SENIOR EXECUTIVE SEVERANCE PAY PLAN
                       OF NORTH AMERICAN MORTGAGE COMPANY


                                  Introduction

     North American  Mortgage Company,  a Delaware  corporation (the "Company"),
has had in effect a practice of paying severance pay to senior executives in the
event  of  specific  types  of  Terminations  (as  hereinafter   defined)  on  a
case-by-case  basis.  This  practice  has not  heretofore  been set forth in any
written document. For the benefit of Named Executives, in order to establish the
prospective  terms  of the  Company's  severance  Policy  with  respect  to such
executives,  the Company  hereby  adopts,  effective as of October 13, 1994, the
Senior  Executive  Severance Pay Plan of North  American  Mortgage  Company (the
"Plan").


                             Section 1. Definitions

     1.1.  "Average Bonus" means the average of the sum of the last three annual
bonuses earned by a Named  Executive  (regardless of whether payment is deferred
by the Named Executive or paid by the Employer in a subsequent year), or, if the
Named  Executive  has been  employed by the  Employer for less than three annual
bonus  periods,  the average of the sum of all annual  bonuses paid to the Named
Executive  by the  Employer;  provided,  however,  that for any partial  year of
employment  a bonus  earned  by an  Executive  for  such  partial  year  will be
annualized for purposes of the Plan (unless such bonus represents a payment that
will not be made more often than once per year).

     1.2. "Board" means the Board of Directors of the Company.

     1.3.  "Cause"  means (a)  refusal to perform or gross  neglect by the Named
Executive of responsibilities of the employment position;  (b) misconduct on the
part of the Named Executive that is materially  detrimental to or has a material
adverse effect on the Company; (c) Named Executive's  conviction or plea of nolo
contendere to a  misdemeanor  involving  embezzlement  or fraud or other offense
involving the money or property of the Company;  (d) the commission by the Named
Executive of one or more acts which  constitute an indictable crime under United
States federal, state, or local law.

     1.4 "Change of Control"  means (i) the sale of all the  outstanding  common
stock of the Company;  (ii) the approval by the  shareholders  of the Company of
the merger or consolidation of the Company with any other corporation; (iii) the
sale of all or  substantially  all of the  assets  of the  Company;  or (iv) the
liquidation  or  dissolution  of the Company (other than, in each of (i) through
(iv) above,  a sale to or merger or  consolidation  with,  or a  liquidation  or
dissolution which results in the stock or assets of the Company being held by an
affiliate of the Company or in which the stockholders of the Company immediately
prior to such event own at least 65 percent of the resulting entity and no other
Stockholder or group of stockholders of the entity involved in such  transaction
(other  than the  Company)  owns  more than  fifteen  percent  of the  resulting
entity).

     1.5. "Code" means the Internal Revenue Code of 1986, as amended.

     1.6.  "Committee" means the Committee appointed by the Board, or in lieu of
such Committee, the Board's designee.

     1.7.  "Company"  means  North  American  Mortgage  Company,  a  corporation
incorporated under the laws of the State of Delaware.

     1.8. "Comparable Position" means a position with at least the same level of
Compensation, responsibilities, substantially the same benefits, and in the same
immediate geographic area as a Named Executive's present position.

     1.9.  "Compensation"  means the amount per annum that a Named Executive was
paid  or  provided  by  the  Company  as  salary  or  wage,  including  deferred
compensation,  (excluding all bonuses, commissions, overtime, and other forms of
special  or  incentive  remuneration)  immediately  preceding  the  Termination.

     1.10 "Employer" means the Company and any of its subsidiaries.

     1.11. "Named Executive" means any employee actively performing services for
the Employer on the date of Notice of Termination or the date of Termination who
holds the title of President,  Chief Executive Officer, Senior Vice President or
Executive vice President.

     1.12.  "Notice  of  Termination"  means  a  written  or  oral  notice  that
employment will be terminated, provided to the Named Executive by the Company or
its  representative  at  least  two  weeks  prior  to the  date of  Termination;
provided, however, that a Termination will be deemed to occur without two weeks'
notice so long as Section 3.1 hereof is complied with.

