ACE SECURITIES CORP.
                                    Depositor

                          SAXON MORTGAGE SERVICES, INC.
                                    Servicer

                             WELLS FARGO BANK, N.A.
                  Master Servicer and Securities Administrator

                       HSBC BANK USA, NATIONAL ASSOCIATION
                                     Trustee

                         POOLING AND SERVICING AGREEMENT
                          Dated as of February 1, 2005

          ACE Securities Corp. Home Equity Loan Trust, Series 2005-RM1
                     Asset Backed Pass-Through Certificates


<PAGE>


                                TABLE OF CONTENTS

ARTICLE I DEFINITIONS                                                          4

   SECTION 1.01.     Defined Terms.............................................4
      Accepted Master Servicing Practices......................................4
      Accepted Servicing Practices.............................................4
      Account..................................................................4
      Accrued Certificate Interest.............................................4
      Adjustable Rate Mortgage Loan............................................4
      Adjustment Date..........................................................5
      Administration Fees......................................................5
      Administration Fee Rate..................................................5
      Advance Facility.........................................................5
      Advance Financing Person.................................................5
      Advance Reimbursement Amounts............................................5
      Affiliate................................................................5
      Aggregate Loss Severity Percentage.......................................5
      Agreement................................................................5
      Allocated Realized Loss Amount...........................................5
      Amounts Held for Future Distribution.....................................5
      Assignment...............................................................5
      Assignment Agreements....................................................6
      Available Distribution Amount............................................6
      Balloon Mortgage Loan....................................................6
      Balloon Payment..........................................................6
      Bankruptcy Code..........................................................6
      Book-Entry Certificates..................................................6
      Book-Entry Custodian.....................................................7
      Business Day.............................................................7
      Cap Contracts............................................................7
      Cash-Out Refinancing.....................................................7
      Certificate..............................................................7
      Certificate Factor.......................................................7
      Certificate Margin.......................................................7
      Certificateholde.........................................................9
      Certificate Owner........................................................9
      Certificate Principal Balance............................................9
      Certificate Register....................................................10
      Class...................................................................10
      Class A Certificate.....................................................10
      Class A Principal Distribution Amount...................................10
      Class A-1 Allocation Percentage.........................................10
      Class A-1 Certificate...................................................10
      Class A-1 Principal Distribution Amount.................................10
      Class A-1A Certificate..................................................10
      Class A-1B Certificate..................................................10
      Class A-2 Allocation Percentage.........................................11


<PAGE>


      Class A-2 Certificate...................................................11
      Class A-2 Principal Distribution Amount.................................11
      Class A-2A Certificate..................................................11
      Class A-2B Certificate..................................................11
      Class A-2C Certificate..................................................11
      Class B Certificate.....................................................11
      Class B-1 Certificate...................................................11
      Class B-1 Principal Distribution Amount.................................11
      Class B-2 Certificate...................................................12
      Class B-2 Principal Distribution Amount.................................12
      Class B-3 Certificate...................................................13
      Class B-3 Principal Distribution Amount.................................13
      Class CE Certificate....................................................14
      Class M Certificates....................................................14
      Class M-1 Certificate...................................................14
      Class M-1 Principal Distribution Amount.................................14
      Class M-2 Certificate...................................................14
      Class M-2 Principal Distribution Amount.................................15
      Class M-3 Certificate...................................................15
      Class M-3 Principal Distribution Amount.................................15
      Class M-4 Certificate...................................................15
      Class M-4 Principal Distribution Amount.................................16
      Class M-5 Certificate...................................................16
      Class M-5 Principal Distribution Amount.................................16
      Class M-6 Certificate...................................................17
      Class M-6 Principal Distribution Amount.................................17
      Class M-7 Certificate...................................................17
      Class M-7 Principal Distribution Amount.................................17
      Class M-8 Certificate...................................................18
      Class M-8 Principal Distribution Amount.................................18
      Class M-9 Certificate...................................................19
      Class M-9 Principal Distribution Amount.................................19
      Class P Certificate.....................................................19
      Class R Certificates....................................................20
      Class R-I Interest......................................................20
      Class R-II Interest.....................................................20
      Closing Date............................................................20
      Code....................................................................20
      Collection Account......................................................20
      Commission..............................................................20
      Corporate Trust Office..................................................20
      Corresponding Certificate...............................................20
      Credit Enhancement Percentage...........................................21
      Credit Risk Management Agreements.......................................21
      Credit Risk Management Fee..............................................21
      Credit Risk Management Fee Rate.........................................21
      Credit Risk Manager.....................................................21
      Custodial Account.......................................................21


                                       ii
<PAGE>


      Custodial Agreement.....................................................21
      Custodian...............................................................21
      Cut-off Date............................................................21
      DBRS....................................................................21
      Debt Service Reduction..................................................22
      Deficient Valuation.....................................................22
      Definitive Certificates.................................................22
      Deleted Mortgage Loan...................................................22
      Delinquency Percentage..................................................22
      Depositor...............................................................22
      Depository..............................................................22
      Depository Institution..................................................22
      Depository Participant..................................................22
      Determination Date......................................................22
      Directly Operate........................................................23
      Disqualified Organization...............................................23
      Distribution Account....................................................23
      Distribution Date.......................................................23
      Due Date................................................................23
      Due Period..............................................................23
      Eligible Account........................................................24
      ERISA...................................................................24
      Estate in Real Property.................................................24
      Excess Liquidation Proceeds.............................................24
      Expense Adjusted Mortgage Rate..........................................24
      Extraordinary Trust Fund Expense........................................24
      Extra Principal Distribution Amount.....................................24
      Fannie Mae..............................................................24
      FDIC....................................................................24
      Final Maturity Date.....................................................24
      Final Recovery Determination............................................24
      Freddie Mac.............................................................25
      Gross Margin............................................................25
      Group I Interest Remittance Amount......................................25
      Group I Mortgage Loans..................................................25
      Group I Principal Distribution Amount...................................25
      Group I Principal Remittance Amount.....................................25
      Group II Interest Remittance Amount.....................................25
      Group II Mortgage Loans.................................................26
      Group II Principal Distribution Amount..................................26
      Group II Principal Remittance Amount....................................26
      Independent.............................................................26
      Independent Contractor..................................................26
      Index...................................................................27
      Institutional Accredited Investor.......................................27
      Insurance Proceeds......................................................27
      Interest Accrual Period.................................................27
      Interest Carry Forward Amount...........................................27


                                      iii
<PAGE>


      Interest Determination Date.............................................27
      Interest Distribution Amount............................................28
      Interim Servicer........................................................28
      Interest Remittance Amount..............................................28
      Last Scheduled Distribution Date........................................28
      Late Collections........................................................28
      Liquidation Event.......................................................28
      Liquidation Proceeds....................................................28
      Litton..................................................................28
      Litton Assignment Agreement.............................................29
      Litton Mortgage Loans...................................................29
      Litton Servicing Agreement..............................................29
      Loan-to-Value Ratio.....................................................29
      London Business Day.....................................................29
      Loss Severity Percentage................................................29
      Marker Rate.............................................................29
      Master Servicer.........................................................29
      Master Servicer Certification...........................................29
      Master Servicer Event of Default........................................30
      Master Servicer Fee Rate................................................30
      Master Servicing Fee....................................................30
      Maximum I-LTZZ Uncertificated Interest Deferral Amount..................30
      Maximum Mortgage Rate...................................................30
      MERS....................................................................30
      MERS(R) System..........................................................31
      Mezzanine Certificate...................................................31
      MIN.....................................................................31
      Minimum Mortgage Rate...................................................31
      MOM Loan................................................................31
      Monthly Payment.........................................................31
      Moody's.................................................................31
      Mortgage................................................................31
      Mortgage File...........................................................31
      Mortgage Loan...........................................................31
      Mortgage Loan Documents.................................................31
      Mortgage Loan Purchase Agreement........................................31
      Mortgage Loan Schedule..................................................32
      Mortgage Note...........................................................34
      Mortgage Rate...........................................................34
      Mortgaged Property......................................................34
      Mortgagor...............................................................34
      Net Monthly Excess Cashflow.............................................34
      Net Mortgage Rate.......................................................35
      Net WAC Pass-Through Rate...............................................35
      Net WAC Rate Carryover Amount...........................................36
      New Lease...............................................................36
      Nonrecoverable P&I Advance..............................................36
      Nonrecoverable Servicing Advance........................................36


                                       iv
<PAGE>


      Non-United States Person................................................36
      Notional Amount.........................................................36
      Offered Certificates....................................................36
      Officer's Certificate...................................................37
      One-Month LIBOR.........................................................37
      One-Month LIBOR Pass-Through Rate.......................................37
      Opinion of Counsel......................................................39
      Optional Termination Date...............................................39
      Originators.............................................................39
      Overcollateralization Amount............................................39
      Overcollateralization Increase Amount...................................39
      Overcollateralization Reduction Amount..................................39
      Ownership Interest......................................................39
      P&I Advance.............................................................39
      Pass-Through Rate.......................................................40
      Percentage Interest.....................................................42
      Periodic Rate...........................................................42
      Permitted Investments...................................................42
      Permitted Transferee....................................................43
      Person..................................................................44
      Plan....................................................................44
      Prepayment Assumption...................................................44
      Prepayment Charge.......................................................44
      Prepayment Charge Schedule..............................................44
      Prepayment Interest Excess..............................................45
      Prepayment Interest Shortfall...........................................45
      Prepayment Period.......................................................45
      Principal Prepayment....................................................45
      Principal Distribution Amount...........................................45
      Principal Remittance Amount.............................................45
      Purchase Price..........................................................45
      QIB.....................................................................46
      Qualified Substitute Mortgage Loan......................................46
      Rate/Term Refinancing...................................................47
      Rating Agency or Rating Agencies........................................47
      Realized Loss...........................................................47
      Record Date.............................................................48
      Reference Banks.........................................................49
      Refinanced Mortgage Loan................................................49
      Regular Certificate.....................................................49
      Regular Interest........................................................49
      Regulation S Temporary Global Certificate...............................49
      Regulation S Permanent Global...........................................49
      Release Date............................................................49
      Relief Act..............................................................49
      Relief Act Interest Shortfall...........................................49
      REMIC...................................................................49
      REMIC I.................................................................49


                                       v
<PAGE>


      REMIC I Interest Loss Allocation Amount.................................50
      REMIC I Marker Allocation Percentage....................................50
      REMIC I Overcollateralization...........................................50
      REMIC I Principal Loss Allocation Amount................................50
      REMIC I Regular Interest................................................51
      REMIC I Regular Interest I-LTAA.........................................51
      REMIC I Regular Interest I-LTA1A........................................51
      REMIC I Regular Interest I-LTA1B........................................51
      REMIC I Regular Interest I-LTA2A........................................51
      REMIC I Regular Interest I-LTA2B........................................51
      REMIC I Regular Interest I-LTA2C........................................51
      REMIC I Regular Interest I-LTB1.........................................52
      REMIC I Regular Interest I-LTB2.........................................52
      REMIC I Regular Interest I-LTB3.........................................52
      REMIC I Regular Interest I-LTM1.........................................52
      REMIC I Regular Interest I-LTM2.........................................52
      REMIC I Regular Interest I-LTM3.........................................52
      REMIC I Regular Interest I-LTM4.........................................52
      REMIC I Regular Interest I-LTM5.........................................53
      REMIC I Regular Interest I-LTM6.........................................53
      REMIC I Regular Interest I-LTM7.........................................53
      REMIC I Regular Interest I-LTM8.........................................53
      REMIC I Regular Interest I-LTM9.........................................53
      REMIC I Regular Interest I-LTP..........................................53
      REMIC I Regular Interest I-LTXX.........................................53
      REMIC I Regular Interest I-LTZZ.........................................54
      REMIC I Regular Interest I-LT1SUB.......................................54
      REMIC I Regular Interest I-LT1GRP.......................................54
      REMIC I Regular Interest I-LT2SUB.......................................54
      REMIC I Regular Interest I-LT2GRP.......................................54
      REMIC I Remittance Rate.................................................54
      REMIC I Sub WAC Allocation Percentage...................................55
      REMIC I Subordinated Balance Ratio......................................55
      REMIC I Required Overcollateralization..................................55
      REMIC II................................................................55
      REMIC II Certificate....................................................55
      REMIC II Certificateholder..............................................55
      REMIC Provisions........................................................55
      REMIC Regular Interest..................................................55
      REMIC Remittance Rate...................................................55
      Remittance Report.......................................................55
      Rents from Real Property................................................55
      REO Account.............................................................55
      REO Disposition.........................................................56
      REO Imputed Interest....................................................56
      REO Principal Amortization..............................................56
      REO Property............................................................56
      Required Overcollateralization..........................................56


                                       vi
<PAGE>


      Reserve Fund............................................................56
      Reserve Interest Rate...................................................56
      Residential Dwelling....................................................57
      Residual Certificate....................................................57
      Residual Interest.......................................................57
      ResMae Assignment Agreement.............................................57
      ResMae Mortgage Loans...................................................57
      Responsible Officer.....................................................57
      RMAE....................................................................57
      RMC.....................................................................57
      Rule....................................................................57
      Saxon...................................................................57
      Saxon Mortgage Loans....................................................57
      S&P.....................................................................57
      Scheduled Principal Balance.............................................57
      Securities..............................................................58
      Securities Administrator................................................58
      Seller..................................................................58
      Senior Interest Distribution Amount.....................................58
      Sequential Trigger Event................................................58
      Servicer................................................................58
      Servicer Event of Default...............................................58
      Servicer Remittance Date................................................59
      Servicer Report.........................................................59
      Servicing Advance.......................................................59
      Servicing Agreement.....................................................59
      Servicing Fee...........................................................59
      Servicing Fee Rate......................................................59
      Servicing Officer.......................................................59
      Servicing Transfer Date.................................................60
      Single Certificate......................................................60
      Startup Day.............................................................60
      Stated Principal Balance................................................60
      Stepdown Date...........................................................61
      Subordinate Certificates................................................61
      Subsequent Recoveries...................................................61
      Sub-Servicer............................................................61
      Sub-Servicing Agreement.................................................61
      Substitution Shortfall Amount...........................................61
      Tax Returns.............................................................61
      Telerate Page...........................................................61
      Termination Price.......................................................61
      Transfer................................................................61
      Transferee..............................................................61
      Transferor..............................................................62
      Trigger Event...........................................................62
      Trust...................................................................62
      Trust Fund..............................................................62


                                      vii
<PAGE>


      Trust REMIC.............................................................62
      Trustee.................................................................62
      Uncertificated Balance..................................................62
      Uncertificated Interest.................................................62
      Uninsured Cause.........................................................63
      United States Person....................................................63
      Value...................................................................63
      Verification Report.....................................................64
      Voting Rights...........................................................64
      Wells Fargo.............................................................64
   SECTION 1.02.     Allocation of Certain Interest Shortfalls................64

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES    66

   SECTION 2.01.     Conveyance of the Mortgage Loans.........................66
   SECTION 2.02.     Acceptance of REMIC I by Trustee.........................67
   SECTION 2.03.     Repurchase or Substitution of Mortgage Loans.............67
   SECTION 2.04.     Representations and Warranties of the
                     Master Servicer..........................................70
   SECTION 2.05.     Representations, Warranties and Covenants
                     of the Servicer..........................................71
   SECTION 2.06.     Issuance of the REMIC I Regular Interests and
                     the Class R-I Interest...................................73
   SECTION 2.07.     Conveyance of the REMIC I Regular Interests;
                     Acceptance of REMIC I by the Trustee.....................74
   SECTION 2.08.     Issuance of Residual Certificates........................74
   SECTION 2.09.     Establishment of the Trust...............................74

ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS; ACCOUNTS      75

   SECTION 3.01.     Servicer to Act as Servicer..............................75
   SECTION 3.02.     Sub-Servicing Agreements Between the Servicer
                     and Sub-Servicers........................................77
   SECTION 3.03.     Successor Sub-Servicers..................................78
   SECTION 3.04.     No Contractual Relationship Between Sub-Servicer,
                     Trustee or the Certificateholders........................78
   SECTION 3.05.     Assumption or Termination of Sub-Servicing Agreement
                     by Successor Servicer....................................78
   SECTION 3.06.     Collection of Certain Mortgage Loan Payments.............79
   SECTION 3.07.     Collection of Taxes, Assessments and Similar Items;
                     Servicing Accounts.......................................79
   SECTION 3.08.     Collection Account and Distribution Account..............80
   SECTION 3.09.     Withdrawals from the Collection Accounts and
                     Distribution Account.....................................83
   SECTION 3.10.     Investment of Funds in the Investment Accounts...........84
   SECTION 3.11.     Maintenance of Hazard Insurance, Errors and Omissions
                     and Fidelity Coverage and Primary Mortgage Insurance.....86
   SECTION 3.12.     Enforcement of Due-on-Sale Clauses;
                     Assumption Agreements....................................88
   SECTION 3.13.     Realization Upon Defaulted Mortgage Loans................89
   SECTION 3.14.     Trustee to Cooperate; Release of Mortgage Files..........90
   SECTION 3.15.     Servicing Compensation...................................92
   SECTION 3.16.     Collection Account Statements............................92


                                      viii
<PAGE>


   SECTION 3.17.     Statement as to Compliance...............................92
   SECTION 3.18.     Independent Public Accountants' Servicing Report.........93
   SECTION 3.19.     Annual Certification.....................................93
   SECTION 3.20.     Access to Certain Documentation..........................94
   SECTION 3.21.     Title, Management and Disposition of REO Property........94
   SECTION 3.22.     Obligations of the Servicer in Respect of Prepayment
                     Interest Shortfalls; Relief Act Interest Shortfalls......97
   SECTION 3.23.     Obligations of the Servicer in Respect of Mortgage Rates
                     and Monthly Payments.....................................98
   SECTION 3.24.     Reserve Fund.............................................98
   SECTION 3.25.     Advance Facility.........................................99
   SECTION 3.26.     Servicer Indemnification................................101

ARTICLE IV ADMINISTRATION AND MASTER SERVICING OF THE MORTGAGE LOANS
           BY THE MASTER SERVICER                                            102

   SECTION 4.01.     Master Servicer.........................................102
   SECTION 4.02.     REMIC-Related Covenants.................................103
   SECTION 4.03.     Monitoring of Servicer..................................103
   SECTION 4.04.     Fidelity Bond...........................................104
   SECTION 4.05.     Power to Act; Procedures................................105
   SECTION 4.06.     Due-on-Sale Clauses; Assumption Agreements..............106
   SECTION 4.07.     Documents, Records and Funds in Possession of Master
                     Servicer To Be Held for Trustee.........................106
   SECTION 4.08.     Standard Hazard Insurance and Flood Insurance Policies..106
   SECTION 4.09.     Presentment of Claims and Collection of Proceeds........107
   SECTION 4.10.     Maintenance of Primary Mortgage Insurance Policies......107
   SECTION 4.11.     Trustee to Retain Possession of Certain Insurance
                     Policies and Documents..................................107
   SECTION 4.12.     Realization Upon Defaulted Mortgage Loans...............108
   SECTION 4.13.     Compensation for the Master Servicer....................108
   SECTION 4.14.     REO Property............................................108
   SECTION 4.15.     Annual Officer's Certificate as to Compliance...........109
   SECTION 4.16.     Annual Independent Accountant's Servicing Report........109
   SECTION 4.17.     UCC.....................................................110
   SECTION 4.18.     Obligation of the Master Servicer in Respect of
                     Prepayment Interest Shortfalls..........................110
   SECTION 4.19.     Prepayment Penalty Verification.........................110

ARTICLE V PAYMENTS TO CERTIFICATEHOLDERS                                     112

   SECTION 5.01.     Distributions...........................................112
   SECTION 5.02.     Statements to Certificateholders........................127
   SECTION 5.03.     Servicer Reports; P&I Advances..........................131
   SECTION 5.04.     Allocation of Realized Losses...........................132
   SECTION 5.05.     Compliance with Withholding Requirements................135
   SECTION 5.06.     Reports Filed with Securities and Exchange Commission...135


                                       ix
<PAGE>


ARTICLE VI THE CERTIFICATES                                                  137

   SECTION 6.01.     The Certificates........................................137
   SECTION 6.02.     Registration of Transfer and Exchange of Certificates...139
   SECTION 6.03.     Mutilated, Destroyed, Lost or Stolen Certificates.......144
   SECTION 6.04.     Persons Deemed Owners...................................145
   SECTION 6.05.     Certain Available Information...........................145

ARTICLE VII THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER              146

   SECTION 7.01.     Liability of the Depositor, the Servicer and the
                     Master Servicer.........................................146
   SECTION 7.02.     Merger or Consolidation of the Depositor, the
                     Servicer or the Master Servicer.........................146
   SECTION 7.03.     Limitation on Liability of the Depositor,
                     the Servicer, the Master Servicer and Others............146
   SECTION 7.04.     Limitation on Resignation of the Servicer...............147
   SECTION 7.05.     Limitation on Resignation of the Master Servicer........148
   SECTION 7.06.     Assignment of Master Servicing..........................149
   SECTION 7.07.     Rights of the Depositor in Respect of the Servicer
                     and the Master Servicer.................................149
   SECTION 7.08.     Duties of the Credit Risk Manager.......................150
   SECTION 7.09.     Limitation Upon Liability of the Credit Risk Manager....150
   SECTION 7.10.     Removal of the Credit Risk Manager......................151

ARTICLE VIII DEFAULT                                                         152

   SECTION 8.01.     Servicer Events of Default..............................152
   SECTION 8.02.     Master Servicer to Act; Appointment of Successor........156
   SECTION 8.03.     Notification to Certificateholders......................157
   SECTION 8.04.     Waiver of Servicer Events of Default....................157

ARTICLE IX CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR           158

   SECTION 9.01.     Duties of Trustee and Securities Administrator..........158
   SECTION 9.02.     Certain Matters Affecting Trustee and
                     Securities Administrator................................159
   SECTION 9.03.     Trustee and Securities Administrator not Liable
                     for Certificates or Mortgage Loans......................161
   SECTION 9.04.     Trustee and Securities Administrator May
                     Own Certificates........................................161
   SECTION 9.05.     Fees and Expenses of Trustee and
                     Securities Administrator................................161
   SECTION 9.06.     Eligibility Requirements for Trustee and
                     Securities Administrator................................162
   SECTION 9.07.     Resignation and Removal of Trustee and
                     Securities Administrator................................163
   SECTION 9.08.     Successor Trustee or Securities Administrator...........164
   SECTION 9.09.     Merger or Consolidation of Trustee or
                     Securities Administrator................................164
   SECTION 9.10.     Appointment of Co-Trustee or Separate Trustee...........165
   SECTION 9.11.     Appointment of Office or Agency.........................165
   SECTION 9.12.     Representations and Warranties..........................166

ARTICLE X TERMINATION                                                        167

   SECTION 10.01.    Termination Upon Repurchase or Liquidation of
                     All Mortgage Loans......................................167


                                       x
<PAGE>


   SECTION 10.02.    Additional Termination Requirements.....................169

ARTICLE XI REMIC PROVISIONS                                                  170

   SECTION 11.01.    REMIC Administration....................................170
   SECTION 11.02.    Prohibited Transactions and Activities..................172
   SECTION 11.03.    Indemnification.........................................173

ARTICLE XII MISCELLANEOUS PROVISIONS                                         174

   SECTION 12.01.    Amendment...............................................174
   SECTION 12.02.    Recordation of Agreement; Counterparts..................175
   SECTION 12.03.    Limitation on Rights of Certificateholders..............175
   SECTION 12.04.    Governing Law...........................................176
   SECTION 12.05.    Notices.................................................176
   SECTION 12.06.    Severability of Provisions..............................177
   SECTION 12.07.    Notice to Rating Agencies...............................177
   SECTION 12.08.    Article and Section References..........................178
   SECTION 12.09.    Grant of Security Interest..............................178
   SECTION 12.10.    Survival of Indemnification.............................179
   SECTION 12.11.    Servicing Agreements....................................179

EXHIBITS

Exhibit A-1       Form of Class A Certificate
Exhibit A-2       Form of Class M Certificate
Exhibit A-3       Form of Class B Certificate
Exhibit A-4       Form of Class CE Certificate
Exhibit A-5       Form of Class P Certificate
Exhibit A-6       Form of Class R Certificate
Exhibit B-1       Form of Transferor Representation Letter and Form of
                  Transferee Representation Letter in Connection with Transfer
                  of the Class B Certificates, Class P Certificates, Class CE
                  Certificates and Residual Certificates Pursuant to Rule 144A
                  Under the 1933 Act
Exhibit B-2       Form of Transferor Representation Letter and Form of
                  Transferee Representation Letter in Connection with Transfer
                  of the Class B Certificates, Class P Certificates, Class CE
                  Certificates and Residual Certificates Pursuant to Rule 501(a)
                  Under the 1933 Act
Exhibit B-3       Form of Transfer Affidavit and Agreement and Form of
                  Transferor Affidavit in Connection with Transfer of Residual
                  Certificates
Exhibit C         Form of Servicer Certification
Exhibit D         Form of Power of  Attorney
Schedule 1        Mortgage Loan Schedule
Schedule 2        Prepayment Charge Schedule
Schedule 3        Reserved.
Schedule 4        Standard File Layout - Delinquency Reporting
Schedule 5        Standard File Layout - Scheduled/Scheduled


                                       xi
<PAGE>


Schedule 6        Servicing Advances Incurred Prior to Cut-off Date


                                       xii
<PAGE>


       This  Pooling  and  Servicing  Agreement,  is dated and  effective  as of
February 1, 2005,  among ACE  SECURITIES  CORP.,  as Depositor,  SAXON  MORTGAGE
SERVICES,  INC., as Servicer,  WELLS FARGO BANK,  N.A.,  as Master  Servicer and
Securities Administrator and HSBC BANK USA, NATIONAL ASSOCIATION, as Trustee.

