect to the Issuer,  any officer of
the Owner  Trustee  who is  authorized  to act for the Owner  Trustee in matters
relating to the Issuer and who is identified on the list of Authorized  Officers
delivered by the Owner Trustee to the Indenture  Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter).

               Bankruptcy Code:  The Bankruptcy Code of 1978, as amended.

               Basic  Documents:  The Trust Agreement,  the Indenture,  the Home
Loan  Purchase  Agreement,  the  Insurance  Agreement,  the  Credit  Enhancement
Instrument,  the  Servicing  Agreement,  the  Custodial  Agreement and the other
documents and certificates delivered in connection with any of the above.

               Beneficial Owner: With respect to any Note, the Person who is the
beneficial  owner of such Note as reflected on the books of the Depository or on
the books of a Person maintaining an account with such Depository (directly as a
Depository  Participant  or  indirectly  through a  Depository  Participant,  in
accordance with the rules of such Depository).

               Book-Entry Custodian: The custodian appointed pursuant to Section
4.06 of the Indenture.



                                       -1-

<PAGE>



               Book-Entry Notes:  Beneficial  interests in the Notes,  ownership
and  transfers of which shall be made through book entries by the  Depository as
described in Section 4.06 of the Indenture.

               Business  Day:  Any day other than (i) a Saturday  or a Sunday or
(ii) a day on which banking institutions in the States of New York,  California,
Minnesota, Pennsylvania,  Illinois or Delaware are required or authorized by law
to be closed.

     Business  Trust  Statute:  Chapter 38 of Title 12 of the Delaware  Code, 12
Del. Code ss.ss.3801 et seq., as the same may be amended from time to time.

               Certificate Distribution Account: The account or accounts created
and maintained by the  Certificate  Paying Agent pursuant to Section  3.10(c) of
the Trust Agreement. The Certificate Paying Agent will make all distributions on
the Certificates from money on deposit in the Certificate  Distribution Account.
The Certificate Distribution Account shall be an Eligible Account.

               Certificate  Distribution  Amount:  The  amount  payable  to  the
Certificate Paying Agent under Section  3.05(a)(ix) of the Indenture for payment
to the Certificates under the Trust Agreement.

     Certificate  Paying  Agent:  The meaning  specified  in Section 3.10 of the
Trust Agreement.

               Certificate Percentage Interest:  With respect to any Certificate
and any date of determination,  the percentage interest as stated on the face of
such  Certificate,  which  percentage  may be  recalculated  in accordance  with
Section 3.03 of the Trust Agreement.

               Certificate  Principal  Balance:  As of any  Payment  Date,  with
respect to any Certificate;  an amount equal to the then applicable  Certificate
Percentage  Interest of such Certificate  multiplied by the Outstanding  Reserve
Amount immediately prior to such Payment Date.

     Certificate Register:  The register maintained by the Certificate Registrar
in which  the  Certificate  Registrar  shall  provide  for the  registration  of
Certificates and of transfers and exchanges of Certificates.

     Certificate Registrar: Initially, the Indenture Trustee, in its capacity as
Certificate  egistrar,  or  any  successor  to the  Indenture  Trustee  in  such
capacity.

               Certificate  of Trust:  The  Certificate  of Trust  filed for the
Trust pursuant to Section  3810(a) of the Business Trust Statute,  including all
amendments and restatements.

               Certificateholder:  The  Person in whose  name a  Certificate  is
registered in the Certificate  Register except that, any Certificate  registered
in the name of the Issuer,  the Owner  Trustee or the  Indenture  Trustee or any
Affiliate  of any  of  them  shall  be  deemed  not to be  outstanding  and  the
registered  holder will not be  considered a  Certificateholder  or a holder for
purposes  of giving  any  request,  demand,  authorization,  direction,  notice,
consent or waiver under the


                                       -2-

<PAGE>



Indenture or the Trust  Agreement  provided  that,  in  determining  whether the
Indenture  Trustee or the Owner  Trustee  shall be protected in relying upon any
such request, demand, authorization,  direction, notice, consent or waiver, only
Certificates  that the  Indenture  Trustee or the Owner  Trustee  knows to be so
owned shall be so disregarded.  Owners of Certificates that have been pledged in
good  faith  may be  regarded  as  Holders  if the  pledgee  establishes  to the
satisfaction of the Indenture Trustee or the Owner Trustee,  as the case may be,
the  pledgee's  right so to act with respect to such  Certificates  and that the
pledgee  is not the  Issuer,  any other  obligor  upon the  Certificates  or any
Affiliate of any of the foregoing Persons.

     Certificates:  The  Certificates  in  substantially  the form set  forth in
Exhibit A to the Trust Agreement.

     Class: Collectively, all of the Notes bearing the same designation.

               Closing Date:  February 22, 2001.

     Code:  The  Internal  Revenue Code of 1986,  as amended,  and the rules and
regulations promulgated thereunder.

     Collateral: The meaning specified in the Granting Clause of the Indenture.

     Collection  Period:  With respect to any Payment Date,  the calendar  month
immediately preceding the month of such Payment Date.

               Combined Loan-to-Value Ratio: With respect to each Home Loan, the
ratio,  expressed as a percentage,  of (i) the sum of (A) the original principal
balance  of such  Home  Loan,  and (B) any  outstanding  principal  balance,  at
origination of such Home Loan, of all other mortgage loans,  if any,  secured by
senior or  subordinate  liens on the  related  Mortgaged  Property,  to (ii) the
Appraised Value, or, if permitted by the Program Guide, a statistical  valuation
or the Stated Value.

               Corporate  Trust Office:  With respect to the Indenture  Trustee,
Certificate Registrar,  Certificate Paying Agent and Paying Agent, the principal
corporate  trust office of the Indenture  Trustee and Note Registrar at which at
any particular  time its corporate trust business shall be  administered,  which
office at the date of the  execution of this  instrument  is located at 450 West
33rd Street,  14th Floor, New York, New York 10001,  Attention:  Capital Markets
Fiduciary Services.  With respect to the Owner Trustee,  the principal corporate
trust office of the Owner Trustee at which at any particular  time its corporate
trust business shall be administered,  which office at the date of the execution
of this Trust  Agreement is located at Rodney  Square  North,  1100 North Market
Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration.

               Credit  Enhancement Draw Amount:  (1) With respect to any Payment
Date, an amount,  if any, equal to the sum of (w) the excess, if any, of (A) the
aggregate  amount  of  accrued  interest  on the  Notes at the Note Rate on such
Payment  Date over (B)(i) the amount on deposit in the  Payment  Account on such
Payment Date, less (ii) an amount equal to the Principal Collection Distribution
Amount,  if any, for such Payment Date, (x) any  Liquidation  Loss Amount (other
than


                                       -3-

<PAGE>



any Excess Loss  Amount)  for such  Payment  Date,  not  currently  covered by a
Liquidation Loss Distribution  Amount or a reduction in the Outstanding  Reserve
Amount,  and (y) any  Excess  Loss  Amount,  and (2) with  respect  to the Final
Insured Payment Date, the amount by which the Note Balance of the Notes plus any
amount determined  pursuant to clause (1) hereof exceeds the payments  otherwise
available to be made to the Holders  thereof on the Final Insured  Payment Date.
The Credit  Enhancement Draw Amount for any Payment Date shall be reduced by the
amount of any  payments  made to the Trust Estate with respect to that date from
the Limited Reimbursement Agreement.

               Credit Enhancement Instrument: The Certificate Guaranty Insurance
Policy  number  AB0437BE,  dated as of the  Closing  Date,  issued by the Credit
Enhancer to the Indenture Trustee.

     Credit Enhancer: Ambac Assurance Corporation,  a Wisconsin-domiciled  stock
insurance corporation or any successor thereto.

     Credit  Enhancer  Default:  If the Credit  Enhancer fails to make a payment
required under the Credit Enhancement Instrument in accordance with its terms.

               Credit  Scores:  The  figure  assigned  to a Home  Loan  that  is
designed to assess the Mortgagor's  credit history which is obtained from credit
reports provided by various credit reporting  organizations and obtained by many
lenders in connection  with Home Loan  applications to help assess a Mortgagor's
creditworthiness.