     1.13.  "Parachute  Payment"  means  any  payment  deemed  to  constitute  a
"parachute payment" as defined in Section 28OG of the Code.

     1.14.  "Plan"  means  this  senior  Executive  Severance  Pay Plan of North
American  Mortgage  Company,  as set  forth in this  document,  and as it may be
amended from time to time.

     1.15. "Release" means a written release, in form and substance satisfactory
to the Committee, in its sole discretion,  executed by a Named Executive who has
been granted Severance Pay, releasing and discharging the Company, the Committee
and any other  persons from and against any claim,  liability or  obligation  in
respect of or arising out of the Named Executive's employment or Termination.

     1.16.  "Severance Pay" means the amounts, if any, payable under Section 3.1
of this Plan to a Named Executive upon Termination.

     1.17.  "Severance  Percentage"  means the percentage of a Named Executive's
Compensation set forth on Exhibit A hereto.

     1.18.  "Termination"  Except  as  otherwise  provided  under a  Termination
Agreement,  "Termination" means a Named Executive's  involuntary  termination of
employment with the Employer without Cause; provided,  however, that Termination
shall not include any  termination of employment by reason of death,  disability
or retirement of the Named Executive.

     1.19.  "Termination  Agreement"  means that  agreement  by and  between the
Company and a Named  Executive  which  provides  for certain  benefits  upon the
occurrence  of  certain  terminations  within  one year  following  a Change  of
Control.

     1.20.  "Severance  Period"  means  that  number of  months  equal to twelve
multiplied by the Severance Percentage.


                             Section 2. Eligibility

     2.1. A Named  Executive must have a minimum of ninety days of Service prior
to the earlier of the date of  Termination  or the date Notice of Termination is
issued to such Named  Executive  to be eligible to receive  benefits  under this
Plan and must in fact not be employed by any  Employer or any  successor  to any
Employer  (whether  by  merger,  stock  sale or the  purchase  of  assets of any
Employer or any business unit thereof). Notwithstanding anything to the contrary
herein, no Named Executive shall be entitled to receive benefits under this Plan
if the Named Executive has been offered a Comparable  Position with any Employer
or any successor to any Employer (whether by merger, stock sale, or the purchase
of the assets of any Employer or any business unit thereof).


                               Section 3. Benefits

     3.1.  (a) As soon as  practicable  after the date of  Termination,  a Named
Executive  eligible to receive benefits under this Plan shall receive  Severance
Pay in a lump sum amount equal to the  Severance  Percentage,  multiplied by the
sum of (i) such Named Executive's Compensation, plus (ii) such Named Executive's
Average Bonus.

           (b) In addition to the amounts payable under Section 3.1(a) above, as
soon as  practicable  after the date of  Termination,  if the Company  failed to
issue a Notice of Termination to the Named Executive,  in lieu of such Notice of
Termination,  the Named  Executive shall receive a lump sum amount equal to 2/52
of Severance Pay.

     3.2.  Notwithstanding  anything  to the  contrary  in this  Plan,  under no
circumstances  may the aggregate  Severance  Pay granted to any Named  Executive
upon a  Termination  be paid unless the  Committee  has  received a Release.  If
payments made pursuant to this Plan,  when  aggregated  with any other  payments
made to you, are considered  Parachute  Payments which would result in a loss of
deduction to the Employer  under Section 280G of the Code,  then payments  under
this Plan shall be limited to the greatest amount which may be paid to you under
Section 280G of the Code  without  causing any loss of deduction to the Employer
under that Section.  The limitations  imposed by the foregoing sentence shall be
computed  by Ernst & Young,  or in the event  they  decline,  another  "big six"
accounting  firm chosen by the Employer and  reasonably  acceptable to the Named
Executive,  and any expenses  relating to such computation shall be borne by the
Employer.

     3.3.  The Named  Executive  shall be entitled to medical  benefits and life
insurance  benefits  under the same  terms as if the Named  Executive  continued
employment with the Employer for the twelve month period following  Termination;
provided, however, that to the extent the Named Executive is entitled to receive
such benefits from the Company under any other plan or agreement, there shall be
no duplication of such benefits.