                             PRELIMINARY STATEMENT:

       The  Depositor  intends to sell  pass-through  certificates  to be issued
hereunder in multiple  classes,  which in the aggregate will evidence the entire
beneficial  ownership  interest of the Trust Fund created  hereunder.  The Trust
Fund will consist of a segregated pool of assets comprised of the Mortgage Loans
and certain other related assets subject to this Agreement.

                                     REMIC I

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


<PAGE>




                    REMIC I
                   REMITTANCE              INITIAL           LATEST POSSIBLE
   DESIGNATION        RATE          UNCERTIFICATED BALANCE  MATURITY DATE (1)
---------------  ---------------  ------------------------ -------------------
I-LTAA             Variable(2)    $  307,403,452.14          March 25, 2035
I-LTA1A            Variable(2)    $  1,518,770.00            March 25, 2035
I-LTA1B            Variable(2)    $  379,695.00              March 25, 2035
I-LTA2A            Variable(2)    $  338,040.00              March 25, 2035
I-LTA2B            Variable(2)    $  107,485.00              March 25, 2035
I-LTA2C            Variable(2)    $  80,735.00               March 25, 2035
I-LTM1             Variable(2)    $  125,470.00              March 25, 2035
I-LTM2             Variable(2)    $  103,515.00              March 25, 2035
I-LTM3             Variable(2)    $  62,735.00               March 25, 2035
I-LTM4             Variable(2)    $  58,030.00               March 25, 2035
I-LTM5             Variable(2)    $  50,190.00               March 25, 2035
I-LTM6             Variable(2)    $  50,190.00               March 25, 2035
I-LTM7             Variable(2)    $  45,485.00               March 25, 2035
I-LTM8             Variable(2)    $  34,505.00               March 25, 2035
I-LTM9             Variable(2)    $  31,370.00               March 25, 2035
I-LTB1             Variable(2)    $  31,370.00               March 25, 2035
I-LTB2             Variable(2)    $  48,620.00               March 25, 2035
I-LTB3             Variable(2)    $  34,505.00               March 25, 2035
I-LTZZ             Variable(2)    $  3,172,829.00            March 25, 2035
I-LTP              Variable(2)    $              100.00      March 25, 2035
I-LT1SUB           Variable(2)    $  11,150.00               March 25, 2035
I-LT1GRP           Variable(2)    $  49,119.35               March 25, 2035
I-LT2SUB           Variable(2)    $  3,090.86                March 25, 2035
I-LT2GRP           Variable(2)    $  13,616.00               March 25, 2035
I-LTXX             Variable(2)    $  313,600,015.67          March 25, 2035

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

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

                                    REMIC II

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


                                       2
<PAGE>


                                       INITIAL AGGREGATE
                                     CERTIFICATE PRINCIPAL    LATEST POSSIBLE
 DESIGNATION     PASS-THROUGH RATE          BALANCE          MATURITY DATE (1)
-------------  -------------------- ----------------------- --------------------
Class A-1A         Variable(2)       $  303,754,000.00        March 25, 2035
Class A-1B         Variable(2)       $  75,939,000.00         March 25, 2035
Class A-2A         Variable(2)       $  67,608,000.00         March 25, 2035
Class A-2B         Variable(2)       $  21,497,000.00         March 25, 2035
Class A-2C         Variable(2)       $  16,147,000.00         March 25, 2035
Class M-1          Variable(2)       $  25,094,000.00         March 25, 2035
Class M-2          Variable(2)       $  20,703,000.00         March 25, 2035
Class M-3          Variable(2)       $  12,547,000.00         March 25, 2035
Class M-4          Variable(2)       $  11,606,000.00         March 25, 2035
Class M-5          Variable(2)       $  10,038,000.00         March 25, 2035
Class M-6          Variable(2)       $  10,038,000.00         March 25, 2035
Class M-7          Variable(2)       $  9,097,000.00          March 25, 2035
Class M-8          Variable(2)       $  6,901,000.00          March 25, 2035
Class M-9          Variable(2)       $  6,274,000.00          March 25, 2035
Class B-1          Variable(2)       $  6,274,000.00          March 25, 2035
Class B-2          Variable(2)       $  9,724,000.00          March 25, 2035
Class B-3          Variable(2)       $  6,901,000.00          March 25, 2035
Class P              N/A(3)          $  100.00                March 25, 2035
Class CE             N/A(4)          $  7,211,983.96          March 25, 2035

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

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

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

(3)    The Class P Certificates will not accrue interest.

(4)    The  Class  CE  Certificates  will  accrue  interest  at  their  variable
       Pass-Through  Rate on the  Notional  Amount of the Class CE  Certificates
       outstanding  from  time to time  which  shall  equal  the  Uncertificated
       Balance  of the REMIC I Regular  Interests  (other  than  REMIC I Regular
       Interest  I-LTP).  The Class CE Certificates  will not accrue interest on
       their Certificate Principal Balance.

       As of the  Cut-off  Date,  the Group I  Mortgage  Loans had an  aggregate
Scheduled Principal Balance equal to approximately $491,193,454 and the Group II
Mortgage  Loans  had  an  aggregate   Scheduled   Principal   Balance  equal  to
approximately $136,160,629.

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


                                       3
<PAGE>


                                   ARTICLE I

                                   DEFINITIONS

       SECTION 1.01.    Defined Terms.

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

       "Accepted Master Servicing Practices": With respect to any Mortgage Loan,
as applicable, either (x) those customary mortgage master servicing practices of
prudent mortgage  servicing  institutions  that master service mortgage loans of
the same type and quality as such  Mortgage Loan in the  jurisdiction  where the
related  Mortgaged  Property is located,  to the extent applicable to the Master
Servicer  (except in its  capacity  as  successor  to the  Servicer),  or (y) as
provided in Section 3.01 hereof, but in no event below the standard set forth in
clause (x).

       "Accepted Servicing Practices": As defined in Section 3.01.

       "Account":  The Collection  Account and the  Distribution  Account as the
context may require.

       "Accrued Certificate Interest":  With respect to any Class A Certificate,
Mezzanine  Certificate,  Class B Certificate  or Class CE  Certificate  and each
Distribution  Date,  interest accrued during the related Interest Accrual Period
at the Pass-Through  Rate for such Certificate for such Distribution Date on the
Certificate  Principal  Balance,  in the case of the Class A  Certificates,  the
Mezzanine  Certificates and the Class B Certificates,  or on the Notional Amount
in the case of the Class CE Certificates,  of such Certificate immediately prior
to such  Distribution  Date.  The  Class P  Certificates  are  not  entitled  to
distributions in respect of interest and, accordingly, will not accrue interest.
All  distributions  of  interest  on the  Class A  Certificates,  the  Mezzanine
Certificates  and the Class B Certificates  will be calculated on the basis of a
360-day year and the actual number of days in the  applicable  Interest  Accrual
Period. All distributions of interest on the Class CE Certificates will be based
on a 360-day  year  consisting  of twelve  30-day  months.  Accrued  Certificate
Interest with respect to each Distribution  Date, as to any Class A Certificate,
Mezzanine  Certificate,  Class B Certificate  or Class CE  Certificate  shall be
reduced by an amount equal to the portion allocable to such Certificate pursuant
to Section  1.02  hereof,  if any,  of the sum of (a) the  aggregate  Prepayment
Interest Shortfall, if any, for such Distribution Date to the extent not covered
by  payments  pursuant  to Section  3.22 or Section  4.18 of this  Agreement  or
pursuant to the Servicing  Agreements and (b) the aggregate amount of any Relief
Act Interest Shortfall, if any, for such Distribution Date. In addition, Accrued
Certificate  Interest with respect to each Distribution Date, as to any Class CE
Certificate,  shall be reduced by an amount  equal to the portion  allocable  to
such Class CE Certificate of Realized Losses,  if any,  pursuant to Section 1.02
and Section 5.04 hereof.

       "Adjustable Rate Mortgage Loan": Each of the Mortgage Loans identified in
the  Mortgage  Loan  Schedule  as  having a  Mortgage  Rate that is  subject  to
adjustment.


                                       4
<PAGE>


       "Adjustment  Date":  With respect to each  Adjustable Rate Mortgage Loan,
the  first day of the month in which the  Mortgage  Rate of an  Adjustable  Rate
Mortgage  Loan  changes  pursuant  to  the  related  Mortgage  Note.  The  first
Adjustment  Date following the Cut-off Date as to each  Adjustable Rate Mortgage
Loan is set forth in the Mortgage Loan Schedule.

       "Administration  Fees": The sum of (i) the Servicing Fee, (ii) the Master
Servicing Fee and (iii) the Credit Risk Management Fee.

       "Administration  Fee Rate":  The sum of (i) the Servicing Fee Rate,  (ii)
the Master Servicer Fee Rate and (iii) the Credit Risk Management Fee Rate.

       "Advance Facility": As defined in Section 3.25(a).

       "Advance Financing Person": As defined in Section 3.25(a).

       "Advance Reimbursement Amounts": As defined in Section 3.25(b).

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

       "Aggregate Loss Severity  Percentage":  With respect to any  Distribution
Date,  the  percentage  equivalent of a fraction,  the numerator of which is the
aggregate  amount of Realized  Losses  incurred on any  Mortgage  Loans from the
Cut-off Date to the last day of the preceding calendar month and the denominator
of which is the aggregate  principal  balance of such Mortgage Loans immediately
prior to the liquidation of such Mortgage Loans.

       "Agreement": This Pooling and Servicing Agreement, including all exhibits
and schedules hereto and all amendments hereof and supplements hereto.

       "Allocated Realized Loss Amount":  With respect to any Class of Mezzanine
Certificates or Class B Certificates and any Distribution  Date, an amount equal
to the sum of any Realized Loss allocated to that Class of  Certificates  on the
Distribution  Date  and any  Allocated  Realized  Loss  Amount  for  that  Class
remaining unpaid from the previous Distribution Date.

       "Amounts Held for Future Distribution":  As to any Distribution Date, the
aggregate amount held in the Custodial  Accounts and the Collection  Accounts at
the close of business on the immediately preceding Determination Date on account
of (i) all  Monthly  Payments  or  portions  thereof  received in respect of the
Mortgage Loans due after the related Due Period and (ii)  Principal  Prepayments
and  Liquidation  Proceeds  received in respect of such Mortgage Loans after the
last day of the related Prepayment Period.

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


                                       5
<PAGE>


blanket assignments  covering Mortgages secured by Mortgaged  Properties located
in the same county, if permitted by law.

       "Assignment  Agreements":  The ResMae Assignment Agreement and the Litton
Assignment Agreement.

       "Available  Distribution  Amount": With respect to any Distribution Date,
an amount equal to (1) the sum of (a) the aggregate of the amounts on deposit in
the Custodial  Accounts,  Collection Account and Distribution  Account as of the
close of business on the related Servicer  Remittance Date, (b) the aggregate of
any amounts deposited in the Distribution  Account by the Servicer or the Master
Servicer in respect of Prepayment Interest Shortfalls for such Distribution Date
pursuant to Section  3.22 or Section  4.18 of this  Agreement  or by the related
Interim Servicer pursuant to the related Servicing Agreement,  (c) the aggregate
of any P&I Advances for such  Distribution Date made by the Servicer pursuant to
Section 5.03 of this Agreement or by the related  Interim  Servicer  pursuant to
the related  Servicing  Agreement and (d) the aggregate of any P&I Advances made
by a successor  Servicer  (including the Master Servicer) for such  Distribution
Date  pursuant to Section 8.02 of this  Agreement  or pursuant to the  Servicing
Agreements  reduced  (to not less than  zero) by (2) the  portion  of the amount
described  in clause  (1)(a) above that  represents  (i) Amounts Held for Future
Distribution,  (ii)  Principal  Prepayments on the Mortgage Loans received after
the related Prepayment Period (together with any interest payments received with
such Principal  Prepayments to the extent they represent the payment of interest
accrued  on the  Mortgage  Loans  during  a  period  subsequent  to the  related
Prepayment Period),  (iii) Liquidation  Proceeds and Insurance Proceeds received
in respect of the  Mortgage  Loans after the  related  Prepayment  Period,  (iv)
amounts reimbursable or payable to the Depositor, the Servicer, the Trustee, the
Master  Servicer,  the  Securities  Administrator  or the Custodian  pursuant to
Section  3.09 or 9.05 of this  Agreement  or  otherwise  payable  in  respect of
Extraordinary  Trust Fund  Expenses  or  reimbursable  or payable to the related
Interim  Servicer  under the related  Servicing  Agreement,  (v) the Credit Risk
Management  Fee,  (vi) amounts  deposited in a Custodial  Account,  a Collection
Account or the Distribution Account in error, (vii) the amount of any Prepayment
Charges  collected by the Servicer or an Interim Servicer in connection with the
Principal   Prepayment  of  any  of  the  Mortgage   Loans  and  (viii)  amounts
reimbursable to a successor Servicer (including the Master Servicer) pursuant to
Section 8.02 of this Agreement or pursuant to the related Servicing Agreement.

       "Balloon Mortgage Loan": A Mortgage Loan that provides for the payment of
the  unamortized  principal  balance of such Mortgage Loan in a single  payment,
that is substantially greater than the preceding monthly payment at the maturity
of such Mortgage Loan.

       "Balloon  Payment":  A payment of the unamortized  principal balance of a
Mortgage  Loan in a  single  payment,  that is  substantially  greater  than the
preceding Monthly Payment at the maturity of such Mortgage Loan.

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

       "Book-Entry   Certificates":   The  Offered   Certificates  and  Class  B
Certificates  for so long as the  Certificates of such Class shall be registered
in the name of the Depository or its nominee.


                                       6
<PAGE>


       "Book-Entry Custodian": The custodian appointed pursuant to Section 6.01.

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

       "Cap Contracts":  Shall mean (i) the Cap Contract between the Trustee and
the counterparty  named thereunder,  for the benefit of the Holders of the Class
A-1 Certificates,  the Mezzanine  Certificates and the Class B Certificates (the
"Group I Cap  Contract")  and (ii) the Cap Contract  between the Trustee and the
counterparty  thereunder,  for the  benefit of the Class A-2  Certificates,  the
Mezzanine  Certificates  and  the  Class  B  Certificates  (the  "Group  II  Cap
Contract").

       "Cash-Out Refinancing":  A Refinanced Mortgage Loan the proceeds of which
are more  than a  nominal  amount in  excess  of the  principal  balance  of any
existing first mortgage plus any subordinate  mortgage on the related  Mortgaged
Property and related closing costs.

       "Certificate": Any one of ACE Securities Corp., Asset Backed Pass-Through
Certificates,  Series 2005-RM1,  Class A-1A, Class A-1B, Class A-2A, Class A-2B,
Class A-2C,  Class M-1,  Class M-2,  Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7, Class M-8, Class M-9, Class B-1, Class B-2, Class B-3, Class P, Class
CE and Class R issued under this Agreement.

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

       "Certificate  Margin":  With respect to the Class A-1A  Certificates and,
for  purposes  of the  definition  of "Marker  Rate",  REMIC I Regular  Interest
I-LTA1A,  0.24% in the case of each  Distribution Date through and including the
Optional  Termination  Date  and  0.48% in the  case of each  Distribution  Date
thereafter.

       With  respect to the Class A-1B  Certificates  and,  for  purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA1B, 0.30% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 0.60% in the case of each Distribution Date thereafter.

       With  respect to the Class A-2A  Certificates  and,  for  purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2A, 0.13% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 0.26% in the case of each Distribution Date thereafter.


                                       7
<PAGE>


       With  respect to the Class A-2B  Certificates  and,  for  purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2B, 0.27% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 0.54% in the case of each Distribution Date thereafter.

       With  respect to the Class A-2C  Certificates  and,  for  purposes of the
definition of "Marker Rate", REMIC I Regular Interest I-LTA2C, 0.37% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 0.74% in the case of each Distribution Date thereafter.

       With  respect to the Class M-1  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM1,  0.46% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 0.69% in the case of each Distribution Date thereafter.

       With  respect to the Class M-2  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM2,  0.50% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 0.75% in the case of each Distribution Date thereafter.

       With  respect to the Class M-3  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM3,  0.53% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 0.795% in the case of each Distribution Date thereafter.

       With  respect to the Class M-4  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM4,  0.68% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 1.02% in the case of each Distribution Date thereafter.

       With  respect to the Class M-5  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM5,  0.73% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 1.095% in the case of each Distribution Date thereafter.

       With  respect to the Class M-6  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM6,  0.80% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 1.20% in the case of each Distribution Date thereafter.

       With  respect to the Class M-7  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM7,  1.35% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 2.025% in the case of each Distribution Date thereafter.

       With  respect to the Class M-8  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM8,  1.40% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 2.10% in the case of each Distribution Date thereafter.


                                       8
<PAGE>


       With  respect to the Class M-9  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTM9,  2.00% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 3.00% in the case of each Distribution Date thereafter.

       With  respect to the Class B-1  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTB1,  3.25% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 4.875% in the case of each Distribution Date thereafter.

       With  respect  to the Class B2  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTB2,  3.25% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 4.875% in the case of each Distribution Date thereafter.

       With  respect  to the Class B3  Certificates  and,  for  purposes  of the
definition of "Marker Rate", REMIC I Regular Interest I-LTB3,  3.25% in the case
of each  Distribution  Date through and including the Optional  Termination Date
and 4.825% in the case of each Distribution Date thereafter.

       "Certificateholder"  or "Holder":  The Person in whose name a Certificate
is  registered  in  the  Certificate   Register,   except  that  a  Disqualified
Organization  or a Non-United  States Person shall not be a Holder of a Residual
Certificate for any purposes  hereof,  and solely for the purposes of giving any
consent pursuant to this Agreement, any Certificate registered in the name of or
beneficially  owned by the  Depositor,  the  Seller,  the  Servicer,  the Master
Servicer,  the Securities  Administrator,  the Trustee or any Affiliate  thereof
shall be  deemed  not to be  outstanding  and the  Voting  Rights to which it is
entitled  shall not be taken into account in  determining  whether the requisite
percentage  of Voting  Rights  necessary  to effect  any such  consent  has been
obtained,  except as otherwise  provided in Section  12.01.  The Trustee and the
Securities  Administrator  may  conclusively  rely  upon  a  certificate  of the
Depositor,  the Seller, the Master Servicer, the Securities Administrator or the
Servicer in determining  whether a Certificate is held by an Affiliate  thereof.
All  references  herein to "Holders" or  "Certificateholders"  shall reflect the
rights of Certificate Owners as they may indirectly exercise such rights through
the Depository and participating members thereof,  except as otherwise specified
herein;  provided,  however,  that the Trustee and the Securities  Administrator
shall be required to  recognize  as a "Holder" or  "Certificateholder"  only the
Person in whose name a Certificate is registered in the Certificate Register.

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

       "Certificate   Principal   Balance":   With   respect  to  each  Class  A
Certificate,  Mezzanine Certificate,  Class B Certificate or Class P Certificate
as of any date of  determination,  the  Certificate  Principal  Balance  of such
Certificate  on  the  Distribution  Date  immediately  prior  to  such  date  of
determination plus any Subsequent  Recoveries added to the Certificate Principal
Balance of such Certificate  pursuant to Section 5.04,  minus all  distributions
allocable to principal made thereon and Realized Losses  allocated  thereto,  if
any, on such immediately prior


                                       9
<PAGE>


Distribution  Date  (or,  in the  case of any  date of  determination  up to and
including the first Distribution Date, the initial Certificate Principal Balance
of such Certificate,  as stated on the face thereof). With respect to each Class
CE  Certificate  as of  any  date  of  determination,  an  amount  equal  to the
Percentage  Interest  evidenced by such Certificate times the excess, if any, of
(A) the then aggregate  Uncertificated Balances of the REMIC I Regular Interests
over  (B) the then  aggregate  Certificate  Principal  Balances  of the  Class A
Certificates, the Mezzanine Certificates, the Class B Certificates and the Class
P Certificates then outstanding.  The aggregate  initial  Certificate  Principal
Balance of each Class of Regular  Certificates  is set forth in the  Preliminary
Statement hereto.

       "Certificate Register": The register maintained pursuant to Section 6.02.

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

       "Class A Certificate": Any Class A-1A, Class A-1B, Class A-2A, Class A-2B
or Class A-2C Certificate.

       "Class  A  Principal   Distribution   Amount":   The  Class  A  Principal
Distribution  Amount  is an  amount  equal  to the sum of:  (i)  the  Class  A-1
Principal  Distribution  Amount  and (ii) the Class A-2  Principal  Distribution
Amount.

       "Class A-1 Allocation Percentage":  With respect to any Distribution Date
is the  percentage  equivalent of a fraction,  the numerator of which is (x) the
Group  I  Principal  Remittance  Amount  for  such  Distribution  Date  and  the
denominator  of  which  is  (y)  the  Principal   Remittance   Amount  for  such
Distribution Date.

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

       "Class  A-1  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in effect,  the excess of (x) the sum of the Certificate  Principal Balances
of the Class A-1A Certificates and Class A-1B Certificates  immediately prior to
such  Distribution Date over (y) the lesser of (A) the product of (i) 54.60% and
(ii) the aggregate Stated Principal  Balance of the Group I Mortgage Loans as of
the last day of the  related  Due  Period  (after  giving  effect  to  scheduled
payments of principal due during the related Due Period,  to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment Period) and (B) the aggregate Stated Principal Balance of the Group I
Mortgage Loans as of the last day of the related Due Period (after giving effect
to  scheduled  payments of principal  due during the related Due Period,  to the
extent  received or advanced and unscheduled  collections of principal  received
during the related  Prepayment  Period)  minus the product of (i) 0.50% and (ii)
the aggregate  principal balance of the Group I Mortgage Loans as of the Cut-off
Date.

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

       "Class A-1B Certificate": Any one of the Class A-1B Certificates executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the


                                       10
<PAGE>


form annexed hereto as Exhibit A-1 and evidencing a Regular Interest in REMIC II
for purposes of the REMIC Provisions.

       "Class A-2 Allocation Percentage":  With respect to any Distribution Date
is the  percentage  equivalent of a fraction,  the numerator of which is (x) the
Group  II  Principal  Remittance  Amount  for  such  Distribution  Date  and the
denominator  of  which  is  (y)  the  Principal   Remittance   Amount  for  such
Distribution Date.

       "Class  A-2  Certificate":  Any  Class  A-2A,  Class  A-2B or Class  A-2C
Certificate.

       "Class  A-2  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in effect,  the excess of (x) the sum of the Certificate  Principal Balances
of the Class A-2A, Class A-2B and Class A-2C  Certificates  immediately prior to
such  Distribution Date over (y) the lesser of (A) the product of (i) 54.60% and
(ii) the aggregate Stated Principal Balance of the Group II Mortgage Loans as of
the last day of the  related  Due  Period  (after  giving  effect  to  scheduled
payments of principal due during the related Due Period,  to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment  Period) and (B) the aggregate Stated Principal  Balance of the Group
II Mortgage  Loans as of the last day of the related  Due Period  (after  giving
effect to scheduled  payments of principal due during the related Due Period, to
the extent  received  or  advanced  and  unscheduled  collections  of  principal
received  during the related  Prepayment  Period) minus the product of (i) 0.50%
and (ii) the aggregate  principal  balance of the Group II Mortgage  Loans as of
the Cut-off Date.

       "Class A-2A Certificate": Any one of the Class A-2A Certificates executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-1 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class A-2B Certificate": Any one of the Class A-2B Certificates executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-1 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class A-2C Certificate": Any one of the Class A-2C Certificates executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-1 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class B Certificate": Any Class B-1, Class B-2 or Class B-3 Certificate.