               Custodial Account: The account or accounts created and maintained
by the Master Servicer  pursuant to Section 3.02(b) of the Servicing  Agreement,
in which the Master  Servicer  shall  deposit or cause to be  deposited  certain
amounts in respect of the Home Loans.

               Custodial Agreement: Any Custodial Agreement among the Custodian,
the  Indenture  Trustee,  the  Issuer and the Master  Servicer  relating  to the
custody of the Home Loans and the Related Documents.

     Custodian:  Wells Fargo Bank Minnesota,  N.A., a national association,  and
its successors and assigns.

               Cut-off Date:  February 1, 2001.

               Cut-off Date Loan  Balance:  With  respect to any Home Loan,  the
unpaid principal balance thereof as of the close of business on the Business Day
immediately prior to the Cut-off Date.

     Default:  Any  occurrence  which is or with  notice or the lapse of time or
both would become an Event of Default.

     Deficient Valuation:  With respect to any Home Loan, a valuation by a court
of competent  jurisdiction of the Mortgaged  Property in an amount less than the
then  outstanding  indebtedness  under the Home Loan,  or any  reduction  in the
amount of principal to be paid in


                                       -4-

<PAGE>



connection with any scheduled  payment that constitutes a permanent  forgiveness
of principal,  which valuation or reduction  results from a proceeding under the
Bankruptcy Code.

     Definitive Notes: The meaning specified in Section 4.06 of the Indenture.

     Deleted  Loan:  A Home Loan  replaced  or to be  replaced  with an Eligible
Substitute Loan.

               Delinquent:  As used herein,  a Home Loan is considered to be "30
to 59 days" or "30 or more days"  delinquent  when a payment due on any due date
remains  unpaid as of the close of  business on the next  following  monthly due
date.  Since  the  determination  as to  whether a Home Loan  falls  into  these
categories  is made as of the close of business on the last business day of each
month,  a Home Loan with a payment due on July 1 that remained  unpaid as of the
close of business on July 31 would still be considered current as of July 31. If
that payment  remained unpaid as of the close of business on August 31, the Home
Loan would then be considered 30-59 days delinquent.  Delinquency information as
of the Cut-off  Date is  determined  and prepared as of the close of business on
the last business day immediately prior to the Cut-off Date.

     Depositor:  Residential  Funding  Mortgage  Securities II, Inc., a Delaware
corporation, or its successor in interest.

               Depository or Depository  Agency: The Depository Trust Company or
a  successor  appointed  by the  Indenture  Trustee  with  the  approval  of the
Depositor.  Any successor to the Depository shall be an organization  registered
as a  "clearing  agency"  pursuant to Section  17A of the  Exchange  Act and the
regulations of the Securities and Exchange Commission thereunder.

     Depository  Participant:  A  Person  for  whom,  from  time  to  time,  the
Depository effects book-entry transfers and pledges of securities deposited with
the Depository.

               Determination  Date:  With respect to any Payment Date,  the 20th
day of the  month in which  such  Payment  Date  occurs  or if such day is not a
Business Day, the next succeeding Business Day.

               Dissolution  Draw:  Following  an  Event of  Liquidation,  on the
related  Dissolution  Payment Date, the amount, if any, by which the proceeds of
the sale,  liquidation or other  disposition of the assets of the Owner Trust in
connection  with the  liquidation  of the Trust Estate which are  available  for
distribution to the  Securityholders is less than the sum of (1) an amount equal
to the  aggregate  of all accrued  and unpaid  interest on the Notes at the Note
Rate through such Payment Date and (2) 100% of the aggregate Note Balance of the
Notes outstanding immediately prior to such Dissolution Payment Date.

               Dissolution Payment Date: Following an Event of Liquidation,  the
Business Day following  the date on which the proceeds of the sale,  liquidation
or other  disposition  of the assets of the Owner Trust in  connection  with the
liquidation of the Trust Estate are paid to the Securityholders.


                                       -5-

<PAGE>



     Due Date: The date on which the Monthly Payment on the related Home Loan is
due in accordance with the terms of the related Mortgage Note.

               Eligible  Account:  An account that is any of the following:  (i)
maintained  with a depository  institution  the short-term  debt  obligations of
which have been  rated by each  Rating  Agency in its  highest  rating  category
available,  or (ii) an account or accounts in a depository  institution in which
such accounts are fully insured to the limits established by the FDIC,  provided
that any deposits not so insured shall, to the extent  acceptable to each Rating
Agency,  as evidenced in writing,  be  maintained  such that (as evidenced by an
Opinion of Counsel  delivered to the Indenture  Trustee and each Rating  Agency)
the Indenture  Trustee have a claim with respect to the funds in such account or
a perfected  first  security  interest  against any  collateral  (which shall be
limited to Permitted Investments) securing such funds that is superior to claims
of any other  depositors or creditors of the depository  institution  with which
such  account  is  maintained,  or (iii) in the case of the  Custodial  Account,
either  (A) a trust  account  or  accounts  maintained  at the  corporate  trust
department of the Indenture Trustee or (B) an account or accounts  maintained at
the corporate trust  department of the Indenture  Trustee,  as long as its short
term debt obligations are rated P-1 by Moody's and A-1+ by Standard & Poor's (or
the  equivalent)  or  better  by each  Rating  Agency  and its  long  term  debt
obligations  are  rated A2 by  Moody's  and AA- by  Standard  &  Poor's  (or the
equivalent)  or  better,  by each  Rating  Agency,  or  (iv) in the  case of the
Custodial  Account  and  the  Payment  Account,  a  trust  account  or  accounts
maintained in the corporate trust division of the Indenture  Trustee,  or (v) an
account or accounts of a depository institution acceptable to each Rating Agency
(as  evidenced in writing by each Rating  Agency that use of any such account as
the Custodial Account or the Payment Account will not reduce the rating assigned
to any of the Securities by such Rating Agency (if determined  without regard to
the Credit Enhancement Instrument) below the lower of the then-current rating or
the rating  assigned to such  Securities  (if  determined  without regard to the
Credit Enhancement Instrument) as of the Closing Date by such Rating Agency).

               Eligible  Substitute  Loan: A Home Loan substituted by the Seller
for a  Deleted  Home  Loan  which  must,  on the date of such  substitution,  as
confirmed in an Officers'  Certificate  delivered to the Indenture Trustee,  (i)
have an outstanding principal balance,  after deduction of the principal portion
of the  monthly  payment due in the month of  substitution  (or in the case of a
substitution  of more than one Home Loan for a Deleted  Home Loan,  an aggregate
outstanding  principal  balance,  after  such  deduction),  not in excess of the
outstanding  principal  balance  of the  Deleted  Home Loan  (the  amount of any
shortfall to be deposited by the Seller in the Custodial Account in the month of
substitution);  (ii) comply with each  representation  and warranty set forth in
clauses  (iii)  through  (xxxv) of  Section  3.1(b)  of the Home  Loan  Purchase
Agreement other than clauses (viii),  (xiii), (xiv), (xxiv),  (xxv),  (xxvi)(B),
and (xxvii) as of the date of substitution; (iii) have a Loan Rate no lower than
and not more than 1% in excess of the Loan Rate of such Deleted Loan;  (iv) have
a Combined  Loan-to-Value  Ratio at the time of substitution no higher than that
of the  Deleted  Loan at the  time of  substitution;  (v)  have,  at the time of
substitution, a remaining term to stated maturity not greater than (and not more
than one year less  than)  that of the  Deleted  Loan;  (vi) be  ineligible  for
inclusion  in a real estate  mortgage  investment  conduit  ("REMIC")  (a "REMIC
Ineligible  Loan") if the Deleted Loan was a REMIC  Ineligible Loan (because (a)
the value of the real property  securing the Deleted Loan was not at least equal
to eighty percent of the adjusted issue price of such loan at


                                       -6-

<PAGE>



the time of origination,  calculated by subtracting the amount of any liens that
are  senior to such Home  Loan and a  proportionate  amount of any lien of equal
priority from the value of such  property  when the Deleted Loan was  originated
and (b)  substantially  all of the proceeds of the Deleted Loan were not used to
acquire,  improve or protect an interest in the real property securing such loan
and such real property was the only security for such Deleted  Loan);  and (vii)
not be 30 days or more delinquent.