     3.4.  No  Severance  Pay or  benefits  shall be  provided  (or  payments or
benefits shall cease) if, between the date of Notice of Termination and the date
of Termination, the Named Executive:

           (a) is found by the Company at any time to have  engaged in an act or
acts of willful malfeasance or nonfeasance of his duties; or

           (b) fails to perform any services  requested of him by his  employer,
supervisor, or superior; or

           (c)  demonstrates a deterioration  in performance or misconduct which
warrants termination of his employment; or

           (d) is offered or reassigned to a Comparable Position,  or refuses to
interview  for any position  with any Employer or any  successor to any Employer
(whether by merger, stock sale, or the purchase of the assets of any Employer or
any business unit thereof).

     3.5.  Any  benefits  provided  pursuant  to this Plan may be reduced by any
amounts owed to the Employer by the Named Executive and any and all withholdings
required by law or authorized by the Named Executive.


                        Section 4. Administration of Plan

     4.1.  The  Committee  shall be the plan  administrator.  In addition to any
other powers granted to the Committee  under the Plan, the Committee  shall have
the exclusive right,  power and authority to interpret,  in its sole discretion,
any and all of the  provisions  of the Plan;  to  establish  claims and  appeals
procedures;  and to consider and decide  conclusively any questions  (whether of
fact or otherwise)  arising in connection with the administration of the Plan or
any  claim  for  severance  pay  arising  under  the  Plan,  including,  without
limitation, the determination of a termination for cause. Any decision or action
of the  Committee  shall be final,  conclusive  and  binding  on all  interested
parties.

     4.2. The Company shall indemnify any individual who is an employee, officer
or  director  of the  Company,  or his or her heirs  and legal  representatives,
against all liability and reasonable expense (including reasonable counsel fees,
amounts  paid in  settlement  and  amounts  of  judgments,  fines or  penalties)
incurred or imposed upon him or her in connection with any claim,  action,  suit
or proceeding,  whether civil,  criminal,  administrative or  investigative,  in
connection with his or her duties with respect to this Plan,  provided that such
act or omission does not constitute gross negligence or willful misconduct.

     5.1. The Board  reserves the right,  upon  unanimous  written  consent or a
majority vote of the directors present, in person or by telephone,  at a meeting
of the Board, to modify,  amend or terminate the Plan in whole or part,  without
notice at any time,  and benefits  hereunder,  whether in an individual  case or
more  generally,  may be  altered,  reduced,  or  eliminated  by the Board.  All
modifications of or amendments to the Plan shall be in writing.

     5.2.  Neither the  establishment of the Plan nor any action of the Company,
the  Committee,  or a fiduciary  shall be held or  construed  to confer upon any
person any legal  right to continue  employment  with the  Company.  The Company
expressly  reserves the right to discharge any employee whenever the interest of
the Company, in its sole judgment, may so require,  without any liability on the
part of the Company, the Committee, or any fiduciary.

     5.3.  Benefits  payable  under  the Plan  shall be paid out of the  general
assets of the Company, and are not required to be funded in any manner, although
the  Company  may set aside  amounts in respect  of, or fund,  benefits  payable
hereunder.  Benefits  payable to a Named  Executive  will represent an unsecured
claim by such Named Executive against the general assets of the Company.

     5.4. Except to the extent required by law,  benefits payable under the Plan
shall  not  be  subject  to  assignment,  alienation,  transfer,  pledge,  levy,
attachment or other legal process,  encumbrance,  commutation or anticipation by
the Named Executive and any attempt to do so shall be void.

         5.5. This Plan shall be interpreted  and applied in accordance with the
laws of the State of Delaware (without  reference to rules relating to conflicts
of laws), except to the extent superseded by applicable federal law.
<PAGE>


                         NORTH AMERICAN MORTGAGE COMPANY
                       SENIOR EXECUTIVE SEVERANCE PAY PLAN

                                    EXHIBIT A

                              SEVERANCE PERCENTAGE



                  Chief Executive Officer                100%

                  Chief Operating Officer                100%

                  Executive Vice Presidents               75%

                  Senior Vice Presidents                  50%