       "Class B-1 Certificate":  Any one of the Class B-1 Certificates  executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-3 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class  B-1  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking


                                       11
<PAGE>


into  account the payment of the Class A Principal  Distribution  Amount on such
Distribution  Date),  (ii) the  Certificate  Principal  Balance of the Class M-1
Certificates  (after  taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (iii) the Certificate  Principal
Balance of the Class M-2 Certificates  (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Certificate  Principal Balance of the Class M-3 Certificates  (after taking into
account  the  payment  of the Class M-3  Principal  Distribution  Amount on such
Distribution  Date),  (v) the  Certificate  Principal  Balance  of the Class M-4
Certificates  (after  taking into account the payment of the Class M-4 Principal
Distribution Amount on such Distribution  Date), (vi) the Certificate  Principal
Balance of the Class M-5 Certificates  (after taking into account the payment of
the Class M-5 Principal  Distribution  Amount on such Distribution  Date), (vii)
the Certificate  Principal  Balance of the Class M-6 Certificates  (after taking
into account the payment of the Class M-6 Principal  Distribution Amount on such
Distribution  Date),  (viii) the Certificate  Principal Balance of the Class M-7
Certificates  (after  taking into account the payment of the Class M-7 Principal
Distribution Amount on such Distribution  Date), (ix) the Certificate  Principal
Balance of the Class M-8 Certificates  (after taking into account the payment of
the Class M-8 Principal  Distribution Amount on such Distribution Date), (x) the
Certificate  Principal Balance of the Class M-9 Certificates  (after taking into
account  the  payment  of the Class M-9  Principal  Distribution  Amount on such
Distribution  Date) and (xi) the Certificate  Principal Balance of the Class B-1
Certificates  immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 92.40% and (ii) the aggregate Stated Principal Balance of
the Mortgage  Loans as of the last day of the related Due Period  (after  giving
effect to scheduled  payments of principal due during the related Due Period, to
the extent  received  or  advanced  and  unscheduled  collections  of  principal
received  during the related  Prepayment  Period) and (B) the  aggregate  Stated
Principal  Balance of the  Mortgage  Loans as of the last day of the related Due
Period (after  giving  effect to scheduled  payments of principal due during the
related  Due  Period,  to  the  extent  received  or  advanced  and  unscheduled
collections of principal  received during the related  Prepayment  Period) minus
the  product  of (i)  0.50%  and (ii) the  aggregate  principal  balance  of the
Mortgage Loans as of the Cut-off Date.

       "Class B-2 Certificate":  Any one of the Class B-2 Certificates  executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-3 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class  B-2  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5  Certificates  (after taking into account the payment of the


                                       12
<PAGE>


Class M-5 Principal  Distribution  Amount on such Distribution  Date), (vii) the
Certificate  Principal Balance of the Class M-6 Certificates  (after taking into
account  the  payment  of the Class M-6  Principal  Distribution  Amount on such
Distribution  Date),  (viii) the Certificate  Principal Balance of the Class M-7
Certificates  (after  taking into account the payment of the Class M-7 Principal
Distribution Amount on such Distribution  Date), (ix) the Certificate  Principal
Balance of the Class M-8 Certificates  (after taking into account the payment of
the Class M-8 Principal  Distribution Amount on such Distribution Date), (x) the
Certificate  Principal Balance of the Class M-9 Certificates  (after taking into
account  the  payment  of the Class M-9  Principal  Distribution  Amount on such
Distribution  Date),  (xi) the  Certificate  Principal  Balance of the Class B-1
Certificates  (after  taking into account the payment of the Class B-1 Principal
Distribution  Amount  on such  Distribution  Date)  and  (xii)  the  Certificate
Principal  Balance  of the  Class  B-2  Certificates  immediately  prior to such
Distribution  Date over (y) the lesser of (A) the product of (i) 95.50% and (ii)
the aggregate Stated Principal  Balance of the Mortgage Loans as of the last day
of the  related  Due  Period  (after  giving  effect to  scheduled  payments  of
principal due during the related Due Period,  to the extent received or advanced
and unscheduled  collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal  Balance of the Mortgage Loans as
of the last day of the  related Due Period  (after  giving  effect to  scheduled
payments of principal due during the related Due Period,  to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment  Period)  minus  the  product  of (i)  0.50%  and (ii) the  aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

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

       "Class  B-3  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5  Certificates  (after taking into account the payment of the Class M-5
Principal  Distribution Amount on such Distribution Date), (vii) the Certificate
Principal  Balance of the Class M-6 Certificates  (after taking into account the
payment  of the Class M-6  Principal  Distribution  Amount on such  Distribution
Date),  (viii) the Certificate  Principal  Balance of the Class M-7 Certificates
(after taking into account the payment of the Class M-7  Principal  Distribution
Amount on such Distribution Date), (ix) the Certificate Principal Balance of the
Class M-8  Certificates  (after taking into account the payment of the Class M-8
Principal  Distribution  Amount on such Distribution  Date), (x) the Certificate
Principal  Balance of the Class M-9 Certificates  (after taking into account the
payment  of the Class M-9


                                       13
<PAGE>


Principal  Distribution  Amount on such Distribution Date), (xi) the Certificate
Principal  Balance of the Class B-1 Certificates  (after taking into account the
payment  of the Class B-1  Principal  Distribution  Amount on such  Distribution
Date),  (xii) the Certificate  Principal  Balance of the Class B-2  Certificates
(after taking into account the payment of the Class B-2  Principal  Distribution
Amount on such Distribution  Date) and (xiii) the Certificate  Principal Balance
of the Class B-3 Certificates  immediately  prior to such Distribution Date over
(y) the lesser of (A) the  product of (i) 97.70% and (ii) the  aggregate  Stated
Principal  Balance of the  Mortgage  Loans as of the last day of the related Due
Period (after  giving  effect to scheduled  payments of principal due during the
related  Due  Period,  to  the  extent  received  or  advanced  and  unscheduled
collections of principal  received during the related Prepayment Period) and (B)
the aggregate Stated Principal  Balance of the Mortgage Loans as of the last day
of the  related  Due  Period  (after  giving  effect to  scheduled  payments  of
principal due during the related Due Period,  to the extent received or advanced
and unscheduled  collections of principal received during the related Prepayment
Period) minus the product of (i) 0.50% and (ii) the aggregate  principal balance
of the Mortgage Loans as of the Cut-off Date.

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

       "Class M  Certificates":  The Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8 and Class M-9 Certificates.

       "Class M-1 Certificate":  Any one of the Class M-1 Certificates  executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class  M-1  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal  Distribution Amount on such Distribution Date)
and (ii)  the  Certificate  Principal  Balance  of the  Class  M-1  Certificates
immediately  prior to such  Distribution  Date  over (y) the  lesser  of (A) the
product of (i) 62.60% and (ii) the  aggregate  Stated  Principal  Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to  scheduled  payments of principal  due during the related Due Period,  to the
extent  received or advanced and unscheduled  collections of principal  received
during the related  Prepayment  Period) and (B) the aggregate  Stated  Principal
Balance  of the  Mortgage  Loans as of the last day of the  related  Due  Period
(after giving  effect to scheduled  payments of principal due during the related
Due Period,  to the extent received or advanced and  unscheduled  collections of
principal  received during the related  Prepayment  Period) minus the product of
(i) 0.50% and (ii) the aggregate  principal  balance of the Mortgage Loans as of
the Cut-off Date.

       "Class M-2 Certificate":  Any one of the Class M-2 Certificates  executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the


                                       14
<PAGE>


form annexed hereto as Exhibit A-2 and evidencing a Regular Interest in REMIC II
for purposes of the REMIC Provisions.

       "Class  M-2  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such  Distribution  Date) and (iii) the Certificate  Principal Balance of the
Class M-2 Certificates  immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 69.20% and (ii) the aggregate  Stated Principal
Balance  of the  Mortgage  Loans as of the last day of the  related  Due  Period
(after giving  effect to scheduled  payments of principal due during the related
Due Period,  to the extent received or advanced and  unscheduled  collections of
principal  received during the related  Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (after  giving  effect to scheduled  payments of principal due during
the related  Due Period,  to the extent  received  or advanced  and  unscheduled
collections of principal  received during the related  Prepayment  Period) minus
the  product  of (i)  0.50%  and (ii) the  aggregate  principal  balance  of the
Mortgage Loans as of the Cut-off Date.

       "Class M-3 Certificate":  Any one of the Class M-3 Certificates  executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class  M-3  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal   Distribution   Amount  on  such  Distribution  Date)  and  (iv)  the
Certificate Principal Balance of the Class M-3 Certificates immediately prior to
such  Distribution Date over (y) the lesser of (A) the product of (i) 73.20% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period  (after  giving  effect to  scheduled  payments of
principal due during the related Due Period,  to the extent received or advanced
and unscheduled  collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal  Balance of the Mortgage Loans as
of the last day of the  related Due Period  (after  giving  effect to  scheduled
payments of principal due during the related Due Period,  to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment  Period)  minus  the  product  of (i)  0.50%  and (ii) the  aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

       "Class M-4 Certificate":  Any one of the Class M-4 Certificates  executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the


                                       15
<PAGE>


form annexed hereto as Exhibit A-2 and evidencing a Regular Interest in REMIC II
for purposes of the REMIC Provisions.

       "Class  M-4  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date) and (v) the Certificate  Principal  Balance of the Class M-4  Certificates
immediately  prior to such  Distribution  Date  over (y) the  lesser  of (A) the
product of (i) 76.90% and (ii) the  aggregate  Stated  Principal  Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to  scheduled  payments of principal  due during the related Due Period,  to the
extent  received or advanced and unscheduled  collections of principal  received
during the related  Prepayment  Period) and (B) the aggregate  Stated  Principal
Balance  of the  Mortgage  Loans as of the last day of the  related  Due  Period
(after giving  effect to scheduled  payments of principal due during the related
Due Period,  to the extent received or advanced and  unscheduled  collections of
principal  received during the related  Prepayment  Period) minus the product of
(i) 0.50% and (ii) the aggregate  principal  balance of the Mortgage Loans as of
the Cut-off Date.

       "Class M-5 Certificate":  Any one of the Class M-5 Certificates  executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class  M-5  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date) and (vi) the Certificate  Principal Balance of
the Class M-5 Certificates  immediately prior to such Distribution Date over (y)
the  lesser of (A) the  product  of (i)  80.10%  and (ii) the  aggregate  Stated
Principal  Balance of the  Mortgage  Loans as of the last day of the related Due
Period (after  giving  effect to scheduled  payments of principal due during the
related  Due  Period,  to  the  extent  received  or  advanced  and  unscheduled
collections of principal  received during the related Prepayment Period) and (B)
the aggregate Stated Principal  Balance of the


                                       16
<PAGE>


Mortgage Loans as of the last day of the related Due Period (after giving effect
to  scheduled  payments of principal  due during the related Due Period,  to the
extent  received or advanced and unscheduled  collections of principal  received
during the related  Prepayment  Period)  minus the product of (i) 0.50% and (ii)
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date.

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

       "Class  M-6  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5  Certificates  (after taking into account the payment of the Class M-5
Principal   Distribution  Amount  on  such  Distribution  Date)  and  (vii)  the
Certificate Principal Balance of the Class M-6 Certificates immediately prior to
such  Distribution Date over (y) the lesser of (A) the product of (i) 83.30% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period  (after  giving  effect to  scheduled  payments of
principal due during the related Due Period,  to the extent received or advanced
and unscheduled  collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal  Balance of the Mortgage Loans as
of the last day of the  related Due Period  (after  giving  effect to  scheduled
payments of principal due during the related Due Period,  to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment  Period)  minus  the  product  of (i)  0.50%  and (ii) the  aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

       "Class M-7 Certificate":  Any one of the Class M-7 Certificates  executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class  M-7  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such


                                       17
<PAGE>


Distribution  Date),  (iii) the Certificate  Principal  Balance of the Class M-2
Certificates  (after  taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution  Date), (iv) the Certificate  Principal
Balance of the Class M-3 Certificates  (after taking into account the payment of
the Class M-3 Principal  Distribution Amount on such Distribution Date), (v) the
Certificate  Principal Balance of the Class M-4 Certificates  (after taking into
account  the  payment  of the Class M-4  Principal  Distribution  Amount on such
Distribution  Date),  (vi) the  Certificate  Principal  Balance of the Class M-5
Certificates  (after  taking into account the payment of the Class M-5 Principal
Distribution Amount on such Distribution Date), (vii) the Certificate  Principal
Balance of the Class M-6 Certificates  (after taking into account the payment of
the Class M-6  Principal  Distribution  Amount  on such  Distribution  Date) and
(viii)  the  Certificate   Principal  Balance  of  the  Class  M-7  Certificates
immediately  prior to such  Distribution  Date  over (y) the  lesser  of (A) the
product of (i) 86.20% and (ii) the  aggregate  Stated  Principal  Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to  scheduled  payments of principal  due during the related Due Period,  to the
extent  received or advanced and unscheduled  collections of principal  received
during the related  Prepayment  Period) and (B) the aggregate  Stated  Principal
Balance  of the  Mortgage  Loans as of the last day of the  related  Due  Period
(after giving  effect to scheduled  payments of principal due during the related
Due Period,  to the extent received or advanced and  unscheduled  collections of
principal  received during the related  Prepayment  Period) minus the product of
(i) 0.50% and (ii) the aggregate  principal  balance of the Mortgage Loans as of
the Cut-off Date.

       "Class M-8 Certificate":  Any one of the Class M-8 Certificates  executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class  M-8  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5  Certificates  (after taking into account the payment of the Class M-5
Principal  Distribution Amount on such Distribution Date), (vii) the Certificate
Principal  Balance of the Class M-6 Certificates  (after taking into account the
payment  of the Class M-6  Principal  Distribution  Amount on such  Distribution
Date),  (viii) the Certificate  Principal  Balance of the Class M-7 Certificates
(after taking into account the payment of the Class M-7  Principal  Distribution
Amount on such Distribution Date) and (ix) the Certificate  Principal Balance of
the Class M-8 Certificates  immediately prior to such Distribution Date over (y)
the  lesser of (A) the  product  of (i)  88.40%  and (ii) the  aggregate  Stated
Principal  Balance of the  Mortgage  Loans as of the last day of the


                                       18
<PAGE>


related Due Period (after  giving effect to scheduled  payments of principal due
during  the  related  Due  Period,  to  the  extent  received  or  advanced  and
unscheduled  collections  of principal  received  during the related  Prepayment
Period) and (B) the aggregate Stated Principal  Balance of the Mortgage Loans as
of the last day of the  related Due Period  (after  giving  effect to  scheduled
payments of principal due during the related Due Period,  to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment  Period)  minus  the  product  of (i)  0.50%  and (ii) the  aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

       "Class M-9 Certificate":  Any one of the Class M-9 Certificates  executed
and authenticated by the Securities  Administrator and delivered by the Trustee,
substantially in the form annexed hereto as Exhibit A-2 and evidencing a Regular
Interest in REMIC II for purposes of the REMIC Provisions.

       "Class  M-9  Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5  Certificates  (after taking into account the payment of the Class M-5
Principal  Distribution Amount on such Distribution Date), (vii) the Certificate
Principal  Balance of the Class M-6 Certificates  (after taking into account the
payment  of the Class M-6  Principal  Distribution  Amount on such  Distribution
Date).  (viii) the Certificate  Principal  Balance of the Class M-7 Certificates
(after taking into account the payment of the Class M-7  Principal  Distribution
Amount on such Distribution Date), (ix) the Certificate Principal Balance of the
Class M-8  Certificates  (after taking into account the payment of the Class M-8
Principal   Distribution  Amount  on  such  Distribution  Date)  and  (vii)  the
Certificate Principal Balance of the Class M-9 Certificates immediately prior to
such  Distribution Date over (y) the lesser of (A) the product of (i) 90.40% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period  (after  giving  effect to  scheduled  payments of
principal due during the related Due Period,  to the extent received or advanced
and unscheduled  collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal  Balance of the Mortgage Loans as
of the last day of the  related Due Period  (after  giving  effect to  scheduled
payments of principal due during the related Due Period,  to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment  Period)  minus  the  product  of (i)  0.50%  and (ii) the  aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

       "Class P Certificate":  Any one of the Class P Certificates  executed and
authenticated  by the  Securities  Administrator  and  delivered by the Trustee,
substantially in the


                                       19
<PAGE>


form annexed hereto as Exhibit A-5 and evidencing a Regular Interest in REMIC II
for purposes of the REMIC Provisions.

       "Class R Certificates":  Any one of the Class R Certificates executed and
authenticated  by the  Securities  Administrator  and  delivered by the Trustee,
substantially  in the form annexed  hereto as Exhibit A-6,  and  evidencing  the
Class R-I Interest and the Class R-II Interest.

       "Class R-I Interest": The uncertificated residual interest in REMIC I.

       "Class R-II Interest": The uncertificated residual interest in REMIC II.

       "Closing Date": February 28, 2005

       "Code": The Internal Revenue Code of 1986 as amended from time to time.

       "Collection Account": The account or accounts created and maintained,  or
caused to be created and maintained, by the Servicer pursuant to Section 3.08(a)
of this Agreement,  which shall be entitled "Saxon Mortgage  Services,  Inc., as
Servicer for HSBC Bank USA,  National  Association as Trustee,  in trust for the
registered  holders of ACE  Securities  Corp.,  Home Equity  Loan Trust,  Series
2005-RM1, Asset Backed Pass-Through Certificates".  The Collection Accounts must
be Eligible Accounts.

       "Commission": The Securities and Exchange Commission.

       "Corporate  Trust Office":  The principal  corporate  trust office of the
Trustee which office at the date of the execution of this  instrument is located
at 452 Fifth Avenue, New York, New York 10018, Attention:  ACE Securities Corp.,
2005-RM1,  or at such other  address as the Trustee may  designate  from time to
time by notice to the  Certificateholders,  the Depositor,  the Master Servicer,
the  Securities  Administrator  and the Servicer.  The office of the  Securities
Administrator,  which for purposes of  Certificate  transfers  and  surrender is
located  at  Wells  Fargo  Bank,  N.A.,  Sixth  Street  and  Marquette   Avenue,
Minneapolis, Minnesota 55479, Attention: Corporate Trust (ACE 2005-RM1), and for
all other purposes is located at Wells Fargo Bank,  N.A., P.O. Box 98, Columbia,
Maryland  21046,  Attention:  Corporate  Trust (ACE  2005-RM1) (or for overnight
deliveries,  at 9062 Old Annapolis Road,  Columbia,  Maryland 21045,  Attention:
Corporate Trust (ACE 2005-RM1)).

       "Corresponding  Certificate":  With  respect  to  each  REMIC  I  Regular
Interest, as follows:

                            REMIC I Regular Interest           Class
                     --------------------------------         --------
                     REMIC I Regular Interest I-LTA1A          A-1A
                     REMIC I Regular Interest I-LTA1B          A-1B
                     REMIC I Regular Interest I-LTA2A          A-2A
                     REMIC I Regular Interest I-LTA2B          A-2B
                     REMIC I Regular Interest I-LTA2C          A-2C
                     REMIC I Regular Interest I-LTM1            M-1
                     REMIC I Regular Interest I-LTM2            M-2
                     REMIC I Regular Interest I-LTM3            M-3
                     REMIC I Regular Interest I-LTM4            M-4
                     REMIC I Regular Interest I-LTM5            M-5
                     REMIC I Regular Interest I-LTM6            M-6


                                       20
<PAGE>


                     REMIC I Regular Interest I-LTM7            M-7
                     REMIC I Regular Interest I-LTM8            M-8
                     REMIC I Regular Interest I-LTM9            M-9
                     REMIC I Regular Interest I-LTB1            B-1
                     REMIC I Regular Interest I-LTB2            B-2
                     REMIC I Regular Interest I-LTB3            B-3
                     REMIC I Regular Interest I-LTP              P

       "Credit   Enhancement   Percentage":   For  any  Distribution  Date,  the
percentage  equivalent  of a fraction,  the numerator of which is the sum of the
aggregate  Certificate  Principal  Balances of the Mezzanine  Certificates,  the
Class B Certificates and the Class CE Certificates, and the denominator of which
is the aggregate  Stated  Principal  Balance of the Mortgage  Loans,  calculated
after taking into account  distributions  of principal on the Mortgage Loans and
distribution  of the  Principal  Distribution  Amount to the  Certificates  then
entitled to distributions of principal on such Distribution Date.

       "Credit Risk Management  Agreements":  The agreements  between the Credit
Risk  Manager  and the  Servicer  and/or  Master  Servicer,  regarding  the loss
mitigation and advisory services to be provided by the Credit Risk Manager.

       "Credit  Risk  Management  Fee":  The amount  payable to the Credit  Risk
Manager on each  Distribution  Date as compensation for all services rendered by
it in the  exercise  and  performance  of any and all  powers  and duties of the
Credit Risk Manager under the Credit Risk  Management  Agreements,  which amount
shall equal one twelfth of the  product of (i) the Credit  Risk  Management  Fee
Rate multiplied by (ii) the Stated  Principal  Balance of the Mortgage Loans and
any related REO Properties as of the first day of the related Due Period.

       "Credit Risk Management Fee Rate": 0.015% per annum.

       "Credit Risk Manager":  The Murrayhill  Company, a Colorado  corporation,
and its successors and assigns.

       "Custodial  Account":  Shall mean each account  maintained  by an Interim
Servicer under the related Servicing Agreement.

       "Custodial  Agreement":  The Custodial  Agreement dated as of February 1,
2005, among the Trustee, the Custodian and the Servicer as such agreement may be
amended or  supplemented  from time to time,  or any other  custodial  agreement
entered into after the date hereof with respect to any Mortgage  Loan subject to
this Agreement.

       "Custodian":  Wells  Fargo or any  other  custodian  appointed  under any
custodial agreement entered into after the date of this Agreement.

       "Cut-off  Date":  With respect to each Mortgage  Loan,  February 1, 2005.
With respect to all Qualified  Substitute Mortgage Loans, their respective dates
of substitution. References herein to the "Cut-off Date," when used with respect
to more than one Mortgage  Loan,  shall be to the  respective  Cut-off Dates for
such Mortgage Loans.

       "DBRS": Dominion Bond Rating Service, or any successor in interest.


                                       21
<PAGE>


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

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

       "Definitive Certificates": As defined in Section 6.01(b).

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

       "Delinquency  Percentage":  As of the last day of the related Due Period,
the percentage equivalent of a fraction, the numerator of which is the aggregate
Stated  Principal  Balance of all Mortgage Loans that, as of the last day of the
previous  calendar month,  are 60 or more days  delinquent,  are in foreclosure,
have been  converted  to REO  Properties  or have been  discharged  by reason of
bankruptcy,  and the  denominator  of which is the  aggregate  Stated  Principal
Balance  of the  Mortgage  Loans  and REO  Properties  as of the last day of the
previous calendar month.

       "Depositor":  ACE  Securities  Corp.,  a  Delaware  corporation,  or  its
successor in interest.

       "Depository":  The Depository Trust Company, or any successor  Depository
hereafter  named.  The  nominee  of the  initial  Depository,  for  purposes  of
registering those Certificates that are to be Book-Entry Certificates, is CEDE &
Co. The Depository shall at all times be a "clearing  corporation" as defined in
Section  8-102(3) of the Uniform  Commercial Code of the State of New York and a
"clearing  agency"  registered  pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.

       "Depository  Institution":  Any depository  institution or trust company,
including  the Trustee,  that (a) is  incorporated  under the laws of the United
States of  America or any State  thereof,  (b) is  subject  to  supervision  and
examination  by federal or state  banking  authorities  and (c) has  outstanding
unsecured  commercial paper or other short-term  unsecured debt obligations (or,
in the case of a depository  institution  that is the principal  subsidiary of a
holding  company,  such holding company has unsecured  commercial paper or other
short-term unsecured debt obligations) that are rated at least A-1+ by S&P, F-1+
by Fitch and P-1 by Moody's (or, if such Rating  Agencies  are no longer  rating
the Offered Certificates,  comparable ratings by any other nationally recognized
statistical rating agency then rating the Offered Certificates).

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

       "Determination  Date": With respect to each Distribution Date and (i) the
Servicer,  the 15th day of the calendar  month in which such  Distribution  Date
occurs,  or if such 15th day is


                                       22
<PAGE>


not a Business Day, the Business Day  immediately  preceding  such 15th day (ii)
each Interim Servicer, as set forth in the related Servicing Agreement.

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

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

       "Distribution  Account":  The  trust  account  or  accounts  created  and
maintained by the Securities  Administrator  pursuant to Section  3.08(b) in the
name of the Securities  Administrator for the benefit of the  Certificateholders
and designated  "Wells Fargo Bank, N.A., in trust for registered  holders of ACE
Securities  Corp.  Home  Equity  Loan  Trust,  Series  2005-RM1".  Funds  in the
Distribution Account shall be held in trust for the  Certificateholders  for the
uses and purposes set forth in this Agreement.  The Distribution Account must be
an Eligible Account.

       "Distribution  Date":  The 25th day of any month,  or if such 25th day is
not a Business  Day,  the  Business  Day  immediately  following  such 25th day,
commencing in March 2005.

       "Due Date": With respect to each Distribution  Date, the day of the month
on which the  Monthly  Payment is due on a Mortgage  Loan during the related Due
Period, exclusive of any days of grace.

       "Due  Period":  With  respect  to any  Distribution  Date  and the  Saxon
Mortgage Loans, the period commencing on the second day of the month immediately
preceding  the month


                                       23
<PAGE>


in which such  Distribution Date occurs and ending on the first day of the month
in which such  Distribution  Date occurs.  With respect to any Distribution Date
and each  Interim  Servicer,  the period as set forth in the  related  Servicing
Agreement.

       "Eligible  Account":  Any of (i) an account or accounts maintained with a
Depository  Institution,  (ii) an account or accounts  the deposits in which are
fully insured by the FDIC or (iii) a trust account or accounts maintained with a
federal depository  institution or state chartered depository institution acting
in its fiduciary capacity. Eligible Accounts may bear interest.

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

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

       "Excess  Liquidation  Proceeds":  To the extent  that such  amount is not
required by law to be paid to the  related  mortgagor,  the  amount,  if any, by
which Liquidation Proceeds with respect to a liquidated Mortgage Loan exceed the
sum of (i) the outstanding  principal  balance of such Mortgage Loan and accrued
but unpaid interest at the related Net Mortgage Rate through the last day of the
month  in  which  the  related  Liquidation  Event  occurs,  plus  (ii)  related
liquidation  expenses  or other  amounts to which the  Servicer  or the  related
Interim  Servicer is entitled to be reimbursed  from  Liquidation  Proceeds with
respect to such  liquidated  Mortgage  Loan  pursuant  to  Section  3.09 of this
Agreement or pursuant to the related Servicing Agreement.