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

               Event of Default:  With respect to the Indenture,  any one of the
following  events  (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment,  decree or order of any court or any order,  rule or regulation
of any administrative or governmental body):

               (i) a default in the payment of any interest on any Note when the
          same becomes due and payable,  and such default  shall  continue for a
          period of five days; or

                   (ii) a default  in the  payment  of the  principal  of or any
        installment  of the  principal of any Note when the same becomes due and
        payable, and such default shall continue for a period of five days; or

                  (iii) there occurs a default in the  observance or performance
        of any covenant or agreement of the Issuer made in the Indenture, or any
        representation or warranty of the Issuer made in the Indenture or in any
        certificate or other writing delivered  pursuant hereto or in connection
        herewith  proving to have been  incorrect in any material  respect as of
        the time when the same shall have been made which has a material adverse
        effect on  Securityholders,  and such default  shall  continue or not be
        cured,  or the  circumstance  or  condition  in  respect  of which  such
        representation  or warranty was incorrect shall not have been eliminated
        or otherwise  cured, for a period of 30 days after there shall have been
        given,  by registered or certified  mail, to the Issuer by the Indenture
        Trustee or to the Issuer and the Indenture  Trustee by the Holders of at
        least 25% of the outstanding Security Balance of the Notes or the Credit
        Enhancer,   a  written  notice  specifying  such  default  or  incorrect
        representation  or warranty and  requiring it to be remedied and stating
        that such notice is a notice of default hereunder; or

                   (iv) there  occurs the filing of a decree or order for relief
        by a court having  jurisdiction in the premises in respect of the Issuer
        or any substantial part of the Trust Estate in an involuntary case under
        any applicable federal or state bankruptcy,  insolvency or other similar
        law now or hereafter in effect,  or  appointing a receiver,  liquidator,
        assignee,  custodian,  trustee,  sequestrator or similar official of the
        Issuer or for any substantial part of the Trust Estate,  or ordering the
        winding-up or  liquidation of the Issuer's  affairs,  and such decree or
        order shall remain unstayed and in effect for a period of 60 consecutive
        days; or

               (v) there  occurs the  commencement  by the Issuer of a voluntary
          case under any applicable  federal or state bankruptcy,  insolvency or
          other similar law now or


                                       -7-

<PAGE>



        hereafter  in  effect,  or the  consent by the Issuer to the entry of an
        order  for  relief in an  involuntary  case  under any such law,  or the
        consent  by the  Issuer to the  appointment  or taking  possession  by a
        receiver,  liquidator,  assignee,  custodian,  trustee,  sequestrator or
        similar official of the Issuer or for any substantial part of the assets
        of  the  Trust  Estate,  or the  making  by the  Issuer  of any  general
        assignment  for the benefit of  creditors,  or the failure by the Issuer
        generally  to pay its debts as such debts  become  due, or the taking of
        any action by the Issuer in furtherance of any of the foregoing.

               Event of  Liquidation:  Following  the  occurrence of an Event of
Default under the Indenture,  the  determination  by the Indenture  Trustee,  as
evidenced by a written notice provided to the Owner Trustee, the Depositor,  the
Issuer and the Credit  Enhancer,  that all  conditions  precedent to the sale or
other  liquidation of the Trust Estate pursuant to Section 5.04 of the Indenture
have been satisfied.

               Event of  Servicer  Termination:  With  respect to the  Servicing
          Agreement,  a  Servicing  Default as  defined  in Section  7.01 of the
          Servicing Agreement.

               Excess Loss Amount: On any Payment Date, the "Excess Loss Amount"
will be equal to the sum of (i) any  Liquidation  Loss  Amounts  (other  than as
described in clauses  (ii)-(iv) below) for the related  Collection Period which,
when added to the aggregate of such  Liquidation  Loss Amounts for all preceding
Collection Periods exceed $80,000,001,  (ii) any Special Hazard Losses in excess
of the Special Hazard Amount, (iii) any Fraud Losses in excess of the Fraud Loss
Amount,  and (iv) any losses  incurred on the Home Loans  caused by or resulting
from an Extraordinary Event.

               Exchange  Act: The  Securities  Exchange Act of 1934, as amended,
          and the rules and regulations promulgated thereunder.

               Expenses:  The  meaning  specified  in Section  7.02 of the Trust
          Agreement.

               Extraordinary Event: Any of the following conditions with respect
to a Mortgaged Property or Home Loan causing or resulting in a loss which causes
the liquidation of such Home Loan:

               (a)  losses  that  are of a type  that  would be  covered  by the
        fidelity bond and the errors and omissions  insurance policy required to
        be maintained  pursuant to Section 3.13 of the  Servicing  Agreement but
        are in excess of the coverage maintained thereunder;

               (b)  nuclear   reaction  or  nuclear   radiation  or  radioactive
        contamination,  all whether controlled or uncontrolled, and whether such
        loss be direct  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";

               (c) hostile or warlike action in time of peace or war,  including
        action in hindering, combating or defending against an actual, impending
        or expected attack:


                                       -8-

<PAGE>



                         1. by any government or sovereign  power, de jure or de
                    facto,  or by any authority  maintaining or using  military,
                    naval or air forces; or

                      2.   by military, naval or air forces; or

                    3. by an agent of any such government,  power,  authority or
               forces;

               (d) any weapon of war  employing  atomic  fission or  radioactive
          force whether in time of peace or war; or

               (e) 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
        transportation or trade.

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

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

               Final Insured Payment Date:  The Payment Date in February 2026.

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

               Foreclosure  Profit:  With respect to a Liquidated Home Loan, the
excess, if any, of (x) Net Liquidation Proceeds over (y) the sum of (a) the Loan
Balance  of the  related  Home  Loan  immediately  prior to the date it became a
Liquidated Home Loan, less any Net Liquidation Proceeds previously received with
respect  to such Home Loan and  applied  as a  recovery  of  principal,  and (b)
accrued  and  unpaid  interest  on the  related  Home  Loan at the Net Loan Rate
through the date of receipt of the proceeds.

               Fraud  Loss  Amount:  As of any date of  determination  after the
Cut-off  Date,  the  Fraud  Loss  Amount  shall  equal  (X)  prior to the  first
anniversary  of the Cut-off  Date an amount equal to 5% of the Cut-off Date Loan
Balance  minus the aggregate of any  Liquidation  Loss Amounts on the Home Loans
due to Fraud Losses up to such date of determination;  (Y) from the first to the
second 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) 3% of the Pool  Balance of the Home Loans as of the most recent  anniversary
of the Cut-off Date minus (2) the aggregate of any  Liquidation  Loss Amounts on
the Home Loans due to Fraud  Losses  since the most  recent  anniversary  of the
Cut-off  Date up to such date of  determination;  and (Z) from the second 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) 2% of the Pool Balance as of the most recent anniversary of the Cut-off Date
minus (2) the aggregate of any Liquidation Loss Amounts on the Home Loans due to
Fraud  Losses 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.  The initial  Fraud Loss Amount  shall be
equal to $12,500,000.


                                       -9-

<PAGE>



               Fraud Losses: Losses on Home Loans as to which there was fraud in
          the origination of such Home Loan.

               Grant: Pledge, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer,  create, and grant a lien upon and a security interest
in and right of set-off against,  deposit,  set over and confirm pursuant to the
Indenture.  A Grant of the  Collateral  or of any other  agreement or instrument
shall include all rights,  powers and options (but none of the  obligations)  of
the granting party  thereunder,  including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of such  collateral or other  agreement or  instrument  and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other  agreements,  to exercise  all rights and  options,  to
bring proceedings in the name of the granting party or otherwise,  and generally
to do and receive  anything that the granting  party is or may be entitled to do
or receive thereunder or with respect thereto.


               Holder:  Any of the Noteholders or Certificateholders.

               Home  Loans:  At any time,  the Home Loans that have been sold by
the Seller under the Home Loan  Purchase  Agreement,  together  with the Related
Documents, and that remain subject to the terms thereof.

               Home Loan Purchase  Agreement:  The Home Loan Purchase Agreement,
between the Seller, as seller, and the Depositor, as purchaser,  with respect to
the Home Loans, dated as of the Cut-off Date.

               Home Loan Schedule:  The initial schedule of Home Loans as of the
Cut-off Date set forth in Exhibit A of the Servicing  Agreement,  which schedule
sets forth as to each Home Loan, among other things:

        (i)    the Home Loan identifying number ("RFC LOAN #");

        (ii)   the state, city and zip code of the Mortgaged Property;

        (iii)  the maturity of the Mortgage Note ("MATURITY DATE");

        (iv)   the Loan Rate ("CUR RATE");

        (v)    the Principal Balance at origination ("ORG AMT");

          (vi) the  type of  property  securing  the  Mortgage  Note  ("PROPERTY
               TYPE");

        (vii)  the appraised value ("APPRSL");

          (viii) the initial scheduled monthly payment of principal, if any, and
               interest ("ORIGINAL P & I");


                                      -10-

<PAGE>



        (ix)   the Cut-off Date Loan Balance ("CUT-OFF BAL");

        (x)    the Combined Loan-to-Value Ratio at origination ("CLTV");

        (xi)   the date of the Mortgage Note ("NOTE DATE");

        (xii)  the original term to maturity of the Home Loan ("ORIGINAL TERM");

        (xiii) under the column "OCCP CODE," a code indicating  whether the Home
               Loan is secured by a non-owner occupied residence;

        (xiv)  the Principal Balance of any Home Loan senior thereto ("SR BAL");

        (xv)   the Credit Score ("CR SCORE");

        (xvi)  the debt to income ratio ("DTI");

        (xvii) product code ("PRODUCT CODE");

        (xviii)loan purpose ("PURPOSE");

        (xvix) the lien position of the related Mortgage ("LIEN");

        (xx)   the Subservicer loan number (SERVICER LOAN #); and

        (xxi)  the remaining term of the Home Loan (REMAINING TERM).

Such schedule may consist of multiple reports that collectively set forth all of
the information required.

     Indemnified  Party:  The  meaning  specified  in Section  7.02 of the Trust
Agreement.

     Indenture:  The indenture dated as of February 22, 2001 between the Issuer,
as debtor, and the Indenture Trustee, as indenture trustee.

     Indenture Trustee: The Chase Manhattan Bank, and its successors and assigns
or any  successor  indenture  trustee  appointed  pursuant  to the  terms of the
Indenture.

               Independent:  When used with respect to any specified Person, the
Person (i) is in fact independent of the Issuer, any other obligor on the Notes,
the Seller,  the Issuer, the Depositor and any Affiliate of any of the foregoing
Persons,  (ii)  does not have any  direct  financial  or any  material  indirect
financial  interest  in the Issuer,  any such other  obligor,  the  Seller,  the
Issuer, the Depositor or any Affiliate of any of the foregoing Persons and (iii)
is not  connected  with the Issuer,  any such other  obligor,  the  Seller,  the
Issuer, the Depositor or any Affiliate of any of the foregoing Persons


                                      -11-

<PAGE>



as an officer, employee,  promoter,  underwriter,  trustee, partner, director or
person performing similar functions.

               Independent Certificate: A certificate or opinion to be delivered
to the  Indenture  Trustee under the  circumstances  described in, and otherwise
complying  with, the applicable  requirements of Section 10.01 of the Indenture,
made by an  Independent  appraiser or other expert  appointed by an Issuer Order
and approved by the Indenture  Trustee in the exercise of reasonable  care,  and
such opinion or certificate  shall state that the signer has read the definition
of "Independent" in this Indenture and that the signer is Independent within the
meaning thereof.

               Initial Certificates:  The Home Loan-Backed Certificates,  Series
2001-HI,  issued on the  Closing  Date,  each  evidencing  undivided  beneficial
interests in the Issuer and executed by the Owner Trustee.

     Initial Note Balance: With respect to the Class A Notes, $250,000,000.

               Insolvency  Event:  With respect to a specified  Person,  (a) the
filing of a decree or order for  relief by a court  having  jurisdiction  in the
premises in respect of such Person or any substantial part of its property in an
involuntary  case under any applicable  bankruptcy,  insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator,  assignee,
custodian,  trustee, sequestrator or similar official for such Person or for any
substantial  part of its property,  or ordering the winding-up or liquidation of
such  Person's  affairs,  and such decree or order shall remain  unstayed and in
effect for a period of 60  consecutive  days;  or (b) the  commencement  by such
Person of a voluntary case under any applicable bankruptcy,  insolvency or other
similar  law now or  hereafter  in effect,  or the consent by such Person to the
entry of an order for relief in an  involuntary  case under any such law, or the
consent by such Person to the appointment of or taking possession by a receiver,
liquidator,  assignee,  custodian, trustee, sequestrator or similar official for
such Person or for any substantial  part of its property,  or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due or the admission
by such Person in writing (as to which the Indenture  Trustee shall have notice)
of its  inability  to pay its debts  generally,  or the adoption by the Board of
Directors  or managing  member of such Person of a resolution  which  authorizes
action by such Person in furtherance of any of the foregoing.

               Insurance Agreement:  The Insurance and Indemnity Agreement dated
as of February 22, 2001, among the Master Servicer,  the Seller,  the Depositor,
the  Issuer,  the  Indenture  Trustee  and the Credit  Enhancer,  including  any
amendments and supplements thereto.

               Insurance Proceeds:  Proceeds paid by any insurer (other than the
Credit Enhancer) pursuant to any insurance policy covering a Home Loan which are
required to be remitted to the Master  Servicer,  or amounts required to be paid
by the Master Servicer  pursuant to the next to last sentence of Section 3.04 of
the Servicing Agreement,  net of any component thereof (i) covering any expenses
incurred by or on behalf of the Master  Servicer in  connection  with  obtaining
such proceeds,  (ii) that is applied to the restoration or repair of the related
Mortgaged Property, (iii) released to the


                                      -12-

<PAGE>



Mortgagor in accordance with the Master Servicer's  normal servicing  procedures
or (iv)  required  to be paid to any  holder of a  mortgage  senior to such Home
Loan.

               Interest Accrual Period:  With respect to the Notes and as to any
Payment  Date,  will be the  calendar  month  preceding  the  month in which the
related Payment Date occurs.

               Interest  Collections:  With respect to any Payment Date, the sum
of (i) the portion  allocable to interest of all scheduled  monthly  payments on
the Home  Loans  received  during  the  related  Collection  Period,  minus  the
Administrative  Fees, (ii) the portion of all Net Liquidation Proceeds allocated
to  interest  pursuant  to the  terms  of the  Mortgage  Notes,  reduced  by the
Administrative  Fees for such Collection  Period,  (iii) the interest portion of
the Repurchase  Price for any Deleted Loans and the interest portion of the cash
purchase price paid in connection  with any optional  purchase of the Home Loans
by the Master  Servicer and (iv)  proceeds and  recoveries  received  during the
related  Collection  Period from a Home Loan after it becomes a Liquidated  Home
Loan allocated to Interest  Collections in accordance with the last paragraph of
Section 3.07 of the Servicing Agreement.

               ISDA   Counterparty:   The  counterparty  named  in  the  Limited
Reimbursement Agreement.

     Issuer or Trust: The Home Loan Trust 2001-HI1,  a Delaware  business trust,
or its successor in interest.

     Issuer Request: A written order or request signed in the name of the Issuer
by any one of its Authorized Officers and delivered to the Indenture Trustee.

               Lien:   Any  mortgage,   deed  of  trust,   pledge,   conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other),  preference,  priority right or interest or other security
agreement  or  preferential  arrangement  of  any  kind  or  nature  whatsoever,
including,  without  limitation,  any conditional  sale or other title retention
agreement,  any financing lease having substantially the same economic effect as
any of the  foregoing and the filing of any  financing  statement  under the UCC
(other than any such financing statement filed for informational  purposes only)
or  comparable  law of  any  jurisdiction  to  evidence  any  of the  foregoing;
provided, however, that any assignment pursuant to Section 6.02 of the Servicing
Agreement shall not be deemed to constitute a Lien.

               Limited Reimbursement Agreement: The ISDA Master Agreement, dated
December  6,  2000,  as  amended,  between  the  Credit  Enhancer  and the  ISDA
Counterparty,  with the related Confirmation,  a copy of which shall be provided
to the Indenture Trustee by the Credit Enhancer on the Closing Date.