       "Expense  Adjusted  Mortgage Rate":  With respect to any Mortgage Loan or
REO Property, the then applicable Mortgage Rate thereon minus the Administration
Fee Rate.

       "Extraordinary  Trust Fund Expense":  Any amounts payable or reimbursable
to the Trustee, the Master Servicer, the Securities Administrator, the Custodian
or any  director,  officer,  employee or agent of any such Person from the Trust
Fund pursuant to the terms of this  Agreement  and any amounts  payable from the
Distribution Account in respect of taxes pursuant to Section 11.01(g)(v).

       "Extra Principal  Distribution  Amount": With respect to any Distribution
Date,  the lesser of (i) the Net Monthly Excess  Cashflow for such  Distribution
Date and (ii) the  Overcollateralization  Increase Amount for such  Distribution
Date.

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

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

       "Final Maturity Date": The Distribution Date occurring in March 2035.

       "Final Recovery  Determination":  With respect to any defaulted  Mortgage
Loan or any REO Property  (other than a Mortgage Loan or REO Property  purchased
by  an  Originator,  the  Seller  or  the  Master  Servicer  pursuant  to  or as
contemplated by Section 2.03, 3.13(c) or Section 10.01), a determination made by
the  Servicer or the  related  Interim  Servicer  that all  Insurance  Proceeds,
Liquidation  Proceeds  and other  payments or  recoveries  which the Servicer


                                       24
<PAGE>


or related Interim Servicer,  in its reasonable good faith judgment,  expects to
be  finally  recoverable  in  respect  thereof  have  been so  recovered,  which
determination  shall  be  evidenced  by a  certificate  of a  Servicing  Officer
delivered to the Master Servicer and maintained in its records.

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

       "Gross  Margin":  With respect to each Adjustable Rate Mortgage Loan, the
fixed  percentage  set forth in the related  Mortgage  Note that is added to the
Index  on each  Adjustment  Date in  accordance  with the  terms of the  related
Mortgage  Note used to determine  the  Mortgage  Rate for such  Adjustable  Rate
Mortgage Loan.

       "Group I Interest  Remittance  Amount":  With respect to any Distribution
Date is that portion of the Available  Distribution Amount for such Distribution
Date that represents interest received or advanced on the Group I Mortgage Loans
(net of the Administration Fees and any Prepayment Charges and after taking into
account  amounts  payable or  reimbursable  to the Trustee,  the Custodian,  the
Securities  Administrator,  the Master Servicer or the Servicer pursuant to this
Agreement or the Custodial  Agreement or the Interim  Servicers  pursuant to the
Servicing Agreements.

       "Group I Mortgage Loans": Those Mortgage Loans identified on the Mortgage
Loan Schedule as Group I Mortgage Loans.

       "Group I Principal Distribution Amount": With respect to any Distribution
Date will be the sum of (i) the principal portion of all Monthly Payments on the
Group I  Mortgage  Loans due  during  the  related  Due  Period,  whether or not
received  on or prior to the  related  Determination  Date;  (ii) the  principal
portion of all  proceeds  received  in respect  of the  repurchase  of a Group I
Mortgage Loan or, in the case of a substitution,  certain amounts representing a
principal  adjustment,  during the related  Prepayment  Period pursuant to or as
contemplated  by  Section  2.03,  Section  3.13(c)  and  Section  10.01  of this
Agreement or the Servicing  Agreements (iii) the principal  portion of all other
unscheduled collections,  including Insurance Proceeds, Liquidation Proceeds and
all  Principal  Prepayments  in full and in part,  received  during the  related
Prepayment Period, to the extent applied as recoveries of principal on the Group
I Mortgage Loans, net in each case of payments or reimbursements to the Trustee,
the Custodian, the Master Servicer, the Securities  Administrator,  the Servicer
or the Interim  Servicers  and (iv) the Class A-1  Allocation  Percentage of the
amount of any  Overcollateralization  Increase Amount for such Distribution Date
MINUS  (v)  the  Class  A-1   Allocation   Percentage   of  the  amount  of  any
Overcollateralization Reduction Amount for such Distribution Date.

       "Group I Principal  Remittance Amount":  With respect to any Distribution
Date will be the sum of the amounts  described  in clauses (i) through  (iii) of
the definition of Group I Principal Distribution Amount.

       "Group II Interest Remittance  Amount":  With respect to any Distribution
Date is that portion of the Available  Distribution Amount for such Distribution
Date that  represents  interest  received  or  advanced on the Group II Mortgage
Loans  (net of the  Administration  Fees and any  Prepayment  Charges  and after
taking  into  account  amounts  payable  or  reimbursable  to


                                       25
<PAGE>


the Trustee, the Custodian, the Securities Administrator, the Master Servicer or
the Servicer pursuant to this Agreement or the Custodial Agreement or payable or
reimbursable to the Interim Servicers pursuant to the Servicing Agreements.

       "Group  II  Mortgage  Loans":  Those  Mortgage  Loans  identified  on the
Mortgage Loan Schedule as Group II Mortgage Loans.

       "Group  II   Principal   Distribution   Amount":   With  respect  to  any
Distribution  Date will be the sum of (i) the  principal  portion of all Monthly
Payments  on the Group II  Mortgage  Loans due during the  related  Due  Period,
whether or not received on or prior to the related  Determination Date; (ii) the
principal  portion of all proceeds  received in respect of the  repurchase  of a
Group II  Mortgage  Loan  or,  in the case of a  substitution,  certain  amounts
representing  a  principal  adjustment,  during the  related  Prepayment  Period
pursuant to or as  contemplated  by Section  2.03,  Section  3.13(c) and Section
10.01;  (iii)  the  principal  portion  of all  other  unscheduled  collections,
including Insurance Proceeds, Liquidation Proceeds and all Principal Prepayments
in full and in part,  received  during the  related  Prepayment  Period,  to the
extent applied as recoveries of principal on the Group II Mortgage Loans, net in
each case of payments or  reimbursements  to the  Trustee,  the  Custodian,  the
Master  Servicer,  the  Securities  Administrator,  the  Servicer or the Interim
Servicers  and (iv) the Class A-2  Allocation  Percentage  of the  amount of any
Overcollateralization  Increase Amount for such  Distribution Date MINUS (v) the
Class A-2  Allocation  Percentage  of the  amount  of any  Overcollateralization
Reduction Amount for such Distribution Date.

       "Group II Principal Remittance Amount":  With respect to any Distribution
Date will be the sum of the amounts  described  in clauses (i) through  (iii) of
the definition of Group II Principal Distribution Amount.

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

       "Independent Contractor": Either (i) any Person (other than the Servicer)
that would be an  "independent  contractor"  with  respect to REMIC I within the
meaning  of  Section  856(d)(3)  of the  Code  if  REMIC  I  were a real  estate
investment  trust  (except  that the  ownership  tests set forth in that section
shall be considered to be met by any Person that owns,  directly or  indirectly,
35% or more of any Class of  Certificates),  so long as REMIC I does not receive
or derive any income from such Person and provided that the relationship between
such Person and REMIC I is at arm's  length,  all within the meaning of Treasury
Regulation  Section  1.856-


                                       26
<PAGE>


4(b)(5),  or (ii) any other Person  (including  the Servicer) if the Trustee has
received  an Opinion  of Counsel to the effect  that the taking of any action in
respect of any REO Property by such Person,  subject to any  conditions  therein
specified,  that is otherwise herein  contemplated to be taken by an Independent
Contractor  will not cause such REO Property to cease to qualify as "foreclosure
property"  within  the  meaning of Section  860G(a)(8)  of the Code  (determined
without regard to the exception  applicable  for purposes of Section  860D(a) of
the Code),  or cause any income realized in respect of such REO Property to fail
to qualify as Rents from Real Property.

       "Index":  As  of  any  Adjustment  Date,  the  index  applicable  to  the
determination  of the Mortgage Rate on each  Adjustable  Rate Mortgage Loan will
generally be the average of the interbank  offered  rates for  six-month  United
States  dollar  deposits in the London  market as  published  in THE WALL STREET
JOURNAL and as most recently  available  either (a) as of the first Business Day
45 days prior to such Adjustment Date or (b) as of the first Business Day of the
month preceding the month of such  Adjustment  Date, as specified in the related
Mortgage Note.

       "Institutional Accredited Investor": As defined in Section 6.01(c).

       "Insurance  Proceeds":  Proceeds of any title  policy,  hazard  policy or
other  insurance  policy,  covering a  Mortgage  Loan or the  related  Mortgaged
Property,  to the extent such proceeds are not to be applied to the  restoration
of the related  Mortgaged  Property or  released  to the  Mortgagor  or a senior
lienholder in accordance with Accepted Servicing Practices, subject to the terms
and conditions of the related Mortgage Note and Mortgage.

       "Interest Accrual Period":  With respect to any Distribution Date and the
Class A  Certificates,  the Mezzanine  Certificate and the Class B Certificates,
the  period  commencing  on  the  Distribution  Date  of the  month  immediately
preceding the month in which such  Distribution  Date occurs (or, in the case of
the first Distribution  Date,  commencing on the Closing Date) and ending on the
day preceding such Distribution  Date. With respect to any Distribution Date and
the  Class CE  Certificates  and the REMIC I Regular  Interests,  the  one-month
period ending on the last day of the calendar  month  immediately  preceding the
month in which such Distribution Date occurs.

       "Interest Carry Forward Amount":  With respect to any  Distribution  Date
and any Class A Certificate,  Mezzanine Certificate or Class B Certificate,  the
sum of (i) the amount, if any, by which (a) the Interest Distribution Amount for
such Class as of the immediately  preceding  Distribution  Date exceeded (b) the
actual  amount  distributed  on  such  Class  in  respect  of  interest  on such
immediately  preceding  Distribution  Date and (ii) the  amount of any  Interest
Carry  Forward  Amount  for  such  Class  remaining  unpaid  from  the  previous
Distribution  Date, plus accrued  interest on such sum calculated at the related
Pass-Through Rate for the most recently ended Interest Accrual Period.

       "Interest  Determination Date": With respect to the Class A Certificates,
the Mezzanine Certificates,  the Class B Certificates,  REMIC I Regular Interest
I-LTA1 A, REMIC I Regular Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,
REMIC I Regular  Interest  I-LTA2B,  REMIC I Regular Interest  I-LTA2C,  REMIC I
Regular  Interest  I-LTM1,  REMIC I  Regular  Interest  I-LTM2,  REMIC I Regular
Interest  I-LTM3,  REMIC I Regular  Interest  I-LTM4,  REMIC I Regular  Interest
I-LTM5,  REMIC I Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC
I Regular  Interest I-LTM8,  REMIC I Regular  Interest  I-


                                       27
<PAGE>


LTM9, REMIC I Regular Interest I-LTB1,  REMIC I Regular Interest I-LTB2, REMIC I
Regular  Interest I-LTB3,  and any Interest Accrual Period therefor,  the second
London Business Day preceding the commencement of such Interest Accrual Period.

       "Interest Distribution Amount": With respect to any Distribution Date and
any Class A Certificates,  any Mezzanine Certificates,  any Class B Certificates
and any Class CE Certificates, the aggregate Accrued Certificate Interest on the
Certificates of such Class for such Distribution Date.

       "Interim Servicer" Any of RMC, RMAE or Litton.

       "Interest Remittance Amount":  With respect to any Distribution Date, the
sum of:  (i) the  Group I  Interest  Remittance  Amount  and (ii)  the  Group II
Interest Remittance Amount.

       "Last Scheduled  Distribution  Date":  The  Distribution  Date in [March]
2035, which is the Distribution Date immediately following the maturity date for
the Mortgage Loan with the latest maturity date.

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

       "Liquidation  Event":  With  respect  to any  Mortgage  Loan,  any of the
following events:  (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination  is made as to such  Mortgage  Loan or (iii) such Mortgage Loan is
removed from REMIC I by reason of its being purchased, sold or replaced pursuant
to or as  contemplated by Section 2.03,  Section 3.13(c) or Section 10.01.  With
respect  to any  REO  Property,  either  of the  following  events:  (i) a Final
Recovery Determination is made as to such REO Property or (ii) such REO Property
is removed  from REMIC I by reason of its being  purchased  pursuant  to Section
10.01.

       "Liquidation  Proceeds":  The  amount  (other  than  Insurance  Proceeds,
amounts  received  in  respect of the  rental of any REO  Property  prior to REO
Disposition, or required to be released to a Mortgagor or a senior lienholder in
accordance  with  applicable  law or the  terms  of the  related  Mortgage  Loan
Documents)  received  by  the  Servicer  or  the  related  Interim  Servicer  in
connection  with (i) the  taking  of all or a part of a  Mortgaged  Property  by
exercise of the power of eminent  domain or  condemnation  (other  than  amounts
required to be  released  to the  Mortgagor  or a senior  lienholder),  (ii) the
liquidation of a defaulted  Mortgage Loan through a trustee's sale,  foreclosure
sale or otherwise, (iii) the repurchase, substitution or sale of a Mortgage Loan
or an REO  Property  pursuant to or as  contemplated  by Section  2.03,  Section
3.13(c),  Section 3.21 or Section 10.01 of this Agreement or (iv) any Subsequent
Recoveries.

       "Litton": Litton Loan Servicing LP.


                                       28
<PAGE>


       "Litton Assignment Agreement": The Assignment, Assumption and Recognition
Agreement, dated as of February 28, 2005, by and among the Seller, the Depositor
and Litton  evidencing the assignment of the Litton  Servicing  Agreement to the
Depositor.

       "Litton Mortgage  Loans":  The Mortgage Loans being serviced by Litton as
of the Closing Date.

       "Litton Servicing  Agreement:  The Sub-Servicing  Agreement,  dated as of
December 1, 2004 by and between DB Structured Products Inc. and Litton.

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

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

       "Loss Severity  Percentage":  With respect to any Distribution  Date, the
percentage  equivalent  of a fraction,  the  numerator of which is the amount of
Realized  Losses incurred on a Mortgage Loan and the denominator of which is the
principal  balance of such Mortgage Loan immediately prior to the liquidation of
such Mortgage Loan.

       "Marker  Rate":  With  respect  to the  Class  CE  Certificates  and  any
Distribution  Date, a per annum rate equal to two (2) times the weighted average
of the REMIC I  Remittance  Rate for each of REMIC I Regular  Interest  I-LTA1A,
REMIC I Regular  Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,  REMIC I
Regular  Interest  I-LTA2B,  REMIC I Regular Interest  I-LTA2C,  REMIC I Regular
Interest  I-LTM1,  REMIC I Regular  Interest  I-LTM2,  REMIC I Regular  Interest
I-LTM3,  REMIC I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC
I Regular  Interest I-LTM6,  REMIC I Regular  Interest  I-LTM7,  REMIC I Regular
Interest  I-LTM8,  REMIC I Regular  Interest  I-LTM9,  REMIC I Regular  Interest
I-LTB1,REMIC I Regular  Interest  I-LTB2,  REMIC I Regular  Interest  I-LTB3 and
REMIC I Regular  Interest  I-LTZZ,  with the rate on each  such  REMIC I Regular
Interest (other than REMIC I Regular  Interest I-LTZZ) subject to a cap equal to
the lesser of (i) the related  One-Month  LIBOR  Pass-Through  Rate and (ii) the
related Net WAC  Pass-Through  Rate for the  Corresponding  Certificate  for the
purpose  of this  calculation  for such  Distribution  Date and with the rate on
REMIC I Regular Interest I-LTZZ subject to a cap of zero for the purpose of this
calculation;  provided however,  each such cap for each REMIC I Regular Interest
shall be multiplied by a fraction the numerator of which is the actual number of
days in the related Interest Accrual Period and the denominator of which is 30.

       "Master  Servicer":  As of the Closing Date,  Wells Fargo Bank,  N.A. and
thereafter, its respective successors in interest who meet the qualifications of
this Agreement.  The Master Servicer and the Securities  Administrator  shall at
all times be the same Person.

       "Master  Servicer   Certification":   A  written  certification  covering
servicing of the Mortgage  Loans by the Servicer and signed by an officer of the
Master  Servicer  that  complies  with (i) the  Sarbanes-Oxley  Act of 2002,  as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding  Compliance by Asset-Backed Issuers with Exchange Act


                                       29
<PAGE>


Rules 13a-14 and 15d-14, as in effect from time to time; provided that if, after
the  Closing  Date  (a)  the  Sarbanes-Oxley  Act of 2002  is  amended,  (b) the
Statement referred to in clause (ii) is modified or superseded by any subsequent
statement,  rule or regulation of the Securities and Exchange  Commission or any
statement  of a  division  thereof,  or  (c)  any  future  releases,  rules  and
regulations are published by the Securities and Exchange Commission from time to
time pursuant to the  Sarbanes-Oxley Act of 2002, which in any such case affects
the form or substance of the required  certification and results in the required
certification  being,  in  the  reasonable  judgment  of  the  Master  Servicer,
materially  more onerous than the form of the required  certification  as of the
Closing Date,  the Master  Servicer  Certification  shall be as agreed to by the
Master  Servicer,  the Depositor and the Seller  following a negotiation in good
faith to determine how to comply with any such new requirements.

       "Master  Servicer Event of Default":  One or more of the events described
in Section 8.01(b).

       "Master Servicer Fee Rate": 0.0075% per annum.

       "Master  Servicing  Fee":  With respect to each Mortgage Loan and for any
calendar  month,  an amount  equal to one  twelfth of the  product of the Master
Servicer Fee Rate multiplied by the Scheduled  Principal Balance of the Mortgage
Loans as of the Due Date in the preceding calendar month.

       "Maximum I-LTZZ Uncertificated Interest Deferral Amount": With respect to
any  Distribution  Date,  the  excess  of (i)  accrued  interest  at the REMIC I
Remittance  Rate  applicable  to  REMIC  I  Regular  Interest  I-LTZZ  for  such
Distribution  Date on a balance equal to the  Uncertificated  Balance of REMIC I
Regular Interest I-LTZZ minus the REMIC I Overcollateralization  Amount, in each
case for such Distribution  Date, over (ii)  Uncertificated  Interest on REMIC I
Regular  Interest  I-LTA1A,  REMIC I Regular Interest  I-LTA1B,  REMIC I Regular
Interest  I-LTA2A,  REMIC I Regular Interest  I-LTA2B,  REMIC I Regular Interest
I-LTA2C, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC
I Regular  Interest I-LTM3,  REMIC I Regular  Interest  I-LTM4,  REMIC I Regular
Interest  I-LTM5,  REMIC I Regular  Interest  I-LTM6,  REMIC I Regular  Interest
I-LTM7,  REMIC I Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC
I Regular Interest  I-LTB1,  REMIC I Regular Interest I-LTB2 and REMIC I Regular
Interest I-LTB3 for such  Distribution  Date, with the rate on each such REMIC I
Regular  Interest  subject  to a cap  equal  to the  lesser  of (i) the  related
One-Month LIBOR Pass-Through Rate and (ii) the related Net WAC Pass-Through Rate
for the  corresponding  Certificate for the purpose of this calculation for such
Distribution  Date;  provided  however,  each such cap for each  REMIC I Regular
Interest  shall be multiplied by a fraction the numerator of which is the actual
number of days in the related  Interest  Accrual  Period and the  denominator of
which is 30.

       "Maximum  Mortgage  Rate":  With respect to each Adjustable Rate Mortgage
Loan,  the  percentage  set forth in the  related  Mortgage  Note as the maximum
Mortgage Rate thereunder.

       "MERS":  Mortgage Electronic  Registration  Systems,  Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.


                                       30
<PAGE>


       "MERS(R)  System":   The  system  of  recording  transfers  of  mortgages
electronically maintained by MERS.

       "Mezzanine Certificate":  Any Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8 or Class M-9 Certificate.

       "MIN": The Mortgage  Identification  Number for Mortgage Loans registered
with MERS on the MERS(R) System.

       "Minimum  Mortgage  Rate":  With respect to each Adjustable Rate Mortgage
Loan,  the  percentage  set forth in the  related  Mortgage  Note as the minimum
Mortgage Rate thereunder.

       "MOM  Loan":  With  respect  to any  Mortgage  Loan,  MERS  acting as the
mortgagee of such Mortgage  Loan,  solely as nominee for the  originator of such
Mortgage Loan and its successors and assigns, at the origination thereof.

       "Monthly  Payment":  With respect to any  Mortgage  Loan,  the  scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the  related  Mortgagor  from time to time under the related  Mortgage  Note,
determined:  (a) after giving effect to (i) any Deficient  Valuation and/or Debt
Service  Reduction  with respect to such Mortgage Loan and (ii) any reduction in
the amount of interest  collectible from the related  Mortgagor  pursuant to the
Relief Act or similar  state laws;  (b) without  giving  effect to any extension
granted or agreed to by the Servicer  pursuant to Section 3.01 of this Agreement
or by the related Interim Servicer pursuant to the related Servicing  Agreement;
and (c) on the  assumption  that all  other  amounts,  if any,  due  under  such
Mortgage Loan are paid when due.

       "Moody's": Moody's Investors Service, Inc. or any successor interest.

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

       "Mortgage File":  The Mortgage Loan Documents  pertaining to a particular
Mortgage Loan.

       "Mortgage  Loan":  Each  mortgage  loan  transferred  and assigned to the
Trustee and the Mortgage  Loan  Documents  for which have been  delivered to the
Custodian  pursuant  to  Section  2.01 of this  Agreement  and  pursuant  to the
Custodial Agreement,  as held from time to time as a part of the Trust Fund, the
Mortgage Loans so held being identified in the Mortgage Loan Schedule.

       "Mortgage Loan Documents":  The documents  evidencing or relating to each
Mortgage Loan delivered to the Custodian under the Custodial Agreement on behalf
of the Trustee.

       "Mortgage Loan Purchase Agreement": Shall mean the Mortgage Loan Purchase
Agreement dated as of Febraury 28, 2005, between the Depositor and the Seller.


                                       31
<PAGE>


       "Mortgage  Loan  Schedule":  As of any date,  the list of Mortgage  Loans
included in REMIC I on such date,  separately  identifying  the Group I Mortgage
Loans and the Group II  Mortgage  Loans,  attached  hereto  as  Schedule  1. The
Depositor  shall  deliver or cause the  delivery  of the initial  Mortgage  Loan
Schedule to the Servicer,  the Master Servicer, the Custodian and the Trustee on
the Closing  Date.  The Mortgage  Loan  Schedule  shall set forth the  following
information with respect to each Mortgage Loan:

         (i)      the Mortgage Loan identifying number;

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

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

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

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

         (vi)     the original months to maturity;

         (vii)    the  original  date of the  Mortgage  Loan  and the  remaining
                  months  to  maturity  from  the  Cut-off  Date,  based  on the
                  original amortization schedule;

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

         (ix)     the Mortgage Rate in effect immediately  following the Cut-off
                  Date;

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

         (xi)     the stated maturity date;

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

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

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

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

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

         (xvii)   with respect to each  Adjustable Rate Mortgage Loan, the first
                  Adjustment Date;


                                       32
<PAGE>


         (xviii)  with respect to each  Adjustable Rate Mortgage Loan, the Gross
                  Margin;

         (xix)    a code  indicating  the  purpose of the loan  (i.e.,  purchase
                  financing, rate/term refinancing, cash-out refinancing);

         (xx)     with  respect  to each  Adjustable  Rate  Mortgage  Loan,  the
                  Maximum Mortgage Rate under the terms of the Mortgage Note;

         (xxi)    with  respect  to each  Adjustable  Rate  Mortgage  Loan,  the
                  Minimum Mortgage Rate under the terms of the Mortgage Note;

         (xxii)   the Mortgage Rate at origination;

         (xxiii)  with  respect  to each  Adjustable  Rate  Mortgage  Loan,  the
                  Periodic Rate Cap;

         (xxiv)   with respect to each  Adjustable Rate Mortgage Loan, the first
                  Adjustment Date immediately following the Cut-off Date;

         (xxv)    with respect to each Adjustable Rate Mortgage Loan, the Index;

         (xxvi)   the date on which the  first  Monthly  Payment  was due on the
                  Mortgage Loan and, if such date is not consistent with the Due
                  Date currently in effect, such Due Date;

         (xxvii)  a code  indicating  whether the Mortgage Loan is an Adjustable
                  Rate Mortgage Loan or a fixed rate Mortgage Loan;

         (xxviii) a code indicating the documentation  style (i.e., full, stated
                  or limited);

         (xxix)   a code indicating if the Mortgage Loan is subject to a primary
                  insurance policy or lender paid mortgage  insurance policy and
                  the name of the insurer;

         (xxx)    the Appraised Value of the Mortgaged Property;

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

         (xxxii)  a code  indicating  whether the Mortgage  Loan is subject to a
                  Prepayment  Charge, the term of such Prepayment Charge and the
                  amount of such Prepayment Charge;

         (xxxiii) the product type (e.g.,  2/28,  15 year fixed,  30 year fixed,
                  15/30 balloon, etc.);

         (xxxiv)  the Mortgagor's debt to income ratio;

         (xxxv)   the FICO score at origination; and


                                       33
<PAGE>


         (xxxvi)  the Interim Servicer, if applicable.