               Liquidated  Home Loan: With respect to any Payment Date, any Home
Loan in respect of which the Master Servicer has determined,  in accordance with
the servicing procedures specified in the Servicing Agreement,  as of the end of
the related Collection Period, that substantially all Liquidation Proceeds which
it reasonably expects to recover, if any, with respect to the


                                      -13-

<PAGE>



disposition of the related Mortgaged Property have been recovered.  In addition,
the Master Servicer will treat any Home Loan that is 180 days or more delinquent
as having been finally liquidated.

               Liquidation  Expenses:   Out-of-pocket   expenses  (exclusive  of
overhead)  which  are  incurred  by or on  behalf  of  the  Master  Servicer  in
connection  with the  liquidation  of any Home Loan and not recovered  under any
insurance policy,  such expenses including,  without limitation,  legal fees and
expenses,  any  unreimbursed  amount expended  (including,  without  limitation,
amounts  advanced  to correct  defaults on any loan which is senior to such Home
Loan and amounts  advanced  to keep  current or pay off a loan that is senior to
such  Home  Loan)   respecting  the  related  Home  Loan  and  any  related  and
unreimbursed  expenditures  for  real  estate  property  taxes  or for  property
acquisition,  restoration,  preservation  or disposition,  or insurance  against
casualty loss or damage.

               Liquidation Loss Amount: With respect to any Payment Date and any
Home Loan that  became a  Liquidated  Home Loan  during the  related  Collection
Period,  the unrecovered  portion of the related Loan Balance thereof at the end
of such Collection Period,  after giving effect to the Net Liquidation  Proceeds
applied in reduction of the Loan Balance.

               Liquidation Loss Distribution Amount: With respect to any Payment
Date, the aggregate of (A) 100% of the Liquidation  Loss Amounts (other than any
Excess Loss Amounts) on the Home Loans on such Payment  Date,  plus (B) any such
Liquidation  Loss Amounts (other than any Excess Loss Amounts)  remaining unpaid
from any preceding  Payment Date, to the extent not reflected on such  preceding
Payment Date by a reduction of the Outstanding Reserve Amount.

               Liquidation Proceeds:  Proceeds (including Insurance Proceeds but
not including  amounts  drawn under the Credit  Enhancement  Instrument)  if any
received in  connection  with the  liquidation  of any Home Loan or related REO,
whether through trustee's sale, foreclosure sale or otherwise.

               Loan  Balance:  With  respect  to any  Home  Loan,  other  than a
Liquidated  Home Loan, and as of any day, the related Cut-off Date Loan Balance,
minus all  collections  in respect of principal in  accordance  with the related
Mortgage Note and applied in reduction of the Loan Balance thereof. For purposes
of this  definition,  a  Liquidated  Home  Loan  shall be  deemed to have a Loan
Balance equal to zero.

               Loan Rate or Mortgage Rate: With respect to any Home Loan and any
day, the per annum rate of interest set forth in the related Mortgage Note.

               Lost Note  Affidavit:  With  respect to any Home Loan as to which
the original  Mortgage Note has been  permanently  lost or destroyed and has not
been  replaced,  an  affidavit  from the  Seller  certifying  that the  original
Mortgage Note has been lost, misplaced or destroyed (together with a copy of the
related Mortgage Note).

     Master Servicer:  Residential Funding Corporation,  a Delaware corporation,
and its successors and assigns.



                                      -14-

<PAGE>



               Master  Servicing  Fee:  With  respect  to any Home  Loan and any
Collection  Period,  the product of (i) the Master Servicing Fee Rate divided by
12 and (ii) the Loan  Balance  of such  Home  Loan as of the  first  day of such
Collection Period.

     Master Servicing Fee Rate: With respect to any Home Loan, 0.08% per annum.

               Monthly Payment: With respect to any Home Loan (including any REO
Property) and any Due Date, the payment of principal and interest due thereon in
accordance with the amortization  schedule at the time applicable thereto (after
adjustment,  if  any,  for  partial  Prepayments  and for  Deficient  Valuations
occurring prior to such Due Date but before any adjustment to such  amortization
schedule  by reason of any  bankruptcy,  other than a  Deficient  Valuation,  or
similar proceeding or any moratorium or similar waiver or grace period).

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

               Mortgage:  The  mortgage,  deed  of  trust  or  other  instrument
creating  a first or second  lien on an estate in fee  simple  interest  in real
property securing a Home Loan.

               Mortgage  File:  The  file   containing  the  Related   Documents
pertaining to a particular Home Loan and any additional documents required to be
added to the Mortgage File  pursuant to the Home Loan Purchase  Agreement or the
Servicing Agreement.

               Mortgage  Note:  With respect to a Home Loan,  the mortgage  note
pursuant to which the related mortgagor agrees to pay the indebtedness evidenced
thereby and secured by the related Mortgage as modified or amended.

     Mortgaged Property:  The underlying  property,  including real property and
improvements thereon, securing a Home Loan.

               Mortgagor:  The obligor or obligors under a Mortgage Note.

               Net  Liquidation  Proceeds:  With respect to any Liquidated  Home
Loan,  Liquidation  Proceeds  (excluding amounts drawn on the Credit Enhancement
Instrument or paid in connection with the Limited  Reimbursement  Agreement) net
of Liquidation Expenses.

               Note  Balance:  With respect to any Payment Date and any Class of
Notes,  the Initial  Note Balance  thereof  reduced by all payments of principal
thereon prior to and as of such Payment Date.

               Note Owner:  The Beneficial Owner of a Note.

               Note Rate:  With  respect to the Class A Notes,  6.95% per annum;
provided,  that on the  Step-Up  Date,  the Note Rate on the Class A Notes shall
increase by 0.50% per annum.



                                      -15-

<PAGE>



     Note Register:  The register  maintained by the Note Registrar in which the
Note Registrar shall provide for the  registration of Notes and of transfers and
exchanges of Notes.

     Note Registrar: The Indenture Trustee, in its capacity as Note Registrar.

               Noteholder:  The Person in whose name a Note is registered in the
Note Register,  except that,  any Note  registered in the name of the Depositor,
the Issuer or the  Indenture  Trustee or any  Affiliate  of any of them shall be
deemed not to be outstanding and the registered  holder will not be considered a
Noteholder or holder for purposes of giving any request, demand,  authorization,
direction,  notice, consent or waiver under the Indenture or the Trust Agreement
provided that, in determining  whether the Indenture  Trustee shall be protected
in relying upon any such  request,  demand,  authorization,  direction,  notice,
consent or waiver,  only Notes that the  Indenture  Trustee or the Owner Trustee
knows to be so owned  shall be so  disregarded.  Owners of Notes  that have been
pledged in good faith may be regarded as Holders if the pledgee  establishes  to
the  satisfaction  of the  Indenture  Trustee or the Owner Trustee the pledgee's
right so to act with  respect  to such  Notes  and that the  pledgee  is not the
Issuer,  any  other  obligor  upon  the  Notes  or any  Affiliate  of any of the
foregoing  Persons.  Any  Notes on which  payments  are made  under  the  Credit
Enhancement Instrument shall be deemed Outstanding until the Credit Enhancer has
been reimbursed with respect thereto and the Credit Enhancer shall be deemed the
Noteholder thereof to the extent of such unreimbursed payment.

     Notes:  Any one of the Class A Notes  issued  and  outstanding  at any time
pursuant to the Indenture.

               Officer's  Certificate:  With respect to the Master  Servicer,  a
certificate  signed by the  President,  Managing  Director,  a Director,  a Vice
President or an Assistant Vice  President,  of the Master Servicer and delivered
to the Indenture  Trustee.  With respect to the Issuer, a certificate  signed by
any Authorized Officer of the Issuer, under the circumstances  described in, and
otherwise  complying  with, the applicable  requirements of Section 10.01 of the
Indenture,  and delivered to the Indenture Trustee.  Unless otherwise specified,
any  reference  in the  Indenture  to an  Officer's  Certificate  shall be to an
Officer's Certificate of any Authorized Officer of the Issuer.

               Opinion of Counsel: A written opinion of counsel.  Any Opinion of
Counsel for the Master  Servicer  may be  provided  by in-house  counsel for the
Master Servicer if reasonably  acceptable to the Indenture  Trustee,  the Credit
Enhancer and the Rating  Agencies or counsel for the Depositor,  as the case may
be.