       The Mortgage Loan Schedule shall set forth the following information with
respect to the Mortgage  Loans in the aggregate as of the Cut-off Date:  (1) the
number of Mortgage  Loans;  (2) the current  principal  balance of the  Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans; and (4) the
weighted  average  maturity of the Mortgage  Loans.  The Mortgage  Loan Schedule
shall be  amended  from time to time by the  Depositor  in  accordance  with the
provisions of this Agreement.  With respect to any Qualified Substitute Mortgage
Loan, the Cut-off Date shall refer to the related Cut-off Date for such Mortgage
Loan, determined in accordance with the definition of Cut-off Date herein.

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

       "Mortgage  Rate":  With respect to each Mortgage Loan, the annual rate at
which  interest  accrues on such  Mortgage  Loan from time to time in accordance
with the  provisions of the related  Mortgage  Note,  which rate with respect to
each Adjustable Rate Mortgage Loan (A) as of any date of determination until the
first  Adjustment Date following the Cut-off Date shall be the rate set forth in
the Mortgage Loan Schedule as the Mortgage Rate in effect immediately  following
the Cut-off Date and (B) as of any date of determination thereafter shall be the
rate as adjusted on the most recent Adjustment Date equal to the sum, rounded to
the nearest  0.125% as  provided in the  Mortgage  Note,  of the Index,  as most
recently available as of a date prior to the Adjustment Date as set forth in the
related Mortgage Note, plus the related Gross Margin; provided that the Mortgage
Rate on such Adjustable Rate Mortgage Loan on any Adjustment Date shall never be
more than the lesser of (i) the sum of the Mortgage  Rate in effect  immediately
prior to the  Adjustment  Date plus the related  Periodic  Rate Cap, if any, and
(ii) the related Maximum Mortgage Rate, and shall never be less than the greater
of (i) the Mortgage Rate in effect immediately prior to the Adjustment Date less
the Periodic Rate Cap, if any, and (ii) the related Minimum  Mortgage Rate. With
respect to each Mortgage  Loan that becomes an REO  Property,  as of any date of
determination,  the annual rate  determined in accordance  with the  immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.

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

       "Mortgagor": The obligor on a Mortgage Note.

       "Net Monthly Excess Cashflow": With respect to any Distribution Date, the
sum of (i) any Overcollateralization Reduction Amount for such Distribution Date
and  (ii)  the  excess  of  (x)  the  Available  Distribution  Amount  for  such
Distribution  Date  over  (y)  the  sum for  such  Distribution  Date of (A) the
aggregate  Senior  Interest  Distribution  Amounts payable to the Holders of the
Class A Certificates, (B) the aggregate Interest Distribution Amounts payable to
the holders of the Mezzanine  Certificates  and the Class B Certificates and (C)
the Principal Remittance Amount.


                                       34
<PAGE>


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

       "Net WAC Pass-Through  Rate":  With respect to the Class A-1 Certificates
and any  Distribution  Date,  a rate per annum  equal to the  product of (x) the
weighted average of the Expense Adjusted  Mortgage Rates on the then outstanding
Group I Mortgage Loans,  weighted based on their Stated Principal Balances as of
the  first  day  of  the  calendar  month  preceding  the  month  in  which  the
Distribution  Date occurs and (y) a fraction,  the  numerator of which is 30 and
the  denominator  of which is the actual  number of days  elapsed in the related
Interest  Accrual  Period.  For  federal  income  tax  purposes,   the  economic
equivalent of such rate shall be expressed as the weighted  average of (adjusted
for the actual number of days elapsed in the related  Interest  Accrual  Period)
the REMIC I Remittance Rate on REMIC I Regular  Interest  I-LT1GRP,  weighted on
the basis of the Uncertificated Balance of such REMIC I Regular Interest.

       With respect to the Class A-2 Certificates  and any Distribution  Date, a
rate per annum equal to the product of (x) the  weighted  average of the Expense
Adjusted  Mortgage  Rates  on the then  outstanding  Group  II  Mortgage  Loans,
weighted  based on their  Stated  Principal  Balances as of the first day of the
calendar month preceding the month in which the Distribution Date occurs and (y)
a fraction,  the  numerator of which is 30 and the  denominator  of which is the
actual  number of days  elapsed in the  related  Interest  Accrual  Period.  For
federal  income tax  purposes,  the  economic  equivalent  of such rate shall be
expressed as the weighted  average of  (adjusted  for the actual  number of days
elapsed in the related  Interest  Accrual Period) the REMIC I Remittance Rate on
REMIC I Regular Interest  I-LT2GRP,  weighted on the basis of the Uncertificated
Balance of such REMIC I Regular Interest.

       With respect to the Mezzanine  Certificates and any Distribution  Date, a
rate per annum equal to the product of (x) the  weighted  average of the Expense
Adjusted  Mortgage Rates on the then  outstanding  Mortgage  Loans,  weighted in
proporation to the results of subtracting  from the aggregate  Stated  Principal
Balance of each of the Group I Mortgage  Loans and the Group II Mortgage  Loans,
as of the  first  day of the  calendar  month  preceding  the month in which the
Distribution Date occurs, the Certificate Principal Balance of the related Class
A  Certificates  and  (y) a  fraction,  the  numerator  of  which  is 30 and the
denominator  of  which is the  actual  number  of days  elapsed  in the  related
Interest  Accrual  Period.  For  federal  income  tax  purposes,   the  economic
equivalent of such rate shall be expressed as the weighted  average of (adjusted
for the actual number of days elapsed in the related  Interest  Accrual  Period)
the REMIC I Remittance Rates on (a) REMIC I Regular Interest  I-LT1SUB,  subject
to a cap and a floor  equal to the  REMIC I  Remittance  Rate on REMIC I Regular
Interest I-LT1GRP,  and (b) REMIC I Regular Interest I-LT2SUB,  subject to a cap
and a floor  equal to the REMIC I  Remittance  Rate on REMIC I Regular  Interest
I-LT2GRP, weighted on the basis of the Uncertificated Balance of each such REMIC
I Regular Interest.

       With respect to the Class B  Certificates  and any  Distribution  Date, a
rate per annum equal to the product of (x) the  weighted  average of the Expense
Adjusted  Mortgage Rates on the then  outstanding  Mortgage  Loans,  weighted in
proporation to the results of subtracting  from the aggregate  Stated  Principal
Balance of the Group I Mortgage Loans and the Group II Mortgage Loans, as of the
first day of the calendar  month  preceding the month in which the  Distribution
Date  occurs,  the  Certificate   Principal  Balance  of  the  related  Class  A
Certificates  and


                                       35
<PAGE>


(y) a fraction, the numerator of which is 30 and the denominator of which is the
actual  number of days  elapsed in the  related  Interest  Accrual  Period.  For
federal  income tax  purposes,  the  economic  equivalent  of such rate shall be
expressed as the weighted  average of  (adjusted  for the actual  number of days
elapsed in the related  Interest Accrual Period) the REMIC I Remittance Rates on
(a) REMIC I Regular Interest I-LT1SUB, subject to a cap and a floor equal to the
REMIC I Remittance Rate on REMIC I Regular  Interest  I-LT1GRP,  and (b) REMIC I
Regular  Interest  I-LT2SUB,  subject to a cap and a floor  equal to the REMIC I
Remittance Rate on REMIC I Regular Interest  I-LT2GRP,  weighted on the basis of
the Uncertificated Balance of each such REMIC I Regular Interest.

       "Net WAC Rate Carryover Amount": With respect to any Class A Certificate,
Mezzanine  Certificate or Class B Certificate and any Distribution Date on which
the Pass-Through Rate is limited to the applicable Net WAC Pass-Through Rate, an
amount  equal to the sum of (i) the  excess of (x) the amount of  interest  such
Class  would have been  entitled  to receive  on such  Distribution  Date if the
applicable  Net WAC  Pass-Through  Rate would not have been  applicable  to such
Class on such  Distribution  Date over (y) the amount of  interest  paid to such
Class on such Distribution Date at the applicable Net WAC Pass-Through Rate plus
(ii) the related Net WAC Rate  Carryover  Amount for the  previous  Distribution
Date not previously  distributed to such Class together with interest thereon at
a rate equal to the Pass-Through Rate for such Class for the most recently ended
Interest  Accrual  Period  without  taking into account the  applicable  Net WAC
Pass-Through Rate.

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

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

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

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

       "Notional  Amount":  With  respect to the Class CE  Certificates  and any
Distribution Date, the  Uncertificated  Balance of the REMIC I Regular Interests
(other than REMIC I Regular  Interest I-LTP) for such  Distribution  Date. As of
the Closing Date, the Notional  Amount of the Class CE  Certificates is equal to
$627,354,083.96.

       "Offered  Certificates":  The  Class A  Certificates  and  the  Mezzanine
Certificates, collectively.


                                       36
<PAGE>


       "Officer's  Certificate":  A  certificate  signed by the  Chairman of the
Board,  the Vice  Chairman  of the  Board,  the  President  or a vice  president
(however  denominated),  or by  the  Treasurer,  the  Secretary,  or  one of the
assistant treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.

       "One-Month  LIBOR"  :  With  respect  to the  Class A  Certificates,  the
Mezzanine  Certificates,  the Class B  Certificates,  REMIC I  Regular  Interest
I-LTA1A,  REMIC I Regular Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,
REMIC I Regular  Interest  I-LTA2B,  REMIC I Regular Interest  I-LTA2C,  REMIC I
Regular  Interest  I-LTM1,  REMIC I  Regular  Interest  I-LTM2,  REMIC I Regular
Interest  I-LTM3,  REMIC I Regular  Interest  I-LTM4,  REMIC I Regular  Interest
I-LTM5,  REMIC I Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC
I Regular  Interest I-LTM8,  REMIC I Regular  Interest  I-LTM9,  REMIC I Regular
Interest  I-LTB1,  REMIC I Regular  Interest I-LTB2 and REMIC I Regular Interest
I-LTB3 and any Interest  Accrual  Period  therefor,  the rate  determined by the
Securities Administrator on the related Interest Determination Date on the basis
of the offered rate for one-month U.S. dollar deposits,  as such rate appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on such Interest Determination
Date; provided that if such rate does not appear on Telerate Page 3750, the rate
for such  date  will be  determined  on the  basis of the  offered  rates of the
Reference Banks for one-month U.S.  dollar  deposits,  as of 11:00 a.m.  (London
time)  on such  Interest  Determination  Date.  In such  event,  the  Securities
Administrator  will request the principal London office of each of the Reference
Banks to provide a  quotation  of its rate.  If on such  Interest  Determination
Date, two or more  Reference  Banks provide such offered  quotations,  One-Month
LIBOR for the related  Interest  Accrual Period shall be the arithmetic  mean of
such offered  quotations  (rounded  upwards if  necessary  to the nearest  whole
multiple  of 1/16).  If on such  Interest  Determination  Date,  fewer  than two
Reference Banks provide such offered quotations, One-Month LIBOR for the related
Interest  Accrual  Period shall be the higher of (i) LIBOR as  determined on the
previous  Interest  Determination  Date  and  (ii) the  Reserve  Interest  Rate.
Notwithstanding the foregoing,  if, under the priorities  described above, LIBOR
for an  Interest  Determination  Date  would be based on LIBOR for the  previous
Interest  Determination  Date for the third consecutive  Interest  Determination
Date, the Securities  Administrator shall select an alternative comparable index
(over which the Securities  Administrator has no control),  used for determining
one-month  Eurodollar  lending  rates  that  is  calculated  and  published  (or
otherwise  made  available)  by  an  independent  party.  The  establishment  of
One-Month   LIBOR   by  the   Securities   Administrator   and  the   Securities
Administrator's subsequent calculation of the One-Month LIBOR Pass-Through Rates
for the relevant  Interest  Accrual  Period,  shall,  in the absence of manifest
error, be final and binding.

       "One-Month  LIBOR  Pass-Through  Rate":  With  respect  to the Class A-1A
Certificates  and,  for purposes of the  definition  of "Marker  Rate",  REMIC I
Regular  Interest  I-LTA1A,  a per annum rate equal to One-Month  LIBOR plus the
related Certificate Margin.

       With  respect to the Class A-1B  Certificates  and,  for  purposes of the
definition of "Marker Rate",  REMIC I Regular Interest I-LTA1B, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class A-2A  Certificates  and,  for  purposes of the
definition of "Marker Rate",  REMIC I Regular Interest I-LTA2A, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.


                                       37
<PAGE>


       With  respect to the Class A-2B  Certificates  and,  for  purposes of the
definition of "Marker Rate",  REMIC I Regular Interest I-LTA2B, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class A-2C  Certificates  and,  for  purposes of the
definition of "Marker Rate",  REMIC I Regular Interest I-LTA2C, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class M-1  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTM1, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class M-2  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTM2, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class M-3  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTM3, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class M-4  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTM4, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class M-5  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTM5, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class M-6  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTM6, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class M-7  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTM7, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class M-8  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTM8, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class M-9  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTM9, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class B-1  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTB1, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.


                                       38
<PAGE>


       With  respect to the Class B-2  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTB2, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

       With  respect to the Class B-3  Certificates  and,  for  purposes  of the
definition of "Marker Rate",  REMIC I Regular  Interest I-LTB3, a per annum rate
equal to One-Month LIBOR plus the related Certificate Margin.

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

       "Optional Termination Date": The Distribution Date on which the aggregate
principal  balance of the  Mortgage  Loans (and  properties  acquired in respect
thereof)  remaining in the Trust Fund is reduced to less than or equal to 10% of
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date.

       "Originators": RMC and RMAE (each, an "Originator").

       "Overcollateralization  Amount":  With respect to any Distribution  Date,
the  excess,  if any,  of (a) the  aggregate  Stated  Principal  Balances of the
Mortgage Loans and REO Properties  immediately  following such Distribution Date
over (b) the sum of the aggregate  Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates, the Class B Certificates and the Class
P  Certificates  as of such  Distribution  Date (after  taking into  account the
payment of the Principal Remittance Amount on such Distribution Date).

       "Overcollateralization  Increase  Amount":  With  respect  to the Class A
Certificates,  the Mezzanine  Certificates  and the Class B Certificates and any
Distribution  Date is any amount of Net Monthly Excess Cashflow actually applied
as  an   accelerated   payment  of   principal   to  the  extent  the   Required
Overcollateralization Amount exceeds the Overcollateralization Amount.

       "Overcollateralization   Reduction   Amount":   With   respect   to   any
Distribution   Date,   is  the   lesser   of  (i)  the   amount   by  which  the
Overcollateralization  Amount exceeds the Required  Overcollateralization Amount
and  (ii)  the  Principal  Remittance  Amount;  provided  however  that  on  any
Distribution   Date   on   which   a   Trigger   Event   is   in   effect,   the
Overcollateralization Reduction Amount shall equal zero.

       "Ownership  Interest":  As to any Certificate,  any ownership or security
interest in such Certificate,  including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.

       "P&I Advance": As to any Mortgage Loan or REO Property,  any advance made
by the Servicer in respect of any Determination Date pursuant to Section 5.03 of
this  Agreement,  an Advance  Financing  Person pursuant to Section 3.25 of this
Agreement  or in  respect  of any  Distribution  Date  by a  successor  Servicer
(including the Master Servicer)  pursuant to Section 8.02 of this Agreement,  or
the related Interim Servicer pursuant to the related Servicing


                                       39
<PAGE>


Agreement (which advances shall not include principal or interest shortfalls due
to bankruptcy  proceedings  or application of the Relief Act or similar state or
local laws.)

       "Pass-Through  Rate":  With  respect  to the  Class A  Certificates,  the
Mezzanine Certificates and the Class B Certificates,  and any Distribution Date,
a rate  per  annum  equal  to the  lesser  of (i) the  related  One-Month  LIBOR
Pass-Through  Rate for such  Distribution  Date  and  (ii) the  related  Net WAC
Pass-Through Rate for such Distribution Date.

       With respect to the Class CE Certificates  and any  Distribution  Date, a
rate per annum equal to the percentage  equivalent of a fraction,  the numerator
of which is the sum of the  amounts  calculated  pursuant to clauses (i) through
(xx)  below,  and the  denominator  of  which  is the  aggregate  Uncertificated
Balances of REMIC I Regular Interest I-LTAA,  REMIC I Regular Interest  I-LTA1A,
REMIC I Regular  Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,  REMIC I
Regular  Interest  I-LTA2B,  REMIC I Regular Interest  I-LTA2C,  REMIC I Regular
Interest  I-LTM1,  REMIC I Regular  Interest  I-LTM2,  REMIC I Regular  Interest
I-LTM3,  REMIC I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC
I Regular  Interest I-LTM6,  REMIC I Regular  Interest  I-LTM7,  REMIC I Regular
Interest  I-LTM8,  REMIC I Regular  Interest  I-LTM9,  REMIC I Regular  Interest
I-LTB1,  REMIC I Regular  Interest  I-LTB2,  REMIC I Regular Interest I-LTB3 and
REMIC I Regular  Interest  I-LTZZ.  For purposes of calculating the Pass-Through
Rate for the Class CE  Certificates,  the  numerator  is equal to the sum of the
following components:

              (i)    the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTAA  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTAA;

              (ii)   the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTA1A  minus  the  Marker  Rate,  applied  to an  amount  equal  to the
       Uncertificated Balance of REMIC I Regular Interest I-LTA1A;

              (iii)  the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTA1B  minus  the  Marker  Rate,  applied  to an  amount  equal  to the
       Uncertificated Balance of REMIC I Regular Interest I-LTA1B;

              (iv)   the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTA2A  minus  the  Marker  Rate,  applied  to an  amount  equal  to the
       Uncertificated Balance of REMIC I Regular Interest I-LTA2A;

              (v)    the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTA2B  minus  the  Marker  Rate,  applied  to an  amount  equal  to the
       Uncertificated Balance of REMIC I Regular Interest I-LTA2B;

              (vi)   the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTA2C  minus  the  Marker  Rate,  applied  to an  amount  equal  to the
       Uncertificated Balance of REMIC I Regular Interest I-LTA2C;

              (vii)  the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTM1  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTM1;


                                       40
<PAGE>


              (viii) the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTM2  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTM2;

              (ix)   the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTM3  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTM3;

              (x)    the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTM4  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTM4;

              (xi)   the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTM5  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTM5;

              (xii)  the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTM6  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTM6;

              (xiii) the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTM7  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTM7;

              (xiv)  the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTM8  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTM8;

              (xv)   the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTM9  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTM9;

              (xvi)  the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTB1  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTB1;

              (xvii) the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTB2  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTB2;

              (xviii) the REMIC I Remittance  Rate for REMIC I Regular  Interest
       I-LTB3  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTB3;

              (xix)  the REMIC I  Remittance  Rate for REMIC I Regular  Interest
       I-LTZZ  minus  the  Marker  Rate,  applied  to an  amount  equal  to  the
       Uncertificated Balance of REMIC I Regular Interest I-LTZZ; and

              (xx)   100% of the interest on REMIC I Regular Interest I-LTP.


                                       41
<PAGE>


       "Percentage  Interest":  With respect to any Class of Certificates (other
than the Residual  Certificates),  the  undivided  percentage  ownership in such
Class evidenced by such Certificate, expressed as a percentage, the numerator of
which  is  the  initial  Certificate   Principal  Balance  represented  by  such
Certificate  and the denominator of which is the aggregate  initial  Certificate
Principal  Balance or Notional Amount of all of the  Certificates of such Class.
The  Class  A  Certificates,   the  Mezzanine   Certificates  and  the  Class  B
Certificates are issuable only in minimum Percentage Interests  corresponding to
minimum initial Certificate Principal Balances of $25,000 and integral multiples
of $1.00 in  excess  thereof.  The Class P  Certificates  are  issuable  only in
Percentage Interests  corresponding to initial Certificate Principal Balances of
$20 and integral multiples thereof.  The Class CE Certificates are issuable only
in  minimum  Percentage  Interests  corresponding  to minimum  initial  Notional
Balances of $10,000 and integral multiples of $1.00 in excess thereof; provided,
however,  that a single  Certificate of each such Class of  Certificates  may be
issued  having a  Percentage  Interest  corresponding  to the  remainder  of the
aggregate  initial Notional Balance of such Class or to an otherwise  authorized
denomination  for such Class plus such  remainder.  With respect to any Residual
Certificate,  the undivided percentage ownership in such Class evidenced by such
Certificate,  as set  forth  on the  face  of  such  Certificate.  The  Residual
Certificates are issuable in Percentage  Interests of 20% and integral multiples
of 5% in excess thereof.

       "Periodic Rate Cap":  With respect to each  Adjustable Rate Mortgage Loan
and any Adjustment Date therefor,  the fixed percentage set forth in the related
Mortgage  Note,  which is the maximum amount by which the Mortgage Rate for such
Adjustable  Rate Mortgage Loan may increase or decrease  (without  regard to the
Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from
the Mortgage Rate in effect immediately prior to such Adjustment Date.

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

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

              (ii)   (A) demand and time  deposits in,  certificates  of deposit
       of,  bankers'  acceptances  issued  by  or  federal  funds  sold  by  any
       depository  institution  or trust company  (including  the Trustee or its
       agent  acting in their  respective  commercial  capacities)  incorporated
       under the laws of the United  States of America or any state  thereof and
       subject  to   supervision   and   examination  by  federal  and/or  state
       authorities,  so long as, at the time of such  investment or  contractual
       commitment providing for such investment,  such depository institution or
       trust  company (or, if the only Rating  Agency is S&P, in the case of the
       principal  depository  institution  in a depository  institution  holding
       company, debt obligations of the depository  institution holding company)
       or its  ultimate  parent has a  short-term  uninsured  debt rating in the
       highest available rating category of Moody's,  Fitch and S&P and provided
       that each such  investment  has an original  maturity of no more than 365
       days; and provided  further that, if the only Rating Agency is S&P and if
       the  depository  or trust  company is a  principal  subsidiary  of a bank
       holding


                                       42
<PAGE>


       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 S&P if S&P is the Rating Agency;
       and (B) any  other  demand  or time  deposit  or  deposit  which is fully
       insured by the FDIC;

              (iii)  repurchase  obligations  with a term not to  exceed 30 days
       with  respect to any  security  described in clause (i) above and entered
       into with a depository institution or trust company (acting as principal)
       rated  A-1+ or higher by S&P,  F-1 or higher by Fitch and A2 or higher by
       Moody's, provided,  however, that collateral transferred pursuant to such
       repurchase  obligation  must be of the type described in clause (i) above
       and must (A) be  valued  daily at  current  market  prices  plus  accrued
       interest, (B) pursuant to such valuation, be equal, at all times, to 105%
       of the cash  transferred  by a party in exchange for such  collateral and
       (C) be  delivered  to such  party  or,  if such  party is  supplying  the
       collateral,  an agent for such party,  in such a manner as to  accomplish
       perfection  of a security  interest in the  collateral  by  possession of
       certificated securities;

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

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

              (vi)   units of money  market  funds that have been rated "AAA" by
       Fitch (if rated by Fitch),  "AAAm" by S&P or "Aaa" by  Moody's  including
       any such money market fund managed or advised by the Master Servicer, the
       Trustee or any of their Affiliates; and

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

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

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


                                       43
<PAGE>


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

       "Prepayment  Assumption":  A  prepayment  rate  for the  Adjustable  Rate
Mortgage  Loans of 28% CPR and a prepayment  rate of 100% PPC for the fixed rate
Mortgage  Loans.  The Prepayment  Assumption is used solely for  determining the
accrual of original  issue discount on the  Certificates  for federal income tax
purposes.  A CPR (or Constant Prepayment Rate) represents an annualized constant
assumed rate of prepayment  each month of a pool of mortgage  loans  relative to
its  outstanding  principal  balance  for  the  life of such  pool.  A 100%  PPC
represents  (i) a per  annum  prepayment  rate  of 4% of  the  then  outstanding
principal  balance of the fixed rate  Mortgage  Loans in the first  month of the
life of such Mortgage Loans, (ii) an additional 1.72727% per annum in each month
thereafter  through the eleventh month and (iii) a constant  prepayment  rate of
23% per annum beginning in the twelfth month and in each month thereafter during
the life of the fixed rate Mortgage Loans.

       "Prepayment  Charge":  With  respect  to any  Principal  Prepayment,  any
prepayment premium,  penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note.

       "Prepayment Charge Schedule":  As of any date, the list of Mortgage Loans
providing  for a  Prepayment  Charge  included  in the Trust  Fund on such date,
attached hereto as Schedule 2 (including the prepayment  charge summary attached
thereto).  The Depositor  shall deliver or cause the delivery of the  Prepayment
Charge  Schedule to the  Servicer,  the Master  Servicer  and the Trustee on the
Closing  Date.  The  Prepayment  Charge  Schedule  shall set forth the following
information with respect to each Prepayment Charge:

              (i)    the Mortgage Loan identifying number;

              (ii)   a code indicating the type of Prepayment Charge;

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

              (iv)   the term of the related Prepayment Charge;

              (v)    the  original  Stated  Principal  Balance  of  the  related
       Mortgage Loan; and

              (vi)   the Stated  Principal  Balance of the related Mortgage Loan
       as of the Cut-off Date.


                                       44
<PAGE>


       "Prepayment Interest Excess": With respect to each Mortgage Loan that was
the subject of a Principal  Prepayment in full during the portion of the related
Prepayment Period occurring between the first day of the calendar month in which
such Distribution  Date occurs and the Determination  Date of the calendar month
in which such  Distribution  Date  occurs,  an amount  equal to interest (to the
extent  received)  at the  applicable  Net  Mortgage  Rate on the amount of such
Principal  Prepayment for the number of days  commencing on the first day of the
calendar  month in which such  Distribution  Date  occurs and ending on the last
date  through  which  interest  is  collected  from the related  Mortgagor.  The
Servicer  may  withdraw  such  Prepayment   Interest  Excess  from  the  related
Collection Account in accordance with Section 3.09(a)(x).

       "Prepayment Interest  Shortfall":  With respect to any Distribution Date,
for each such  Mortgage  Loan that was the subject of a Principal  Prepayment in
full or in part during the portion of the related  Prepayment  Period  occurring
between the first day of the related  Prepayment  Period and the last day of the
calendar month preceding the month in which such  Distribution  Date occurs that
was  applied by the  Servicer  or the  related  Interim  Servicer  to reduce the
outstanding  principal balance of such Mortgage Loan on a date preceding the Due
Date in the  succeeding  Prepayment  Period,  an amount equal to interest at the
applicable Net Mortgage Rate on the amount of such Principal  Prepayment for the
number of days  commencing  on the date on which the  prepayment  is applied and
ending on the last day of the calendar month preceding such  Distribution  Date.
The  obligations  of the  Servicer  and the  Master  Servicer  in respect of any
Prepayment  Interest  Shortfall  are set forth in Section 3.22 and Section 4.18,
respectively  of this  Agreement.  The  obligations of the Interim  Servicers in
respect of any  Prepayment  Interest  Shortfalls  are set forth in the Servicing
Agreements

       "Prepayment   Period":   (i)  With   respect  to  the  Servicer  and  any
Distribution  Date, the calendar month  preceding the month in which the related
Distribution  Date occurs with respect to  prepayments  in part,  and the period
beginning on the 16th day of the month preceding the related  Distribution  Date
(or, the period  commencing on the Cut-off  Date,  in connection  with the first
Prepayment  Period)  and  ending  on the  15th day of the  month  in which  such
Distribution  Date  occurs  with  respect to  prepayments  in full and (ii) with
respect to the Interim Servicers, as set forth in the Servicing Agreements

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

       "Principal Distribution Amount": With respect to any Distribution Date is
the sum of the Group I Principal  Distribution Amount and the Group II Principal
Distribution Amount.

       "Principal  Remittance Amount":  With respect to any Distribution Date is
the sum of the Group I Principal  Remittance  Amount and the Group II  Principal
Remittance Amount.

       "Purchase Price": With respect to any Mortgage Loan or REO Property to be
purchased  pursuant to or as  contemplated  by Section 2.03,  Section 3.13(c) or
Section 10.01, and as confirmed by a certification of a Servicing Officer to the
Trustee,  an amount equal to the sum of (i) 100% of the Stated Principal Balance
thereof as of the date of  purchase  (or such other price


                                       45
<PAGE>


as provided in Section 10.01),  (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the  Mortgagor  or a P&I Advance by the  Servicer or the related
Interim  Servicer,  which  payment or P&I Advance had as of the date of purchase
been distributed pursuant to Section 5.01, through the end of the calendar month
in which the purchase is to be effected and (y) an REO Property,  the sum of (1)
accrued interest on such Stated Principal Balance at the applicable Net Mortgage
Rate in effect from time to time from the Due Date as to which interest was last
covered by a payment by the  Mortgagor  or a P&I Advance by the  Servicer or the
related  Interim  Servicer  through the end of the  calendar  month  immediately
preceding the calendar  month in which such REO Property was acquired,  plus (2)
REO Imputed  Interest for such REO Property for each calendar  month  commencing
with the calendar  month in which such REO Property was acquired and ending with
the calendar month in which such purchase is to be effected, net of the total of
all net rental income, Insurance Proceeds, Liquidation Proceeds and P&I Advances
that as of the date of purchase had been  distributed as or to cover REO Imputed
Interest pursuant to Section 5.01, (iii) any unreimbursed Servicing Advances and
P&I Advances (including Nonrecoverable P&I Advances and Nonrecoverable Servicing
Advances) and any unpaid  Servicing  Fees allocable to such Mortgage Loan or REO
Property,  (iv) any amounts  previously  withdrawn from the  Collection  Account
pursuant to Section  3.09(a)(ix)  and  Section  3.13(b) and (v) in the case of a
Mortgage  Loan  required  to be  purchased  pursuant to Section  2.03,  expenses
reasonably  incurred  or to be incurred by the  related  Interim  Servicer,  the
Servicer  or the  Trustee in respect of the breach or defect  giving rise to the
purchase obligation and any costs and damages incurred by the Trust Fund and the
Trustee  in  connection  with any  violation  by any such  Mortgage  Loan of any
predatory or abusive lending law.

       "QIB": As defined in Section 6.01(c).

       "Qualified  Substitute  Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such  substitution,  (i) have an outstanding  principal  balance,  after
application  of all  scheduled  payments of principal and interest due during or
prior to the month of  substitution,  not in excess of the  Scheduled  Principal
Balance of the Deleted  Mortgage  Loan as of the Due Date in the calendar  month
during which the  substitution  occurs,  (ii) have a Mortgage Rate not less than
(and not more than one  percentage  point in excess of) the Mortgage Rate of the
Deleted Mortgage Loan, (iii) if the mortgage loan is an Adjustable Rate Mortgage
Loan,  have a Maximum  Mortgage Rate not less than the Maximum  Mortgage Rate on
the Deleted  Mortgage  Loan,  (iv) if the mortgage  loan is an  Adjustable  Rate
Mortgage Loan, have a Minimum  Mortgage Rate not less than the Minimum  Mortgage
Rate of the Deleted  Mortgage  Loan,  (v) if the mortgage  loan is an Adjustable
Rate Mortgage Loan, have a Gross Margin equal to the Gross Margin of the Deleted
Mortgage  Loan,  (vi) if the mortgage loan is an Adjustable  Rate Mortgage Loan,
have a next  Adjustment  Date  not  more  than two  months  later  than the next
Adjustment  Date on the Deleted  Mortgage  Loan,  (vii) have a remaining term to
maturity  not  greater  than (and not more than one year less  than) that of the
Deleted  Mortgage  Loan,  (viii)  have  the same Due Date as the Due Date on the
Deleted  Mortgage  Loan,  (ix)  have a  Loan-to-Value  Ratio  as of the  date of
substitution  equal to or  lower  than the  Loan-to-Value  Ratio of the  Deleted
Mortgage  Loan as of such date,  (x) be secured by the same lien priority on the
related  Mortgaged  Property as the Deleted  Loan,  (xi) have a credit  grade at
least equal to the credit grading  assigned on the Deleted  Mortgage Loan, (xii)
be a "qualified  mortgage" as defined in the REMIC Provisions and


                                       46
<PAGE>


(xiii) conform to each representation and warranty set forth in Section 6 of the
Mortgage Loan Purchase Agreement applicable to the Deleted Mortgage Loan. In the
event that one or more mortgage  loans are  substituted  for one or more Deleted
Mortgage Loans,  the amounts  described in clause (i) hereof shall be determined
on the basis of aggregate  principal  balances,  the Mortgage Rates described in
clause (ii) hereof shall be determined on the basis of weighted average Mortgage
Rates,  the terms  described in clause (vii) hereof shall be  determined  on the
basis of weighted average remaining term to maturity,  the Loan-to-Value  Ratios
described  in clause (ix) hereof  shall be  satisfied  as to each such  mortgage
loan, the credit grades  described in clause (x) hereof shall be satisfied as to
each such mortgage  loan and,  except to the extent  otherwise  provided in this
sentence,  the representations  and warranties  described in clause (xii) hereof
must  be  satisfied  as to each  Qualified  Substitute  Mortgage  Loan or in the
aggregate, as the case may be.

       "Rate/Term  Refinancing":  A Refinanced  Mortgage  Loan,  the proceeds of
which  are not more  than a nominal  amount  in  excess  of the  existing  first
mortgage  loan  and  any  subordinate  mortgage  loan on the  related  Mortgaged
Property and related closing costs, and were used  exclusively  (except for such
nominal  amount)  to  satisfy  the then  existing  first  mortgage  loan and any
subordinate mortgage loan of the Mortgagor on the related Mortgaged Property and
to pay related closing costs.

       "Rating Agency or Rating Agencies": Fitch, Moody's, DBRS and S&P or their
successors.  If such  agencies or their  successors  are no longer in existence,
"Rating  Agencies"  shall  be  such  nationally  recognized  statistical  rating
agencies,  or other comparable Persons,  designated by the Depositor,  notice of
which designation shall be given to the Trustee and the Servicer.

       "Realized  Loss":  With respect to each Mortgage Loan as to which a Final
Recovery  Determination  has been  made,  an amount  (not less  than  zero),  as
reported by the Servicer to the Master  Servicer (in  substantially  the form of
Schedule 4 hereto) or by the related  Interim  Servicer  to the Master  Servicer
pursuant to the related  Servicing  Agreement equal to (i) the unpaid  principal
balance of such Mortgage Loan as of the  commencement  of the calendar  month in
which the Final Recovery Determination was made, plus (ii) accrued interest from
the Due Date as to which interest was last paid by the Mortgagor through the end
of the  calendar  month in which such  Final  Recovery  Determination  was made,
calculated  in the case of each  calendar  month  during  such  period (A) at an
annual rate equal to the annual rate at which interest was then accruing on such
Mortgage  Loan  and (B) on a  principal  amount  equal to the  Stated  Principal
Balance of such  Mortgage  Loan as of the close of business on the  Distribution
Date during such calendar  month,  plus (iii) any amounts  previously  withdrawn
from the  Collection  Account or Custodial  Account in respect of such  Mortgage
Loan pursuant to Section  3.09(a)(ix)  and Section  3.13(b) of this Agreement or
pursuant to the Servicing  Agreements minus (iv) the proceeds,  if any, received
in respect of such Mortgage  Loan during the calendar  month in which such Final
Recovery  Determination  was made, net of amounts that are payable  therefrom to
the Servicer or the related Interim  Servicer with respect to such Mortgage Loan
pursuant to Section  3.09(a)(iii)  of this  Agreement or pursuant to the related
Servicing Agreement.

       With  respect  to  any  REO  Property  as  to  which  a  Final   Recovery
Determination  has been made,  an amount  (not less than zero)  equal to (i) the
unpaid  principal  balance  of the  related  Mortgage  Loan  as of the  date  of
acquisition  of such REO  Property  on  behalf  of REMIC I,


                                       47
<PAGE>


plus (ii) accrued  interest from the Due Date as to which interest was last paid
by the Mortgagor in respect of the related  Mortgage Loan through the end of the
calendar  month  immediately  preceding  the  calendar  month in which  such REO
Property was acquired, calculated in the case of each calendar month during such
period (A) at an annual rate equal to the annual rate at which interest was then
accruing on the related Mortgage Loan and (B) on a principal amount equal to the
Stated  Principal  Balance  of the  related  Mortgage  Loan as of the  close  of
business on the  Distribution  Date during such calendar  month,  plus (iii) REO
Imputed  Interest for such REO Property for each calendar month  commencing with
the  calendar  month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery  Determination  was made,  plus (iv)
any  amounts  previously  withdrawn  from the  Collection  Account or  Custodial
Account in respect of the related Mortgage Loan pursuant to Section  3.09(a)(ix)
and Section  3.13(b) of this  Agreement  or  pursuant  to the related  Servicing
Agreement,  minus (v) the aggregate of all P&I Advances and  Servicing  Advances
(in the case of Servicing Advances, without duplication of amounts netted out of
the rental income,  Insurance  Proceeds and  Liquidation  Proceeds  described in
clause  (vi) below) made by the  Servicer  or the  related  Interim  Servicer in
respect of such REO Property or the related Mortgage Loan for which the Servicer
or the  related  Interim  Servicer  has been or, in  connection  with such Final
Recovery  Determination,  will be  reimbursed  pursuant to Section  3.21 of this
Agreement or pursuant to the related  Servicing  Agreement out of rental income,
Insurance  Proceeds  and  Liquidation  Proceeds  received in respect of such REO
Property,  minus (vi) the total of all net rental income, Insurance Proceeds and
Liquidation  Proceeds received in respect of such REO Property that has been, or
in connection with such Final Recovery Determination, will be transferred to the
Distribution  Account  pursuant to Section 3.21 of this Agreement or pursuant to
the related Servicing Agreement.

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

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

       To the extent the  Servicer  or the  related  Interim  Servicer  receives
Subsequent Recoveries, with respect to any Mortgage Loan, the amount of Realized
Loss with  respect to that  Mortgage  Loan will be  reduced  to the extent  such
recoveries are applied to reduce the Certificate  Principal Balance of any Class
on any Distribution Date.

       "Record  Date":  With respect to each  Distribution  Date and the Class A
Certificates,  the  Mezzanine  Certificates  and the Class B  Certificates,  the
Business Day immediately  preceding such  Distribution  Date for so long as such
Certificates are Book-Entry Certificates. With respect to each Distribution Date
and any other Class of Certificates,  including any Definitive Certificates, the
last day of the calendar  month  immediately  preceding  the month in which such
Distribution Date occurs.


                                       48
<PAGE>


       "Reference  Banks":  Barclay's  Bank PLC, The Tokyo  Mitsubishi  Bank and
National  Westminster  Bank PLC and  their  successors  in  interest;  provided,
however,  that if any of the  foregoing  banks  are not  suitable  to serve as a
Reference Bank, then any leading banks selected by the Securities  Administrator
which are engaged in  transactions in Eurodollar  deposits in the  International
Eurocurrency  market (i) with an established  place of business in London,  (ii)
not controlling, under the control of or under common control with the Depositor
or any  Affiliate  thereof and (iii) which have been  designated  as such by the
Securities Administrator.

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

       "Regular  Certificate":  Any Class A Certificate,  Mezzanine Certificate,
Class B Certificate, Class CE Certificate or Class P Certificate.

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

       "Regulation  S  Temporary  Global  Certificate":  As  defined  in Section
6.01(c).

       "Regulation  S  Permanent  Global  Certificate":  As  defined  in Section
6.01(c).

       "Release Date":  The 40th day after the later of (i)  commencement of the
offering of the Class B Certificates and (ii) the Closing Date.

       "Relief Act": The Servicemembers Civil Relief Act, as amended, or similar
state or local laws.

       "Relief Act Interest  Shortfall" : With respect to any Distribution  Date
and any Mortgage  Loan,  any reduction in the amount of interest  collectible on
such  Mortgage  Loan for the most  recently  ended Due Period as a result of the
application of the Relief Act.

       "REMIC": A "real estate mortgage  investment  conduit" within the meaning
of Section 860D of the Code.

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


                                       49
<PAGE>


Principal  Prepayments  made before the Cut-off Date;  (ii) the Reserve Fund and
any amounts on deposit  therein from time to time and any  proceeds  thereof and
(iii) the Cap Contracts.

       "REMIC  I  Interest  Loss  Allocation  Amount"  :  With  respect  to  any
Distribution  Date,  an amount  equal to (a) the  product  of (i) the  aggregate
Stated  Principal  Balance  of  the  Mortgage  Loans  and  REO  Properties  then
outstanding  and (ii) the REMIC I Remittance  Rate for REMIC I Regular  Interest
I-LTAA minus the Marker Rate, divided by (b) 12.

       "REMIC I Marker  Allocation  Percentage":  0.50% of any amount payable or
loss attributable  from the Mortgage Loans,  which shall be allocated to REMIC I
Regular  Interest  I-LTAA,  REMIC I Regular  Interest  I-LTA1A,  REMIC I Regular
Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,  REMIC I Regular Interest
I-LTA2B,  REMIC I Regular  Interest  I-LTA2C,  REMIC I Regular  Interest I-LTM1,
REMIC I Regular  Interest  I-LTM2,  REMIC I  Regular  Interest  I-LTM3,  REMIC I
Regular  Interest  I-LTM4,  REMIC I  Regular  Interest  I-LTM5,  REMIC I Regular
Interest  I-LTM6,  REMIC I Regular  Interest  I-LTM7,  REMIC I Regular  Interest
I-LTM8,  REMIC I Regular Interest I-LTM9, REMIC I Regular Interest I-LTB1, REMIC
I Regular  Interest I-LTB2,  REMIC I Regular  Interest  I-LTB3,  REMIC I Regular
Interest I-LTZZ and REMIC I Regular Interest I-LTP.

       "REMIC  I  Overcollateralization  Amount":  With  respect  to any date of
determination, (i) 0.50% of the aggregate Uncertificated Balances of the REMIC I
Regular  Interests  minus (ii) the aggregate of the  Uncertificated  Balances of
REMIC I Regular  Interest  I-LTA1A,  REMIC I Regular Interest  I-LTA1B,  REMIC I
Regular  Interest  I-LTA2A,  REMIC I Regular Interest  I-LTA2B,  REMIC I Regular
Interest  I-LTA2C,  REMIC I Regular  Interest  I-LTM1,  REMIC I Regular Interest
I-LTM2,  REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC
I Regular  Interest I-LTM5,  REMIC I Regular  Interest  I-LTM6,  REMIC I Regular
Interest  I-LTM7,  REMIC I Regular  Interest  I-LTM8,  REMIC I Regular  Interest
I-LTM9,  REMIC I Regular Interest I-LTB1, REMIC I Regular Interest I-LTB2, REMIC
I Regular Interest  I-LTB3,  and REMIC I Regular Interest I-LTP, in each case as
of such date of determination.

       "REMIC  I  Principal  Loss  Allocation  Amount"  :  With  respect  to any
Distribution  Date,  an  amount  equal to (a) the  product  of (i)  0.50% of the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the  Uncertificated  Balances of REMIC I Regular Interest  I-LTA1A,
REMIC I Regular  Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,  REMIC I
Regular  Interest  I-LTA2B,  REMIC I Regular Interest  I-LTA2C,  REMIC I Regular
Interest  I-LTM1,  REMIC I Regular  Interest  I-LTM2,  REMIC I Regular  Interest
I-LTM3,  REMIC I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC
I Regular  Interest I-LTM6,  REMIC I Regular  Interest  I-LTM7,  REMIC I Regular
Interest  I-LTM8,  REMIC I Regular  Interest  I-LTM9,  REMIC I Regular  Interest
I-LTB1,  REMIC I Regular Interest I-LTB2 and REMIC I Regular Interest I-LTB3 and
the  denominator  of which is the  aggregate of the  Uncertificated  Balances of
REMIC I Regular  Interest  I-LTA1A,  REMIC I Regular Interest  I-LTA1B,  REMIC I
Regular  Interest  I-LTA2A,  REMIC I Regular Interest  I-LTA2B,  REMIC I Regular
Interest  I-LTA2C,  REMIC I Regular  Interest  I-LTM1,  REMIC I Regular Interest
I-LTM2,  REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC
I Regular  Interest I-LTM5,  REMIC I Regular  Interest  I-LTM6,  REMIC I Regular
Interest  I-LTM7,  REMIC I Regular  Interest  I-LTM8,  REMIC I Regular  Interest
I-


                                       50
<PAGE>


LTM9, REMIC I Regular Interest I-LTB1,  REMIC I Regular Interest I-LTB2, REMIC I
Regular Interest I-LTB3 and REMIC I Regular Interest I-LTZZ.

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

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

       "REMIC I Regular Interest I-LTA1A": One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I. REMIC I Regular  Interest  I-LTA1A  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTA1B": One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I. REMIC I Regular  Interest  I-LTA1B  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTA2A": One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I. REMIC I Regular  Interest  I-LTA2A  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTA2B": One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I. REMIC I Regular  Interest  I-LTA2B  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTA2C": One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest


                                       51
<PAGE>


in REMIC I.  REMIC I Regular  Interest  I-LTA2C  shall  accrue  interest  at the
related  REMIC I  Remittance  Rate in  effect  from  time to time,  and shall be
entitled to  distributions  of  principal,  subject to the terms and  conditions
hereof,  in an aggregate amount equal to its initial  Uncertificated  Balance as
set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTB1":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTB1  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTB2":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTB2  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTB3":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTB3  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTM1":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTM1  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTM2":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTM2  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTM3":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTM3  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTM4":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest


                                       52
<PAGE>


in REMIC I. REMIC I Regular Interest I-LTM4 shall accrue interest at the related
REMIC I  Remittance  Rate in effect from time to time,  and shall be entitled to
distributions of principal,  subject to the terms and conditions  hereof,  in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTM5":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTM5  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTM6":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTM6  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTM7":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTM7  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTM8":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTM8  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LTM9":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest  in REMIC I.  REMIC I Regular  Interest  I-LTM9  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

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

       "REMIC I Regular Interest I-LTXX":  One of the separate  non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest


                                       53
<PAGE>


in REMIC I. REMIC I Regular Interest I-LTXX shall accrue interest at the related
REMIC I  Remittance  Rate in effect from time to time,  and shall be entitled to
distributions of principal,  subject to the terms and conditions  hereof,  in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary Statement hereto.

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

       "REMIC I Regular Interest I-LT1SUB": One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LT1SUB  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LT1GRP": One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LT1GRP  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LT2SUB": One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LT2SUB  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I Regular Interest I-LT2GRP": One of the separate non-certificated
beneficial  ownership  interests in REMIC I issued hereunder and designated as a
Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LT2GRP  shall  accrue
interest at the related REMIC I Remittance Rate in effect from time to time, and
shall be  entitled  to  distributions  of  principal,  subject  to the terms and
conditions  hereof,  in an aggregate amount equal to its initial  Uncertificated
Balance as set forth in the Preliminary Statement hereto.

       "REMIC I  Remittance  Rate":  With  respect  to REMIC I Regular  Interest
I-LTAA,  REMIC I Regular Interest  I-LTA1A,  REMIC I Regular  Interest  I-LTA1B,
REMIC I Regular  Interest  I-LTA2A,  REMIC I Regular Interest  I-LTA2B,  REMIC I
Regular  Interest  I-LTA2C,  REMIC I Regular  Interest  I-LTM1,  REMIC I Regular
Interest  I-LTM2,  REMIC I Regular  Interest  I-LTM3,  REMIC I Regular  Interest
I-LTM4,  REMIC I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC
I Regular  Interest I-LTM7,  REMIC I Regular  Interest  I-LTM8,  REMIC I Regular
Interest  I-LTM9,  REMIC I Regular  Interest  I-LTB1,  REMIC I Regular  Interest
I-LTB2,  REMIC I Regular Interest I-LTB3, REMIC I Regular Interest I-LTZZ, REMIC
I Regular  Interest I-LTP,  REMIC I Regular Interest  I-LT1SUB,  REMIC I


                                       54
<PAGE>


Regular  Interest  I-LT2SUB and REMIC I Regular  Interest  I-LTXX,  the weighted
average of the Expense  Adjusted  Mortgage  Rates of the  Mortgage  Loans.  With
respect  to REMIC I Regular  Interest  I-LT1GRP,  the  weighted  average  of the
Expense Adjusted  Mortgage Rates of the Group I Mortgage Loans.  With respect to
REMIC I Regular Interest I-LT2GRP,  the weighted average of the Expense Adjusted
Mortgage Rates of the Group II Mortgage Loans.

       "REMIC I Sub WAC Allocation  Percentage":  0.50% of any amount payable or
loss attributable  from the Mortgage Loans,  which shall be allocated to REMIC I
Regular Interest I-LT1SUB,  REMIC I Regular Interest  I-LT1GRP,  REMIC I Regular
Interest  I-LT2SUB,  REMIC I  Regular  Interest  I-LT2GRP  and  REMIC I  Regular
Interest I-LTXX.

       "REMIC I Subordinated  Balance Ratio": The ratio among the Uncertificated
Balances of each REMIC I Regular  Interest ending with the  designation  "SUB,",
equal to the ratio between,  with respect to each such REMIC I Regular Interest,
the excess of (x) the aggregate Stated Principal Balance of the Group I Mortgage
Loans or Group II Mortgage Loans, as applicable over (y) the current Certificate
Principal Balance of related Class A Certificates.

       "REMIC  I  Required  Overcollateralization  Amount":  1% of the  Required
Overcollateralization Amount.

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

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

       "REMIC II Certificateholder": The Holder of any REMIC II Certificate.

       "REMIC Provisions":  Provisions of the federal income tax law relating to
real estate mortgage investment  conduits,  which appear at Section 860A through
860G of the Code,  and related  provisions,  and  proposed,  temporary and final
regulations  and  published  rulings,  notices  and  announcements   promulgated
thereunder, as the foregoing may be in effect from time to time.

       "REMIC Regular Interest": Any REMIC I Regular Interest.

       "REMIC Remittance Rate": The REMIC I Remittance Rate.

       "Remittance Report": A report by the Servicer pursuant to Section 5.03(a)
of this  Agreement  or the  related  Interim  Servicer  pursuant  to the related
Servicing Agreement.

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

       "REO  Account":  The  account  or  accounts  maintained,  or caused to be
maintained,  by the Servicer in respect of an REO  Property  pursuant to Section
3.21 of this  Agreement  or by the  related  Interim  Servicer  pursuant  to the
related Servicing Agreement.