     Original Trust  Agreement:  The Trust  Agreement,  dated as of February 13,
2001, between the Owner Trustee and the Depositor.

     Outstanding:  With respect to the Notes,  as of the date of  determination,
all Notes theretofore executed, authenticated and delivered under this Indenture
except:

               (i)  Notes  theretofore   cancelled  by  the  Note  Registrar  or
          delivered to the Indenture Trustee for cancellation; and


                                      -16-

<PAGE>



                   (ii) Notes in  exchange  for or in lieu of which  other Notes
        have  been  executed,   authenticated  and  delivered  pursuant  to  the
        Indenture  unless  proof   satisfactory  to  the  Indenture  Trustee  is
        presented that any such Notes are held by a holder in due course;

provided, however, that for purposes of effectuating the Credit Enhancer's right
of  subrogation  as set forth in Section 4.12 of the Indenture  only,  all Notes
that have been paid with funds provided under the Credit Enhancement  Instrument
shall be deemed to be Outstanding  until the Credit Enhancer has been reimbursed
with respect thereto.

               Outstanding Reserve Amount: With respect to any Payment Date, the
amount,  if any, by which (i) the Pool Balance after applying  payments received
in the related  Collection Period exceeds (ii) the aggregate Note Balance of the
Notes on such Payment Date after  application of Principal  Collections for such
date. On each Payment Date, the  Outstanding  Reserve Amount  available to cover
Liquidation  Loss Amounts on such Payment  Date,  if any,  shall be deemed to be
reduced by an amount  equal to any  Liquidation  Loss  Amounts  (other  than any
Excess  Loss  Amounts)  for such  Payment  Date,  except to the extent that such
Liquidation Loss Amounts were covered on such Payment Date by a Liquidation Loss
Distribution Amount.

     Owner Trust: Home Loan Trust 2001-HI1,  created by the Certificate of Trust
pursuant to the Trust Agreement and the Original Trust Agreement.

     Owner Trust Estate: The corpus of the Issuer created by the Trust Agreement
which consists of the Home Loans and the Credit Enhancement Instrument.

               Owner  Trustee:  Wilmington  Trust Company not in its  individual
capacity  but  solely as Owner  Trustee  of the Trust,  and its  successors  and
assigns or any successor  owner trustee  appointed  pursuant to the terms of the
Trust Agreement.

     Paying Agent:  Any paying agent or co-paying  agent  appointed  pursuant to
Section 3.03 of the Indenture, which initially shall be the Indenture Trustee.

               Payment Account: The account established by the Indenture Trustee
pursuant to Section  8.02 of the  Indenture  and Section  5.01 of the  Servicing
Agreement.  Amounts  deposited in the Payment Account will be distributed by the
Indenture Trustee in accordance with Section 3.05 of the Indenture.

     Payment Date: The 25th day of each month,  or if such day is not a Business
Day, then the next Business Day.

               Percentage  Interest:  With  respect  to any Note and any date of
determination, the percentage obtained by dividing the Note Balance of such Note
by the aggregate of the Note Balances of all Notes of the same Class.

               Permitted Investments:  One or more of the following:



                                      -17-

<PAGE>



                    (i)  obligations  of  or  guaranteed  as  to  principal  and
        interest by the United States or any agency or  instrumentality  thereof
        when such  obligations  are  backed by the full  faith and credit of the
        United States;

                   (ii) repurchase agreements on obligations specified in clause
        (i)  maturing  not more  than  one  month  from the date of  acquisition
        thereof,  provided that the unsecured  obligations of the party agreeing
        to  repurchase  such  obligations  are at the time rated by each  Rating
        Agency in its highest short-term rating category available;

                  (iii) federal funds, certificates of deposit, demand deposits,
        time  deposits  and  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  of any  U.S.  depository  institution  or trust
        company  incorporated  under the laws of the United  States or any state
        thereof or of any domestic branch of a foreign depository institution or
        trust company;  provided that the debt  obligations  of such  depository
        institution  or trust company (or, if the only Rating Agency is Standard
        &  Poor's,  in the case of the  principal  depository  institution  in a
        depository   institution  holding  company,   debt  obligations  of  the
        depository  institution  holding  company)  at the  date of  acquisition
        thereof have been rated by each Rating Agency in its highest  short-term
        rating category available; and provided further that, if the only Rating
        Agency is Standard & Poor's and if the  depository or trust company is a
        principal  subsidiary of a bank holding company and the debt obligations
        of such subsidiary are not separately rated, the applicable rating shall
        be that of the bank holding company;  and, provided further that, if the
        original maturity of such short-term obligations of a domestic branch of
        a foreign depository  institution or trust company shall exceed 30 days,
        the short-term  rating of such institution  shall be A-1+ in the case of
        Standard & Poor's if Standard & Poor's is the Rating Agency;

                   (iv) commercial paper (having original maturities of not more
        than 365  days) of any  corporation  incorporated  under the laws of the
        United States or any state thereof which on the date of acquisition  has
        been  rated by each  Rating  Agency  in its  highest  short-term  rating
        category  available;  provided that such  commercial  paper shall have a
        remaining maturity of not more than 30 days;

               (v) a money market fund or a qualified  investment  fund rated by
          each Rating Agency in its highest long-term rating category available;
          and

                   (vi) other  obligations or securities  that are acceptable to
        each Rating  Agency as an Permitted  Investment  hereunder  and will not
        reduce the rating assigned to any Securities by such Rating Agency below
        the lower of the  then-current  rating or the  rating  assigned  to such
        Securities as of the Closing Date by such Rating  Agency,  and which are
        acceptable  to the Credit  Enhancer,  as evidenced in writing,  provided
        that if the Master Servicer or any other Person controlled by the Master
        Servicer  is the issuer or the  obligor of any  obligation  or  security
        described in this clause (vi) such obligation or security must have


                                      -18-

<PAGE>



        an  interest  rate or yield  that is fixed  or is  variable  based on an
        objective  index that is not affected by the rate or amount of losses on
        the Home Loans;

provided,  however,  that no  instrument  shall be a Permitted  Investment if it
represents,  either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest  payments derived from  obligations  underlying such instrument and the
principal and interest payments with respect to such instrument  provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations  References  herein to the highest  rating  available  on  unsecured
long-term  debt shall  mean AAA in the case of  Standard & Poor's and Aaa in the
case of Moody's,  and  references  herein to the  highest  rating  available  on
unsecured  commercial paper and short-term debt  obligations  shall mean A-1+ in
the case of Standard & Poor's and P-1 in the case of Moody's.

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

     Plan:  Any employee  benefit plan subject to Title IV of ERISA and any plan
or other arrangement described in Section 4975(e)(1) of the Code.

     Plan Assets:  The assets of a Plan as determined  under Department of Labor
regulation section 2510.3-101 or other applicable law.

     Pool Balance:  With respect to any date, the aggregate of the Loan Balances
of all Home Loans as of such date.

               Predecessor  Note:  With respect to any  particular  Note,  every
previous Note  evidencing all or a portion of the same debt as that evidenced by
such  particular  Note;  and,  for the  purpose  of this  definition,  any  Note
authenticated  and  delivered  under  Section 4.03 of the Indenture in lieu of a
mutilated,  lost,  destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.

     Premium  Amount:  The  amount of  premium  due to the  Credit  Enhancer  in
accordance with the terms of the Insurance Agreement.

               Premium Percentage:  As set forth in the Insurance Agreement.

               Prepayment  Assumption:  A 100% Prepayment Assumption used solely
for  determining  the accrual of original issue  discount,  market  discount and
premium, if any, on the Notes for federal income tax purposes. A 100% Prepayment
Assumption  assumes  a  constant  prepayment  rate of 2% per annum for the first
month, increasing each month by an additional 0.9286% until the fifteenth month.
Beginning in the fifteenth month and in each month thereafter during the life of
the Home Loans, a 100% Prepayment  Assumption assumes a constant prepayment rate
of 15% per annum each month.



                                      -19-

<PAGE>



               Principal  Collection  Distribution Amount: For any Payment Date,
the Principal  Collections  for such Payment  Date;  provided,  however,  on any
Payment Date with  respect to which the  Outstanding  Reserve  Amount that would
result, if determined without regard to this proviso, exceeds the Reserve Amount
Target,  the  Principal  Collection  Distribution  Amount will be reduced by the
amount of such excess, but not below zero, until the Outstanding  Reserve Amount
equals the Reserve Amount Target.

     Principal Collections: An amount equal to the sum of the following amounts:

               (i) the principal  portion of all scheduled  Monthly  Payments on
          the Home Loans received during the related Collection Period;

               (ii) the principal  portion of all proceeds of the  repurchase of
        any Home  Loans (or,  in the case of a  substitution,  any  Substitution
        Adjustment  Amounts) as required by the Servicing  Agreement  during the
        related Collection Period and the principal portion of the cash purchase
        price paid in connection with any optional purchase of the Home Loans by
        the Master Servicer; and

                (iii) the principal portion of all other unscheduled collections
        received  on the Home Loans  during the  related  Collection  Period (or
        deemed to be received during the related Collection Period)  (including,
        without limitation,  full and partial Principal  Prepayments made by the
        respective Mortgagors, Insurance Proceeds and Net Liquidation Proceeds),
        to the extent not previously distributed;

provided,  however,  that Principal  Collections shall be reduced by any amounts
withdrawn from the Custodial Account pursuant to Section 3.03(ii), (v), (vi) and
(vii) of the Servicing Agreement.

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

     Proceeding:  Any  suit  in  equity,  action  at law or  other  judicial  or
administrative proceeding.

     Program Guide:  Together, the Seller's Seller Guide and Servicing Guide, as
in effect from time to time.

     Prospectus Supplement: The prospectus supplement,  dated February 15, 2001,
relating to the issuance of the Home Loan-Backed Notes, Series 2001-HI1.

     Purchase  Price:  The meaning  specified in Section 2.2(a) of the Home Loan
Purchase Agreement.



                                      -20-

<PAGE>



     Purchaser:  Residential  Funding  Mortgage  Securities II, Inc., a Delaware
corporation, and its successors and assigns.

               Qualified  Insurer:  A mortgage  guaranty  insurance company duly
qualified as such under the laws of the state of its principal place of business
and each state  having  jurisdiction  over such insurer in  connection  with the
insurance  policy issued by such insurer,  duly  authorized and licensed in such
states to transact a mortgage guaranty  insurance business in such states and to
write the insurance  provided by the insurance  policy issued by it, approved as
an insurer by the Master Servicer and as a FNMA-approved mortgage insurer.

               Rating  Agency:  Any  nationally  recognized  statistical  rating
organization,  or its successor, that rated the Securities at the request of the
Depositor at the time of the initial issuance of the Securities, which initially
shall be Moody's or Standard & Poor's. If such organization or a successor is no
longer  in  existence,  "Rating  Agency"  shall  be such  nationally  recognized
statistical rating organization,  or other comparable Person,  designated by the
Depositor,  notice of which designation shall be given to the Indenture Trustee.
References  herein to the  highest  short term  unsecured  rating  category of a
Rating  Agency shall mean A-1 or better in the case of Standard & Poor's and P-1
or better in the case of  Moody's  and in the case of any  other  Rating  Agency
shall mean such equivalent  ratings.  References herein to the highest long-term
rating  category of a Rating  Agency  shall mean "AAA" in the case of Standard &
Poor's  and "Aaa" in the case of  Moody's  and in the case of any  other  Rating
Agency, such equivalent rating.

     Record Date: With respect to the Notes and the Certificates and any Payment
Date,  the last  Business Day of the month  preceding  the month of such Payment
Date.

     Registered  Holder:  The Person in whose name a Note is  registered  in the
Note Register on the applicable Record Date.

               Related Documents:  With respect to each Home Loan, the documents
specified  in  Section  2.1(c)  of the  Home  Loan  Purchase  Agreement  and any
documents  required  to be added to such  documents  pursuant  to the Home  Loan
Purchase Agreement, the Trust Agreement or the Servicing Agreement.

     Release  Agreement:  A Release  Agreement as defined in Section 3.05 of the
Servicing Agreement.

     REO: A Mortgaged  Property that is acquired by the Issuer in foreclosure or
by deed in lieu of foreclosure.

               Repurchase  Event:  With  respect  to any Home  Loan,  one of the
following:  (i) a discovery  that, as of the Closing Date, the related  Mortgage
was not a valid lien on the related  Mortgaged  Property subject only to (A) the
lien of any prior mortgage indicated on the Home Loan Schedule,  (B) the lien of
real property  taxes and  assessments  not yet due and payable,  (C)  covenants,
conditions,  and  restrictions,  rights of way,  easements  and other matters of
public  record  as of the date of  recording  of such  Mortgage  and such  other
permissible title exceptions as are listed in the


                                      -21-

<PAGE>



Program  Guide and (D) other  matters  to which  like  properties  are  commonly
subject which do not materially  adversely affect the value,  use,  enjoyment or
marketability  of the related  Mortgaged  Property,  or (ii) with respect to any
Home Loan as to which the Seller  delivers a Lost Note  Affidavit,  a subsequent
default on such Home Loan if the enforcement  thereof or of the related Mortgage
is  materially  and adversely  affected by the absence of the original  Mortgage
Note.

               Repurchase  Price:  With respect to any Home Loan  required to be
repurchased  on any  date  pursuant  to the  Home  Loan  Purchase  Agreement  or
purchased by the Master Servicer pursuant to the Servicing Agreement,  an amount
equal to the sum of (i) 100% of the Loan Balance thereof (without  reduction for
any amounts  charged off) and (ii) unpaid accrued  interest at the Loan Rate (or
with respect to the last day of the month in the month of  repurchase,  the Loan
Rate will be the Loan Rate in effect as to the second to last day in such month)
on the outstanding principal balance thereof from the Due Date to which interest
was last paid by the Mortgagor to the first day of the month following the month
of purchase.

     Request  for  Release:  The form  attached  as  Exhibit 4 to the  Custodial
Agreement or an electronic request in a form acceptable to the Custodian.

               Reserve Amount Target:  On any Payment Date prior to the Stepdown
Date,  the Reserve  Amount  Target  will be 2.00% of the Pool  Balance as of the
Cut-off Date. On or after the Stepdown  Date,  the Reserve Amount Target will be
equal to the lesser of:

        (a)    the Reserve Amount Target as of the Cut-off Date and

        (b) 4.00% of the Pool Balance after  applying  payments  received in the
related  Collection  Period  (but not less  than  $1,250,000  (0.50% of the Pool
Balance as of the Cut-off Date));

provided,  however, that any scheduled reduction to the Reserve Amount Target on
or after the Stepdown  Date as described  above shall not be made on any Payment
Date unless:

        (i) either (a) the aggregate  cumulative  Liquidation Loss Amount on the
        Home Loans  from the  Cut-off  Date  through  the end of the  Collection
        Period immediately prior to such Payment Date is less than:

               (A) 7.0% of the Pool  Balance  as of the  Cut-off  Date,  if such
               Payment  Date is the  Stepdown  Date or one of the first  through
               eleventh Payment Dates after the Stepdown Date,

               (B) 8.5% of the Pool  Balance  as of the  Cut-off  Date,  if such
               Payment Date is one of the twelfth through  twenty-third  Payment
               Dates after the Stepdown Date, or

               (C) 10.5% of the Pool  Balance as of the  Cut-off  Date,  if such
               Payment  Date is the  twenty-fourth  Payment Date (or any Payment
               Date thereafter) after the Stepdown Date or



                                      -22-

<PAGE>



               (b) the average of the aggregate  Liquidation  Loss Amount on the
        Home  Loans  that  became  Liquidated  Home  Loans  during  the  related
        Collection  Period,  as  determined  for the current  and five  previous
        Payment Dates,  is less than 50% of the average of the amount  remaining
        in the Payment  Account on such  Payment  Date  following  distributions
        pursuant to clauses (i)-(v) of Section 3.05 of the Indenture (other than
        distributions made pursuant to clause (iii) thereof),  as determined for
        the current and five previous Payment Dates and

        (ii) there has been no draw on the Credit Enhancement Instrument on such
Payment Date that remains unreimbursed.

In addition,  the Reserve  Amount  Target may be reduced with the prior  written
consent of the Credit Enhancer and notice to the Rating Agencies.