                                       55
<PAGE>


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

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

       "REO Principal  Amortization":  With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month,  whether in the form
of rental income, sale proceeds (including,  without limitation, that portion of
the Termination  Price paid in connection with a purchase of all of the Mortgage
Loans and REO  Properties  pursuant to Section 10.01 of this  Agreement  that is
allocable to such REO Property) or otherwise, net of any portion of such amounts
(i) payable in respect of the proper  operation,  management and  maintenance of
such REO Property or (ii) payable or  reimbursable  to the Servicer  pursuant to
Section  3.21(d) of this Agreement or related Interim  Servicer  pursuant to the
related Servicing  Agreement for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances and P&I Advances in respect of
such REO  Property  or the  related  Mortgage  Loan,  over  (b) the REO  Imputed
Interest in respect of such REO Property for such calendar month.

       "REO  Property":  A Mortgaged  Property  acquired by the  Servicer or its
nominee on behalf of REMIC I through foreclosure or deed-in-lieu of foreclosure,
as described in Section 3.21 of this Agreement or the related  Interim  Servicer
pursuant to the related Interrim Servicing Agreement.

       "Required   Overcollateralization   Amount"   :  With   respect   to  any
Distribution  Date (i) prior to the Stepdown  Date, the product of (A) 1.15% and
(B) the  aggregate  principal  balance of the  Mortgage  Loans as of the Cut-off
Date,  (ii) on or after the  Stepdown  Date  provided a Trigger  Event is not in
effect,  the greater of (x) 2.30% of the aggregate Stated  Principal  Balance of
the  Mortgage  Loans as of the last day of the  related  Due  Period  and (y) an
amount equal to the product of (A) 0.50% and (B) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date, and (iii) on or after the Stepdown
Date and a Trigger Event is in effect, the Required Overcollateralization Amount
for the immediately preceding Distribution Date.  Notwithstanding the foregoing,
on and after any  Distribution  Date  following  the  reduction of the aggregate
Certificate   Principal   Balance  of  the  Class  A   Certificates,   Mezzanine
Certificates    and   Class   B    Certificates    to   zero,    the    Required
Overcollateralization Amount shall be zero.

       "Reserve Fund": A fund created pursuant to Section 3.24 which shall be an
asset of the Trust Fund but which shall not be an asset of any Trust REMIC.

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


                                       56
<PAGE>


dollar  lending  rate  which  New York City  banks  selected  by the  Securities
Administrator  are  quoting  on such  Interest  Determination  Date  to  leading
European banks.

       "Residential  Dwelling":  Any  one  of  the  following:  (i)  a  detached
one-family  dwelling,  (ii) a detached  two- to  four-family  dwelling,  (iii) a
one-family dwelling unit in a Fannie Mae eligible  condominium  project,  (iv) a
manufactured  home,  or (v) a detached  one-family  dwelling  in a planned  unit
development, none of which is a co-operative or mobile home.

       "Residual Certificate": Any one of the Class R Certificates.

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

       "ResMae Assignment Agreement": The Assignment, Assumption and Recognition
Agreement,  dated  as of  February  28,  2005,  by and  among  the  Seller,  the
Depositor,  RMC and RMAE  evidencing  the  assignment  of the  ResMae  Servicing
Agreement to the Depositor.

       "ResMae Mortgage Loans": The Mortgage Loans being serviced by RMC or RMAE
as of the Closing Date.

       "Responsible Officer": When used with respect to the Trustee, any officer
of the Trustee  having  direct  responsibility  for the  administration  of this
Agreement  and,  with  respect to a  particular  matter,  to whom such matter is
referred  because  of such  officer's  knowledge  of and  familiarity  with  the
particular subject.

       "RMAE": Residential Mortgage Assistance Enterprise, LLC.

       "RMC": ResMae Mortgage Corporation.

       "Rule 144A": As defined in Section 6.01(c).

       "Saxon": Saxon Mortgage Services, Inc. or any successor thereto appointed
hereunder in  connection  with the  servicing  and  administration  of the Saxon
Mortgage Loans.

       "Saxon Mortgage  Loans":  Those Mortgage Loans serviced by Saxon pursuant
to the terms of this  Agreement as specified on the Mortgage  Loan  Schedule and
from and after the related  Servicing  Transfer Date, the RMC Mortgage Loans and
Litton Mortgage Loans transferred to Saxon on such Servicing Transfer Date.

       "S&P": Standard and Poor's, a division of the McGraw-Hill Companies, Inc.

       "Scheduled Principal Balance":  With respect to any Mortgage Loan: (a) as
of the Cut-off Date, the outstanding  principal balance of such Mortgage Loan as
of such date, net of the principal  portion of all unpaid Monthly  Payments,  if
any,  due on or  before  such  date;  (b) as of any Due Date  subsequent  to the
Cut-off Date up to and including  the Due Date in the calendar  month in which a
Liquidation  Event  occurs with respect to such  Mortgage  Loan,  the  Scheduled
Principal Balance of such Mortgage Loan as of the Cut-off Date, minus the sum of
(i) the principal portion of each Monthly Payment due on or before such Due Date
but subsequent to the


                                       57
<PAGE>


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

       "Securities Act": The Securities Act of 1933, as amended.

       "Securities  Administrator":  As of the Closing  Date,  Wells Fargo Bank,
N.A.  and  thereafter,  its  respective  successors  in  interest  that meet the
qualifications  of this Agreement.  The Securities  Administrator and the Master
Servicer shall at all times be the same Person.

       "Seller":  DB Structured Products,  Inc. or its successor in interest, in
its capacity as seller under the Mortgage Loan Purchase Agreement.

       "Senior Interest  Distribution  Amount": With respect to any Distribution
Date,  an amount  equal to the sum of (i) the Interest  Distribution  Amount for
such  Distribution Date for the Class A Certificates and (ii) the Interest Carry
Forward Amount, if any, for such Distribution Date for the Class A Certificates.

       "Sequential  Trigger  Event":  With respect to any  Distribution  Date, a
Sequential Trigger Event is in effect if, before the 37th Distribution Date, the
aggregate  amount of Realized Losses incurred since the Cut-off Date through the
last day of the related Due Period (after  giving  effect to scheduled  payments
received or advanced on or before the related  Determination  Date and principal
prepayments received during the related Prepayment Period) divided by the sum of
the  aggregate  principal  balance of the Mortgage  Loans as of the Cut-off Date
exceeds 3.10%, or if, on or after the 37th Distribution Date, a Trigger Event is
in effect.

       "Servicer":  Saxon,  or any  successor  thereto  appointed  hereunder  in
connection with the servicing and administration of the Mortgage Loans.

       "Servicer  Event of  Default":  One or more of the  events  described  in
Section 8.01(a).


                                       58
<PAGE>


       "Servicer  Remittance  Date":  With respect to any Distribution  Date, by
12:00 p.m.  on the 21st day of each  month;  provided  that if the 21st day of a
given month is a Saturday, the Servicer Remittance Date shall be the immediately
preceding  Business  Day and if the 21st day of a given  month is a Sunday  or a
Monday (which is not a Business Day), the Servicer  Remittance Date shall be the
next Business Day.

       "Servicer  Report":  A report  (substantially  in the form of  Schedule 5
hereto) or otherwise in form and substance acceptable to the Master Servicer and
Securities  Administrator  on an  electronic  data file or tape  prepared by the
Servicer or the related  Interim  Servicer  pursuant to Section  5.03(a) of this
Agreement or pursuant to the related Servicing  Agreement,  as applicable,  with
such additions, deletions and modifications as agreed to by the Master Servicer,
the Securities Administrator and the Servicer or the related Interim Servicer.

       "Servicing Advances": The customary and reasonable  "out-of-pocket" costs
and  expenses  incurred  prior to or on or after the Cut-off  Date (the  amounts
incurred  prior to the Cut-off Date are  identified on Schedule 6 hereto) by the
Servicer  or  the  related  Interim  Servicer  in  connection  with  a  default,
delinquency or other  unanticipated event by the Servicer or the related Interim
Servicer in the  performance of its servicing  obligations,  including,  but not
limited to, the cost of (i) the  preservation,  restoration  and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings,  including but
not limited to foreclosures, in respect of a particular Mortgage Loan, including
any expenses  incurred in relation to any such  proceedings that result from the
Mortgage  Loan being  registered  on the MERS(R)  System,  (iii) the  management
(including  reasonable fees in connection  therewith) and liquidation of any REO
Property and (iv) the performance of its obligations under Section 3.01, Section
3.07, Section 3.11, Section 3.13 and Section 3.21 of this Agreement or under the
related  Servicing  Agreement.  Servicing  Advances also include any  reasonable
"out-of-pocket"  cost  and  expenses  (including  legal  fees)  incurred  by the
Servicer or the  related  Interim  Servicer in  connection  with  executing  and
recording  instruments of satisfaction,  deeds of reconveyance or Assignments to
the extent not  recovered  from the  Mortgagor or otherwise  payable  under this
Agreement  or the related  Servicing  Agreement.  Neither the  Servicer  nor the
related Interim Servicer shall be required to make any Nonrecoverable  Servicing
Advances.

       "Servicing  Agreement":  The  ResMae  Servicing  Agreement  or the Litton
Servicing Agreement, as applicable.

       "Servicing  Fee": With respect to each Mortgage Loan and for any calendar
month,  an amount equal to  one-twelfth of the product of the Servicing Fee Rate
multiplied by the Scheduled  Principal  Balance of the Mortgage  Loans as of the
Due Date in the preceding  calendar  month.  The Servicing Fee is payable solely
from collections of interest on the Mortgage Loans.

       "Servicing Fee Rate": 0.50% per annum.

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


                                       59
<PAGE>


       "Servicing  Transfer  Date":  With respect to the Litton  Mortgage Loans,
March 31, 2005 (a schedule of the Litton  Mortgage  Loans  transferring  on such
Servicing Transfer Date will be provided to the Master Servicer by the Seller on
or prior to such Servicing  Transfer Date).  With respect to the ResMae Mortgage
Loans, March 31, 2005, April 30, 2005 and May 31, 2005 (a schedule of the ResMae
Mortgage  Loans  transferring  on each  such  Servicing  Transfer  Date  will be
provided  to the  Master  Servicer  by RMC or RMAE  on or  prior  to  each  such
Servicing Transfer Date).

       "Single  Certificate":  With respect to any Class of Certificates  (other
than the  Residual  Certificates),  a  hypothetical  Certificate  of such  Class
evidencing a  Percentage  Interest  for such Class  corresponding  to an initial
Certificate   Principal  Balance  of  $1,000.   With  respect  to  the  Residual
Certificates,  a  hypothetical  Certificate  of  such  Class  evidencing  a 100%
Percentage Interest in such Class.

       "Startup  Day":  With respect to each Trust REMIC,  the day designated as
such pursuant to Section 11.01(b) hereof.

       "Stated Principal Balance":  With respect to any Mortgage Loan: (a) as of
any date of determination up to but not including the Distribution Date on which
the proceeds,  if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed,  the Scheduled  Principal Balance of such Mortgage Loan as
of the Cut-off Date, as shown in the Mortgage  Loan  Schedule,  minus the sum of
(i) the principal  portion of each Monthly  Payment due on a Due Date subsequent
to the Cut-off  Date,  to the extent  received from the Mortgagor or advanced by
the Servicer or the related  Interim  Servicer or a successor to the Servicer or
such Interim Servicer  (including the Master Servicer) and distributed  pursuant
to Section 5.01 of this Agreement on or before such date of determination,  (ii)
all  Principal  Prepayments  received  after the  Cut-off  Date,  to the  extent
distributed pursuant to Section 5.01 of this Agreement on or before such date of
determination,  (iii) all Liquidation Proceeds and Insurance Proceeds applied by
the  Servicer or the related  Interim  Servicer as  recoveries  of  principal in
accordance  with the provisions of Section 3.13 of this Agreement or pursuant to
the related Servicing  Agreement,  to the extent distributed pursuant to Section
5.01 of this  Agreement  on or before such date of  determination,  and (iv) any
Realized Loss incurred with respect thereto as a result of a Deficient Valuation
made during or prior to the Prepayment  Period for the most recent  Distribution
Date coinciding with or preceding such date of determination;  and (b) as of any
date of determination  coinciding with or subsequent to the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, zero. With respect to any REO Property: (a) as of any
date of determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be  distributed,  an amount (not less than zero)  equal to the Stated  Principal
Balance of the related  Mortgage  Loan as of the date on which such REO Property
was acquired on behalf of REMIC I, minus the sum of (i) if such REO Property was
acquired  before the  Distribution  Date in any calendar  month,  the  principal
portion of the  Monthly  Payment  due on the Due Date in the  calendar  month of
acquisition,  to the  extent  advanced  by the  Servicer,  the  related  Interim
Servicer or a successor to the Servicer or such Interim Servicer  (including the
Master Servicer) and distributed pursuant to Section 5.01 of this Agreement,  on
or  before  such  date of  determination  and (ii) the  aggregate  amount of REO
Principal  Amortization in respect of such REO Property for all previously ended
calendar  months,  to the extent  distributed  pursuant to Section  4.01 of this
Agreement  on or before  such date of  determination;  and (b) as of any date of


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<PAGE>


determination  coinciding with or subsequent to the  Distribution  Date on which
the proceeds,  if any, of a Liquidation  Event with respect to such REO Property
would be distributed, zero.

       "Stepdown  Date":  The  earlier to occur of (i) the later to occur of (a)
the  Distribution  Date  occurring in March 2008 and (b) the first  Distribution
Date on which the Credit  Enhancement  Percentage  (calculated  for this purpose
only after taking into account  distributions of principal on the Mortgage Loans
but  prior to any  distribution  of the  Principal  Distribution  Amount  to the
Certificates  then entitled to distributions  of principal on such  Distribution
Date) is equal to or greater than 45.40% and (ii) the first Distribution Date on
which the aggregate  Certificate  Principal  Balance of the Class A Certificates
has been reduced to zero.

       "Subordinate  Certificates" : Collectively,  the Mezzanine  Certificates,
the Class B Certificates and the Class CE Certificates.

       "Subsequent  Recoveries":  As of any Distribution  Date, amounts received
during the related  Prepayment  Period by the  Servicer  or the related  Interim
Servicer  specifically related to a defaulted Mortgage Loan or disposition of an
REO Property prior to the related  Prepayment Period that resulted in a Realized
Loss, after the liquidation or disposition of such defaulted Mortgage Loan.

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

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

       "Substitution Shortfall Amount": As defined in Section 2.03.

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

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

       "Termination Price": As defined in Section 10.01.

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

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


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<PAGE>


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

       "Trigger  Event":  A  Trigger  Event  has  occurred  with  respect  to  a
Distribution Date if either (x) the Delinquency Percentage exceeds 35.00% of the
Credit Enhancement  Percentage with respect to such Distribution Date or (y) the
aggregate  amount of Realized Losses incurred since the Cut-off Date through the
last day of the related Due Period divided by the aggregate principal balance of
the Mortgage Loans as of the Cut-off Date exceeds the applicable percentages set
forth below with respect to such Distribution Date:

DISTRIBUTION DATE            PERCENTAGE
-----------------            ----------
March 2008 to February 2009  3.10%, plus 1/12 of 1.75% for each month thereafter
March 2009 to February 2010  4.85%, plus 1/12 of 1.40% for each month thereafter
March 2010 to February 2011  6.25%, plus 1/12 of 0.75% for each month thereafter
March 2011 and thereafter    7.00%

       "Trust":  ACE Securities Corp., Home Equity Loan Trust,  Series 2005-RM1,
the trust created hereunder.

       "Trust  Fund":  Collectively,  all of the assets of REMIC I, REMIC II and
the Reserve Fund and any amounts on deposit therein and any proceeds thereof and
the Cap Contracts.

       "Trust REMIC": REMIC I or REMIC II.

       "Trustee":  HSBC  Bank  USA,  National  Association  a  national  banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.

       "Uncertificated  Balance":  The  amount of the REMIC I Regular  Interests
outstanding  as of any  date  of  determination.  As of the  Closing  Date,  the
Uncertificated  Balance of each REMIC I Regular  Interest shall equal the amount
set forth in the  Preliminary  Statement  hereto as its  initial  uncertificated
balance.  On each Distribution Date, the  Uncertificated  Balance of the REMIC I
Regular Interest shall be reduced by all distributions of principal made on such
REMIC I Regular Interest on such Distribution Date pursuant to Section 5.01 and,
if and to the extent necessary and appropriate, shall be further reduced on such
Distribution  Date by  Realized  Losses  as  provided  in  Section  5.04 and the
Uncertificated  Balance of REMIC I Regular Interest I-LTZZ shall be increased by
interest  deferrals  as provided in Section  5.01(a)(1)(i).  The  Uncertificated
Balance of each REMIC I Regular Interest shall never be less than zero.

       "Uncertificated  Interest":  With respect to any REMIC I Regular Interest
for any  Distribution  Date, one month's interest at the REMIC I Remittance Rate
applicable to such REMIC I Regular Interest for such Distribution  Date, accrued
on the  Uncertificated  Balance thereof  immediately  prior to such Distribution
Date.  Uncertificated Interest in respect of the REMIC I Regular Interests shall
accrue on the basis of a  360-day  year  consisting  of  twelve  30-day  months.
Uncertificated  Interest with respect to each Distribution Date, as to any REMIC
I Regular  Interest,  shall be reduced by an amount  equal to the sum of (a) the
aggregate  Prepayment Interest Shortfall,  if any, for such Distribution Date to
the extent not covered by payments  pursuant to Section  3.22 or Section 4.18 of
this  Agreement or pursuant to the  Servicing  Agreements  and (b) the aggregate
amount of any Relief Act Interest Shortfall,  if any allocated, in


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<PAGE>


each case, to such REMIC I Regular Interest or REMIC I Regular Interest pursuant
to Section  1.02.  In  addition,  Uncertificated  Interest  with respect to each
Distribution  Date, as to any  Uncertificated  REMIC Regular Interest,  shall be
reduced by Realized  Losses,  if any,  allocated  to such  Uncertificated  REMIC
Regular Interest pursuant to Section 1.02 and Section 5.04.

       "Uninsured  Cause": Any cause of damage to a Mortgaged Property such that
the  complete  restoration  of such  property is not fully  reimbursable  by the
hazard insurance policies required to be maintained pursuant to Section 3.11.

       "United States  Person":  A citizen or resident of the United  States,  a
corporation,  partnership  or other entity created or organized in, or under the
laws of, the United States or any political  subdivision thereof (except, in the
case of a partnership, to the extent provided in regulations) provided that, for
purposes solely of the  restrictions on the transfer of any Class R Certificate,
no  partnership  or other  entity  treated as a  partnership  for United  States
federal  income tax purposes  shall be treated as a United  States Person unless
all persons that own an interest in such partnership  either directly or through
any entity  that is not a  corporation  for  United  States  federal  income tax
purposes are required to be United States Persons,  or an estate whose income is
subject to United States federal income tax regardless of its source, or a trust
if a court within the United States is able to exercise primary supervision over
the  administration  of the trust and one or more United States persons have the
authority  to control  all  substantial  decisions  of the trust.  To the extent
prescribed in regulations by the Secretary of the Treasury, a trust which was in
existence on August 20, 1996 (other than a trust treated as owned by the grantor
under subpart E of part I of  subchapter J of chapter I of the Code),  and which
was treated as a United  States  person on August 20, 1996 may elect to continue
to be treated as a United States person  notwithstanding  the previous sentence.
The term "United States" shall have the meaning set forth in Section 7701 of the
Code.

       "Value":  With respect to any Mortgaged  Property,  the lesser of (i) the
lesser of (a) the value  thereof  as  determined  by an  appraisal  made for the
related  Originator  of the  Mortgage  Loan at the  time of  origination  of the
Mortgage Loan by an appraiser who met the minimum requirements of Fannie Mae and
Freddie  Mac and (b) the  value  thereof  as  determined  by a review  appraisal
conducted by the related  Originator of the Mortgage Loan in accordance with the
related Originator's  underwriting guidelines,  and (ii) the purchase price paid
for the related  Mortgaged  Property by the  Mortgagor  with the proceeds of the
Mortgage Loan; provided, however, (A) in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged  Property is based solely upon the lesser of (1) the
value determined by an appraisal made for the related Originator of the Mortgage
Loan of  such  Refinanced  Mortgage  Loan at the  time  of  origination  of such
Refinanced  Mortgage  Loan by an appraiser who met the minimum  requirements  of
Fannie Mae and Freddie Mac and (2) the value  thereof as  determined by a review
appraisal conducted by the related Originator of the Mortgage Loan in accordance
with the related Originator's underwriting guidelines,  and (B) in the case of a
Mortgage Loan  originated in connection  with a  "lease-option  purchase,"  such
value of the Mortgaged Property is based on the lower of the value determined by
an  appraisal  made  for the  Originator  of such  Mortgage  Loan at the time of
origination  or the sale price of such  Mortgaged  Property if the "lease option
purchase price" was set less than 12 months prior to  origination,  and is based
on the value determined by an appraisal made for the related  Originator of such
Mortgage Loan at the time of  origination if the "lease option  purchase  price"
was set 12 months or more prior to origination.


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<PAGE>


       "Verification Report": As defined in Section 4.19.

       "Voting  Rights":  The  portion  of  the  voting  rights  of  all  of the
Certificates  which is  allocated to any such  Certificate.  With respect to any
date of  determination,  98% of all Voting  Rights will be  allocated  among the
holders of the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates  in  proportion  to  the  then  outstanding  Certificate  Principal
Balances  of their  respective  Certificates,  1% of all Voting  Rights  will be
allocated  among the  holders of the Class P  Certificates  and 1% of all Voting
Rights  will be  allocated  among the holders of the Class R  Certificates.  The
Voting Rights  allocated to each Class of Certificate  shall be allocated  among
Holders  of each such  Class in  accordance  with  their  respective  Percentage
Interests as of the most recent Record Date.

       "Wells Fargo": Wells Fargo Bank, N.A. or any successor thereto.


       SECTION 1.02.    Allocation of Certain Interest Shortfalls.

       For purposes of calculating  the amount of Accrued  Certificate  Interest
and the amount of the Interest Distribution Amount for the Class A Certificates,
the  Mezzanine  Certificates,   the  Class  B  Certificates  and  the  Class  CE
Certificates  for  any  Distribution  Date,  (1)  the  aggregate  amount  of any
Prepayment  Interest  Shortfalls  (to the extent not  covered by payments by the
Servicer  pursuant to Section 3.22 of this  Agreement or by the Master  Servicer
pursuant to Section 4.18 of this Agreement or by the Interim Servicers  pursuant
to the Servicing  Agreements) and any Relief Act Interest Shortfalls incurred in
respect of the  Mortgage  Loans for any  Distribution  Date  shall be  allocated
first,  to the Class CE  Certificates,  second,  to the Class B-3  Certificates,
third, to the Class B-2  Certificates,  fourth,  to the Class B-1  Certificates,
fifth,  to the Class M-9  Certificates,  sixth,  to the Class M-8  Certificates,
seventh,  to the Class M-7 Certificates,  eighth, to the Class M-6 Certificates,
ninth,  to the Class M-5  Certificates,  tenth,  to the Class M-4  Certificates,
eleventh, to the Class M-3 Certificates, twelfth, to the Class M-2 Certificates,
thirteenth,  to the  Class  M-1  Certificates  and  fourteenth,  to the  Class A
Certificates,  on a PRO RATA basis, in each case based on, and to the extent of,
one month's interest at the then applicable respective  Pass-Through Rate on the
respective  Certificate Principal Balance or Notional Amount, as applicable,  of
each  such  Certificate  and (2) the  aggregate  amount of any  Realized  Losses
allocated to the Class B Certificates,  the Mezzanine  Certificates  and Net WAC
Rate  Carryover  Amounts  paid  to  the  Class  A  Certificates,  the  Mezzanine
Certificates  and the Class B Certificates  incurred for any  Distribution  Date
shall be  allocated to the Class CE  Certificates  on a PRO RATA basis based on,
and to the extent of, one  month's  interest at the then  applicable  respective
Pass-Through  Rate on the respective  Certificate  Principal Balance or Notional
Amount thereof, as applicable.