               Reserve  Increase  Amount:  On each  Payment  Date other than the
Payment  Date in March  2001,  an amount  equal to the  lesser of (i) the amount
remaining in the Payment  Account  following  distributions  pursuant to Section
3.05(a)(v)  of the  Indenture  and  (ii)  the  amount  necessary  to  bring  the
Outstanding  Reserve Amount up to the Reserve Amount Target. On the Payment Date
in March 2001, an amount equal to zero.

               Responsible  Officer:  With respect to the Indenture Trustee, any
officer  of  the   Indenture   Trustee  with  direct   responsibility   for  the
administration  of the Trust  Agreement  and also,  with respect to a particular
matter,  any other  officer  to whom such  matter is  referred  because  of such
officer's knowledge of and familiarity with the particular subject.

               Sale:  The meaning specified in Section 5.15 of the Indenture.

     Securities  Act: The Securities Act of 1933, as amended,  and the rules and
regulations promulgated thereunder.

               Security:  Any of the Certificates or Notes.

               Securityholder or Holder:  Any Noteholder or a Certificateholder.

               Security Instrument:  A written instrument creating a valid first
lien  on a  Mortgaged  Property  securing  a  Mortgage  Note,  which  may be any
applicable  form of  mortgage,  deed of trust,  deed to secure  debt or security
deed, including any riders or addenda thereto.

     Seller:  Residential Funding Corporation,  a Delaware corporation,  and its
successors and assigns.

     Servicing Agreement:  The Servicing Agreement dated as of February 22, 2001
among the  Indenture  Trustee,  the Issuer and the  Master  Servicer,  as master
servicer.

     Servicing  Certificate:  A certificate  prepared by a Servicing  Officer on
behalf of the Master  Servicer in accordance  with Section 4.01 of the Servicing
Agreement.


                                      -23-

<PAGE>



     Servicing  Default:  The meaning specified in Section 7.01 of the Servicing
Agreement.

     Servicing Fee: With respect to any Home Loan, the sum of the related Master
Servicing Fee and the related Subservicing Fee.

     Servicing Fee Rate:  With respect to any Home Loan,  the sum of the related
Master Servicing Fee Rate and the related Subservicing Fee Rate.

               Servicing  Officer:  Any officer of the Master Servicer  involved
in, or responsible for, the administration and servicing of the Home Loans whose
name and specimen  signature appear on a list of servicing officers furnished to
the  Indenture  Trustee  (with  a copy to the  Credit  Enhancer)  by the  Master
Servicer, as such list may be amended from time to time.

               Special Hazard Amount: As of any date of determination  following
the Cut-off Date, the Special Hazard Amount shall equal  $2,500,000 less the sum
of (A) the  aggregate of any  Liquidation  Loss Amounts on the Home Loans due to
Special Hazard Losses 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 amount,  if any, by which the amount  calculated in
accordance with the preceding  sentence  (without giving effect to the deduction
of the Adjustment Amount for such anniversary) exceeds the greatest of (i) twice
the  outstanding  principal  balance  of the Home  Loan  which  has the  largest
outstanding  principal  balance on the Payment Date  immediately  preceding such
anniversary,  (ii) the product of 1.00% multiplied by the outstanding  aggregate
credit limits of all Home Loans on the Payment Date  immediately  preceding such
anniversary  and (iii) the aggregate  outstanding  principal  balance (as of the
immediately  preceding  Payment Date) of the Home Loans in any single five-digit
California  zip code area with the  largest  amount of Home  Loans by  aggregate
principal balance as of such anniversary.

               Special Hazard Loss: Any Liquidation Loss Amount not in excess of
the cost of the lesser of repair or replacement of a Mortgaged Property suffered
by such Mortgaged Property on account of direct physical loss,  exclusive of (i)
any  loss of a type  covered  by a hazard  policy  or a flood  insurance  policy
required to be  maintained  in respect of such  Mortgaged  Property  pursuant to
Section 3.04 of the Servicing Agreement,  except to the extent of the portion of
such loss not  covered  as a result of any  coinsurance  provision  and (ii) any
losses resulting from an Extraordinary Event.

     Standard  &  Poor's:  Standard  & Poor's,  a  Division  of The  McGraw-Hill
Companies, Inc. or its successor in interest.

     Stated Value: The value of the Mortgaged  Property as stated by the related
Mortgagor in his or her application.

               Step-Up Date:  The first Payment Date  immediately  following the
Payment  Date on which the Master  Servicer can purchase all or some of the Home
Loans from the Trust pursuant to Section 8.08 of the Servicing Agreement.



                                      -24-

<PAGE>



               Stepdown  Date:  The later of (i) the Payment  Date in March 2004
and (ii) the Payment Date on which the Pool  Balance,  after  applying  payments
received in the related  Collection Period, is less than 50% of the Pool Balance
as of the Cut-off Date.

     Subservicer:  Any Person with whom the Master  Servicer  has entered into a
Subservicing Agreement as a Subservicer by the Master Servicer.

     Subservicing  Account:  An Eligible Account  established or maintained by a
Subservicer as provided for in Section 3.02(c) of the Servicing Agreement.

               Subservicing  Agreement:  The written contract between the Master
Servicer and any Subservicer relating to servicing and administration of certain
Home Loans as provided in Section 3.01 of the Servicing Agreement.

               Subservicing Fee: With respect to any Collection  Period, the fee
retained monthly by the Subservicer  (or, in the case of a  nonsubserviced  Home
Loan, by the Master  Servicer) equal to the product of (i) the  Subservicing Fee
Rate  divided  by 12 and (ii)  the  Pool  Balance  as of the  first  day of such
Collection Period.

     Subservicing  Fee Rate:  With respect to each Home Loan, the amount payable
to the related Subservicer, equal to 0.50% per annum.

               Substitution  Adjustment  Amounts:  With  respect to any Eligible
Substitute  Loan,  the  amount as  defined  in  Section  3.1(b) of the Home Loan
Purchase  Agreement and any Deleted Loan,  the amount,  if any, as determined by
the  Master  Servicer,  by which the  aggregate  principal  balance  of all such
Eligible  Substitute  Loans  as of the  date of  substitution  is less  than the
aggregate  principal balance of all such Deleted Loans (after application of the
principal  portion of the Monthly Payments due in the month of substitution that
are to be distributed to the Payment Account in the month of substitution).

               Termination  Price:  In the event  that all of the Home Loans are
purchased by the Master Servicer,  the Termination Price will be an amount equal
to 100% of the unpaid Loan Balance of each Home Loan so purchased,  plus accrued
and unpaid  interest  thereon at the weighted  average of the Loan Rates through
the day  preceding  the Payment  Date on which such  purchase  occurs,  plus any
amounts due and owing to the Credit  Enhancer under the Insurance  Agreement and
any  amounts  due  and  owing  to  the  ISDA  Counterparty   under  the  Limited
Reimbursement  Agreement  (such amount to be determined  without  respect to the
limitation in the  definition of "Fixed  Amount"  therein which limits the Fixed
Amount to Available Funds).

               Treasury   Regulations:   Regulations,   including   proposed  or
temporary Regulations, promulgated under the Code. References herein to specific
provisions  of  proposed  or  temporary   regulations  shall  include  analogous
provisions  of  final   Treasury   Regulations  or  other   successor   Treasury
Regulations.



                                      -25-

<PAGE>


     Trust  Agreement:  The Amended and Restated  Trust  Agreement,  dated as of
February 22, 2001, between the Owner Trustee and the Depositor.

     Trust  Estate:  The  meaning  specified  in  the  Granting  Clause  of  the
Indenture.

               Trust  Indenture Act or TIA: The Trust  Indenture Act of 1939, as
amended from time to time, as in effect on any relevant date.

     UCC:  The Uniform  Commercial  Code,  as amended  from time to time,  as in
effect in any specified jurisdiction.

               Underwriter: Bear, Stearns & Co. Inc.

               Uniform  Single  Attestation  Program for Mortgage  Bankers:  The
Uniform Single  Attestation  Program for Mortgage  Bankers,  as published by the
Mortgage  Bankers  Association  of America and effective  with respect to fiscal
periods ending on or after December 15, 1995.

               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 state  thereof or the  District  of  Columbia
(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 other than a "foreign  trust"  within the
meaning of Section 7701(a)(30) of the Code.



                                      -26-

<PAGE>



<PAGE>