                            For   purposes   of   calculating   the   amount  of
                     Uncertificated  Interest for the REMIC I Regular  Interests
                     for any Distribution Date:

                            (A) The REMIC I Marker Allocation  Percentage of the
                     aggregate amount of any Prepayment  Interest Shortfalls (to
                     the extent not covered by payments by the Servicer pursuant
                     to Section 3.22 of this  Agreement  or the Master  Servicer
                     pursuant  to  Section  4.18  or by  the  Interim  Servicers
                     pursuant  to the  Servicing  Agreements)  and  the  REMIC I
                     Marker  Allocation  Percentage  of any Relief Act  Interest
                     Shortfalls  incurred in respect of the  Mortgage  Loans for
                     any


                                       64
<PAGE>


                     Distribution  Date shall be allocated among REMIC I Regular
                     Interest  I-LTAA,  REMIC I Regular Interest I-LTA1A REMIC I
                     Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A,
                     REMIC I Regular Interest I-LTA2B,  REMIC I Regular Interest
                     I-LTA2C,  REMIC I Regular Interest I-LTM1,  REMIC I Regular
                     Interest I-LTM2,  REMIC I Regular Interest I-LTM3,  REMIC I
                     Regular Interest  I-LTM4,  REMIC I Regular Interest I-LTM5,
                     REMIC I Regular Interest  I-LTM6,  REMIC I Regular Interest
                     I-LTM7,  REMIC I Regular Interest  I-LTM8,  REMIC I Regular
                     Interest I-LTM9,  REMIC I Regular Interest I-LTB1,  REMIC I
                     Regular  Interest  I-LTB2,  REMIC I Regular Interest I-LTB3
                     and REMIC I Regular  Interest I-LTZZ PRO RATA based on, and
                     to  the  extent  of,  one  month's  interest  at  the  then
                     applicable  respective  REMIC  I  Remittance  Rate  on  the
                     respective  Uncertificated  Balance  of each  such  REMIC I
                     Regular Interest; and

                            (B) The REMIC I Sub WAC Allocation Percentage of the
                     aggregate amount of any Prepayment  Interest Shortfalls (to
                     the extent not covered by payments by the Servicer pursuant
                     to Section 3.22 of this Agreement or by the Master Servicer
                     pursuant  to  Section  4.18  of  this  Agreement  or by the
                     Interim Servicers pursuant to the Servicing Agreements) and
                     the REMIC I Sub WAC Allocation Percentage of any Relief Act
                     Interest  Shortfalls  incurred  in respect of the  Mortgage
                     Loans  for any  Distribution  Date  shall be  allocated  to
                     Uncertificated Interest payable to REMIC I Regular Interest
                     I-LT1SUB,  REMIC  I  Regular  Interest  I-LT1GRP,  REMIC  I
                     Regular  Interest   I-LT2SUB,   REMIC  I  Regular  Interest
                     I-LT2GRP  and REMIC I  Regular  Interest  I-LTXX,  PRO RATA
                     based on, and to the extent of, one month's interest at the
                     then applicable  respective  REMIC I Remittance Rate on the
                     respective  Uncertificated  Balance  of each  such  REMIC I
                     Regular Interest.


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<PAGE>


                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

       SECTION 2.01.    Conveyance of the Mortgage Loans.

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

       In connection  with such  transfer and  assignment,  the  Depositor  does
hereby  deliver to, and deposit  with the  Custodian  pursuant to the  Custodial
Agreement  the documents  with respect to each Mortgage Loan as described  under
Section  2 of the  Custodial  Agreement  (the  "Mortgage  Loan  Documents").  In
connection  with  such  delivery  and as  further  described  in  the  Custodial
Agreement, the Custodian will be required to review such Mortgage Loan Documents
and  deliver  to the  Trustee,  the  Depositor,  the  Servicer  and  the  Seller
certifications  (in the forms attached to the Custodial  Agreement) with respect
to such review with exceptions noted thereon.  In addition,  under the Custodial
Agreement the Depositor will be required to cure certain defects with respect to
the Mortgage Loan  Documents for the related  Mortgage  Loans after the delivery
thereof  by the  Depositor  to the  Custodian  as more  particularly  set  forth
therein.

       Notwithstanding  anything to the contrary  contained herein,  the parties
hereto  acknowledge  that the  functions  of the  Trustee  with  respect  to the
custody,  acceptance,  inspection and release of the Mortgage Files,  including,
but not limited to certain  insurance  policies and  documents  contemplated  by
Section  4.11,  and  preparation  and  delivery of the  certifications  shall be
performed by the Custodian pursuant to the terms and conditions of the Custodial
Agreement.

       The Depositor shall deliver or cause the related Originator to deliver to
the  Servicer  copies of all trailing  documents  required to be included in the
Mortgage  File at the same time the  originals or certified  copies  thereof are
delivered to the Trustee or Custodian,  such  documents  including the mortgagee
policy of title  insurance and any Mortgage Loan  Documents upon return from the
recording  office.  The Servicer shall not be responsible for any custodian fees
or other costs  incurred in obtaining  such  documents and the  Depositor  shall
cause the Servicer to be reimbursed for any such costs the Servicer may incur in
connection with performing its obligations under this Agreement.

       The  Mortgage  Loans  permitted  by the  terms  of this  Agreement  to be
included in the Trust are limited to (i)  Mortgage  Loans  (which the  Depositor
acquired pursuant to the Mortgage Loan Purchase Agreement, which contains, among
other  representations  and


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<PAGE>


warranties, a representation and warranty of the Seller that no Mortgage Loan is
a  "High-Cost  Home  Loan" as  defined  in the New  Jersey  Home  Ownership  Act
effective November 27, 2003 or as defined in the New Mexico Home Loan Protection
Act effective  January 1, 2004) and (ii)  Qualified  Substitute  Mortgage  Loans
(which,  by  definition as set forth herein and referred to in the Mortgage Loan
Purchase Agreement,  are required to conform to, among other representations and
warranties,  the  representation  and  warranty of the Seller that no  Qualified
Substitute Mortgage Loan is a "High-Cost Home Loan" as defined in the New Jersey
Home  Ownership Act effective  November 27, 2003 or as defined in the New Mexico
Home Loan  Protection  Act  effective  January 1, 2004.  The  Depositor  and the
Trustee on behalf of the Trust understand and agree that it is not intended that
any Mortgage  Loan be included in the Trust that is a  "High-Cost  Home Loan" as
defined in HOEPA or any other applicable predatory or abusive lending law.

       SECTION 2.02.    Acceptance of REMIC I by Trustee.

       The Trustee  acknowledges  receipt,  subject to the provisions of Section
2.01 hereof and  Section 2 of the  Custodial  Agreement,  of the  Mortgage  Loan
Documents  and all other assets  included in the  definition  of "REMIC I" under
clauses (i),  (iii),  (iv) and (v) (to the extent of amounts  deposited into the
Distribution Account) and declares that it holds (or the Custodian on its behalf
holds) and will hold such  documents  and the other  documents  delivered  to it
constituting  a Mortgage Loan  Document,  and that it holds (or the Custodian on
its behalf holds) or will hold all such assets and such other assets included in
the  definition  of "REMIC I" in trust for the  exclusive use and benefit of all
present and future Certificateholders.

       SECTION 2.03.    Repurchase or Substitution of Mortgage Loans.

       (a)    Upon  discovery or receipt of notice of any  materially  defective
document in, or that a document is missing  from, a Mortgage File or of a breach
by the Seller of any  representation,  warranty or covenant  under the  Mortgage
Loan  Purchase  Agreement in respect of any Mortgage  Loan that  materially  and
adversely affects the value of such Mortgage Loan or the interest therein of the
Certificateholders,  the  Trustee  shall  promptly  notify  the  Seller  and the
Servicer of such defect,  missing document or breach and request that the Seller
deliver such missing  document,  cure such defect or breach  within 60 days from
the date the Seller was notified of such missing document, defect or breach, and
if the Seller  does not  deliver  such  missing  document or cure such defect or
breach in all material  respects  during such period,  the Trustee shall enforce
the  obligations  of the Seller under the Mortgage  Loan  Purchase  Agreement to
repurchase  such Mortgage Loan from REMIC I at the Purchase Price within 90 days
after the date on which the Seller was notified of such missing document, defect
or breach,  if and to the extent that the Seller is obligated to do so under the
Mortgage  Loan  Purchase  Agreement.  The  Purchase  Price  for the  repurchased
Mortgage  Loan shall be remitted to the Servicer  for deposit in the  Collection
Account and the Trustee, upon receipt of written certification from the Servicer
of such deposit, shall release or cause the Custodian (upon receipt of a request
for release in the form attached to the  Custodial  Agreement) to release to the
Seller the related  Mortgage File and the Trustee shall execute and deliver such
instruments  of  transfer  or  assignment,   in  each  case  without   recourse,
representation  or warranty,  as the Seller shall  furnish to it and as shall be
necessary to vest in the Seller any Mortgage Loan released pursuant hereto,  and
the  Trustee  shall  not have any  further  responsibility  with  regard to such
Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided above,
if so provided in the Mortgage  Loan  Purchase


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<PAGE>


Agreement,  the Seller may cause such  Mortgage  Loan to be removed from REMIC I
(in which case it shall become a Deleted  Mortgage  Loan) and  substitute one or
more  Qualified  Substitute  Mortgage  Loans in the  manner  and  subject to the
limitations set forth in Section  2.03(b).  It is understood and agreed that the
obligation  of the Seller to cure or to repurchase  (or to  substitute  for) any
Mortgage  Loan as to  which a  document  is  missing,  a  material  defect  in a
constituent  document  exists or as to which such a breach has  occurred  and is
continuing shall constitute the sole remedy respecting such omission,  defect or
breach available to the Trustee and the Certificateholders.

       In  addition,  promptly  upon the earlier of discovery by the Servicer or
receipt  of notice  by the  Servicer  of the  breach  of the  representation  or
covenant of the Seller set forth in Section 5(xiv) of the Mortgage Loan Purchase
Agreement which materially and adversely affects the interests of the Holders of
the Class P Certificates in any Prepayment Charge,  such Servicer shall promptly
notify the Seller and the Trustee of such breach.  The Trustee shall enforce the
obligations  of the Seller under the Mortgage Loan Purchase  Agreement to remedy
such  breach to the  extent and in the  manner  set forth in the  Mortgage  Loan
Purchase Agreement.

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

       As to any  Deleted  Mortgage  Loan for which  the  Seller  substitutes  a
Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected
by the  Seller  delivering  to the  Trustee  or the  Custodian  on behalf of the
Trustee,  for such  Qualified  Substitute  Mortgage Loan or Loans,  the Mortgage
Note, the Mortgage,  the Assignment to the Trustee, and such other documents and
agreements,  with all necessary endorsements thereon, as are required by Section
2 of  the  Custodial  Agreement,  as  applicable,  together  with  an  Officers'
Certificate   providing  that  each  such  Qualified  Substitute  Mortgage  Loan
satisfies the  definition  thereof and  specifying  the  Substitution  Shortfall
Amount (as described below), if any, in connection with such  substitution.  The
Custodian on behalf of the Trustee shall  acknowledge  receipt of such Qualified
Substitute  Mortgage  Loan or Loans and,  within ten Business  Days  thereafter,
review  such  documents  and  deliver  to the  Depositor,  the  Trustee  and the
Servicer,  with respect to such Qualified  Substitute Mortgage Loan or Loans, an
initial certification  pursuant to the Custodial Agreement,  with any applicable
exceptions  noted  thereon.  Within  one year of the date of  substitution,  the
Custodian on behalf of the Trustee shall deliver to the  Depositor,  the Trustee
and the Servicer a final certification  pursuant to the Custodial Agreement with
respect to such Qualified Substitute Mortgage Loan or Loans, with any applicable
exceptions  noted  thereon.  Monthly  Payments  due with  respect  to  Qualified
Substitute  Mortgage Loans in the month of substitution  are not part of REMIC I
and will be retained by the Seller. For the month of substitution, distributions
to  Certificateholders  will  reflect  the Monthly  Payment due on such  Deleted
Mortgage  Loan on or before the Due Date in the month of  substitution,  and the
Seller shall thereafter be entitled to retain all amounts subsequently  received
in respect of such Deleted  Mortgage Loan. The Depositor  shall give or cause to
be given written notice to the  Certificateholders  that such  substitution  has
taken place,  shall amend the Mortgage  Loan  Schedule to reflect the removal of
such Deleted Mortgage Loan from the terms of this Agreement and the substitution
of the Qualified  Substitute  Mortgage Loan or Loans and shall deliver a copy of
such amended  Mortgage Loan Schedule to the Trustee and the Servicer.  Upon such
substitution,  such Qualified Substitute Mortgage Loan or Loans shall constitute
part of the Trust Fund and shall be subject in


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<PAGE>


all  respects to the terms of this  Agreement  and the  Mortgage  Loan  Purchase
Agreement,  including all  applicable  representations  and  warranties  thereof
included herein or in the Mortgage Loan Purchase Agreement.

       For any  month in which  the  Seller  substitutes  one or more  Qualified
Substitute  Mortgage Loans for one or more Deleted  Mortgage Loans,  the related
Servicer will determine the amount (the  "Substitution  Shortfall  Amount"),  if
any, by which the aggregate  Purchase  Price of all such Deleted  Mortgage Loans
exceeds the aggregate of, as to each such  Qualified  Substitute  Mortgage Loan,
the Scheduled Principal Balance thereof as of the date of substitution, together
with one month's interest on such Scheduled  Principal Balance at the applicable
Net Mortgage  Rate,  plus all  outstanding  P&I Advances and Servicing  Advances
(including  Nonrecoverable P&I Advances and Nonrecoverable  Servicing  Advances)
related thereto.  On the date of such  substitution,  the Seller will deliver or
cause to be  delivered  to the related  Servicer  for deposit in the  Collection
Account an amount equal to the Substitution  Shortfall  Amount,  if any, and the
Trustee or the  Custodian on behalf of the Trustee,  upon receipt of the related
Qualified  Substitute  Mortgage  Loan or Loans,  upon  receipt of a request  for
release in the form attached to the Custodial Agreement and certification by the
related  Servicer  of such  deposit,  shall  release to the  Seller the  related
Mortgage  File  or  Files  and  the  Trustee  shall  execute  and  deliver  such
instruments  of  transfer  or  assignment,   in  each  case  without   recourse,
representation  or warranty,  as the Seller shall  deliver to it and as shall be
necessary to vest therein any Deleted Mortgage Loan released pursuant hereto.

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

       (c)    Upon discovery by the Depositor,  the Seller,  the Servicer or the
Trustee that any Mortgage Loan does not constitute a "qualified mortgage" within
the meaning of Section  860G(a)(3) of the Code, the party  discovering such fact
shall within two Business Days give written notice thereof to the other parties.
In connection  therewith,  the Seller shall repurchase or substitute one or more
Qualified  Substitute  Mortgage  Loans for the affected  Mortgage Loan within 90
days of the earlier of  discovery or receipt of such notice with respect to such
affected Mortgage Loan. Such repurchase or substitution shall be made by (i) the
Seller if the affected Mortgage Loan's status as a non-qualified  mortgage is or
results from a breach of any  representation,  warranty or covenant  made by the
Seller under the Mortgage Loan Purchase Agreement or (ii) the Depositor,  if the
affected  Mortgage Loan's status as a  non-qualified  mortgage is a breach of no
representation or warranty. Any such repurchase or substitution shall be made in
the same manner as set forth in Section  2.03(a).  The Trustee shall reconvey to
the Seller the Mortgage Loan to be released  pursuant hereto in the same manner,
and on the same terms and  conditions,  as it would a Mortgage Loan  repurchased
for breach of a representation or warranty.

       (d)    With respect to a breach of the  representations  made pursuant to
Section  5(xiv) of the Mortgage  Loan Purchase  Agreement  that  materially  and
adversely affects the value


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<PAGE>


of such Mortgage  Loan or the interest  therein of the  Certificateholders,  the
Seller shall be required to take the actions set forth in this Section 2.03.

       (e)    Within 90 days of the  earlier of  discovery  by the  Servicer  or
receipt of notice by the Servicer of the breach of any representation,  warranty
or covenant  of the  Servicer  set forth in Section  2.05 which  materially  and
adversely affects the interests of the  Certificateholders  in any Mortgage Loan
or  Prepayment  Charge,  the  Servicer  shall cure such  breach in all  material
respects.

       SECTION 2.04.    Representations and Warranties of the Master Servicer.

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

              (i)    The Master Servicer is a national banking  association duly
       formed,  validly  existing  and in good  standing  under  the laws of the
       United States of America and is duly authorized and qualified to transact
       any and all business  contemplated  by this  Agreement to be conducted by
       the Master Servicer;

              (ii)   The Master  Servicer  has the full power and  authority  to
       conduct its business as presently conducted by it and to execute, deliver
       and  perform,  and  to  enter  into  and  consummate,   all  transactions
       contemplated by this  Agreement.  The Master Servicer has duly authorized
       the  execution,  delivery and  performance  of this  Agreement,  has duly
       executed and delivered this Agreement,  and this Agreement,  assuming due
       authorization,  execution  and  delivery  by the  other  parties  hereto,
       constitutes a legal, valid and binding obligation of the Master Servicer,
       enforceable  against  it in  accordance  with  its  terms  except  as the
       enforceability   thereof  may  be  limited  by  bankruptcy,   insolvency,
       reorganization  or similar laws  affecting the  enforcement of creditors'
       rights generally and by general principles of equity;

              (iii)  The execution and delivery of this  Agreement by the Master
       Servicer,  the  consummation  by the Master  Servicer of any other of the
       transactions  herein  contemplated,  and the fulfillment of or compliance
       with the terms  hereof  are in the  ordinary  course of  business  of the
       Master  Servicer  and will  not (A)  result  in a  breach  of any term or
       provision  of charter and by-laws of the Master  Servicer or (B) conflict
       with,  result in a breach,  violation or acceleration  of, or result in a
       default under, the terms of any other material agreement or instrument to
       which the Master  Servicer is a party or by which it may be bound, or any
       statute,  order or regulation  applicable  to the Master  Servicer of any
       court, regulatory body, administrative agency or governmental body having
       jurisdiction  over the Master Servicer;  and the Master Servicer is not a
       party to, bound by, or in breach or  violation of any  indenture or other
       agreement  or  instrument,  or subject to or in violation of any statute,
       order or regulation of any court, regulatory body,  administrative agency
       or governmental  body having  jurisdiction  over it, which materially and
       adversely  affects or, to the Master Servicer's  knowledge,  would in the
       future  materially  and adversely  affect,  (x) the ability of the Master
       Servicer  to perform  its  obligations  under this  Agreement  or (y) the
       business,  operations,  financial condition,  properties or assets of the
       Master Servicer taken as a whole;


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<PAGE>


              (iv)   The Master Servicer does not believe,  nor does it have any
       reason  or  cause to  believe,  that it  cannot  perform  each and  every
       covenant made by it and contained in this Agreement;

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

              (vi)   There  are  no   actions   or   proceedings   against,   or
       investigations  known to it of,  the  Master  Servicer  before any court,
       administrative  or other  tribunal  (A) that might  prohibit its entering
       into this  Agreement,  (B)  seeking to prevent  the  consummation  of the
       transactions contemplated by this Agreement or (C) that might prohibit or
       materially and adversely affect the performance by the Master Servicer of
       its obligations  under, or validity or enforceability of, this Agreement;
       and

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

       It is  understood  and agreed that the  representations,  warranties  and
covenants  set forth in this  Section  2.04 shall  survive  the  resignation  or
termination  of the parties  hereto and the  termination  of this  Agreement and
shall   inure  to  the  benefit  of  the   Trustee,   the   Depositor   and  the
Certificateholders.

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

       (a)    Saxon  hereby  represents,  warrants  and  covenants to the Master
Servicer, the Securities  Administrator,  the Depositor and the Trustee, for the
benefit  of each  of such  Persons  and  the  Certificateholders  that as of the
Closing Date or as of such date specifically provided herein:

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

              (ii)   Saxon  has the full  power and  authority  to  conduct  its
       business  as  presently  conducted  by it and  to  execute,  deliver  and
       perform, and to enter into and consummate,  all transactions contemplated
       by this Agreement. Saxon has duly authorized the execution,  delivery and
       performance  of this  Agreement,  has duly  executed and  delivered  this
       Agreement, and this Agreement, assuming due authorization,


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<PAGE>


       execution and delivery by the other parties hereto,  constitutes a legal,
       valid  and  binding  obligation  of  Saxon,  enforceable  against  it  in
       accordance with its terms,  except as the  enforceability  thereof may be
       limited  by  bankruptcy,  insolvency,   reorganization  or  similar  laws
       affecting the enforcement of creditors'  rights  generally and by general
       principles of equity;

              (iii)  The execution and delivery of this Agreement by Saxon,  the
       servicing  of  the  Saxon   Mortgage  Loans  by  Saxon   hereunder,   the
       consummation   by  Saxon  of  any  other  of  the   transactions   herein
       contemplated,  and the fulfillment of or compliance with the terms hereof
       are in the  ordinary  course of business of Saxon and will not (A) result
       in a breach of any term or  provision  of the charter or by-laws of Saxon
       or (B) conflict with,  result in a breach,  violation or acceleration of,
       or result in a default under,  the terms of any other material  agreement
       or instrument  to which Saxon is a party or by which it may be bound,  or
       any  statute,  order or  regulation  applicable  to  Saxon of any  court,
       regulatory  body,  administrative  agency  or  governmental  body  having
       jurisdiction  over  Saxon;  and Saxon is not a party to,  bound by, or in
       breach or  violation  of any  indenture  or other  material  agreement or
       instrument,  or  subject  to or in  violation  of any  statute,  order or
       regulation  of any  court,  regulatory  body,  administrative  agency  or
       governmental  body having  jurisdiction  over it,  which  materially  and
       adversely  affects  or,  to  Saxon's  knowledge,   would  in  the  future
       materially and adversely affect,  (x) the ability of Saxon to perform its
       obligations under this Agreement, (y) the business, operations, financial
       condition,  properties  or  assets  of Saxon  taken as a whole or (z) the
       legality, validity or enforceability of this Agreement;

              (iv)   Saxon  does not  believe,  nor does it have any  reason  or
       cause to believe,  that it cannot perform each and every covenant made by
       it and contained in this Agreement;

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

              (vi)   There  are  no   actions   or   proceedings   against,   or
       investigations known to it of, Saxon before any court,  administrative or
       other tribunal (A) that might prohibit its entering into this  Agreement,
       (B) seeking to prevent the consummation of the transactions  contemplated
       by this  Agreement or (C) that might prohibit or materially and adversely
       affect the performance by Saxon of its obligations under, or the validity
       or enforceability of, this Agreement;

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

              (viii) Saxon  has  fully  furnished  and  will  continue  to fully
       furnish,  in  accordance  with  the  Fair  Credit  Reporting  Act and its
       implementing  regulations,   accurate  and  complete  information  (e.g.,
       favorable  and  unfavorable)  on its  borrower  credit  files to


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<PAGE>


       Equifax,  Experian  and Trans Union Credit  Information  Company or their
       successors on a monthly basis; and

              (ix)   Saxon  will not waive any  Prepayment  Charge  related to a
       Saxon Mortgage Loan other than in accordance  with the standard set forth
       in Section 3.01.

       Notwithstanding  anything to the contrary contained in this Agreement, if
the covenant of the Servicer set forth in Section 2.05(a)(ix) above is breached,
the related Servicer will pay the amount of such waived Prepayment Charge,  from
its own funds without any right of reimbursement, for the benefit of the Holders
of the Class P  Certificates,  by  depositing  such amount  into the  Collection
Account within 90 days of the earlier of discovery by the Servicer or receipt of
notice by the Servicer of such breach.  Furthermore,  notwithstanding  any other
provisions  of this  Agreement,  any payments made by the Servicer in respect of
any waived  Prepayment  Charges pursuant to this paragraph shall be deemed to be
paid outside of the Trust Fund.

       It is  understood  and agreed that the  representations,  warranties  and
covenants  set forth in this  Section  2.05 shall  survive  the  resignation  or
termination  of the parties  hereto,  the  termination of this Agreement and the
delivery of the Mortgage  Files to the  Custodian and shall inure to the benefit
of  the  Trustee,  the  Master  Servicer,  the  Securities  Administrator,   the
Depositor,  the  Certificateholders.  Upon  discovery  by any such Person or the
related Servicer of a breach of any of the foregoing representations, warranties
and covenants which  materially and adversely  affects the value of any Mortgage
Loan, Prepayment Charge or the interests therein of the Certificateholders,  the
party  discovering such breach shall give prompt written notice (but in no event
later than two Business Days following such  discovery) to the Trustee.  Subject
to Section 8.01,  unless such breach shall not be  susceptible of cure within 90
days,  the  obligation  of the  Servicer  set forth in  Section  2.03(e) to cure
breaches shall constitute the sole remedy against the related Servicer available
to the  Certificateholders,  the  Depositor  or the  Trustee  on  behalf  of the
Certificateholders  respecting a breach of the  representations,  warranties and
covenants contained in this Section 2.05.

       SECTION 2.06.    Issuance of the REMIC I Regular Interests and the
                        Class R-I Interest.

       The Trustee  acknowledges  the assignment to it of the Mortgage Loans and
the  delivery to the  Custodian on its behalf of the  Mortgage  Loan  Documents,
subject to the  provisions of Section 2.01 and Section 2.02 hereof and Section 2
of the  Custodial  Agreement,  together  with the  assignment to it of all other
assets  included  in REMIC I, the receipt of which is hereby  acknowledged.  The
interests evidenced by the Class R-I Interest, together with the REMIC I Regular
Interests,  constitute the entire beneficial  ownership interest in REMIC I. The
rights of the  Holders of the Class R-I  Interest  and REMIC I (as holder of the
REMIC I Regular Interests) to receive distributions from the proceeds of REMIC I
in  respect  of the  Class  R-I  Interest  and the  REMIC I  Regular  Interests,
respectively,  and all ownership interests evidenced or constituted by the Class
R-I  Interest and the REMIC I Regular  Interests,  shall be as set forth in this
Agreement.


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

       The Depositor,  concurrently with the execution and delivery hereof, does
hereby transfer,  assign, set over and otherwise convey to the Trustee,  without
recourse all the right,  title and interest of the Depositor in and to the REMIC
I Regular  Interests for the benefit of the Class R-II Interest and REMIC II (as
holder of the REMIC I Regular Interests).  The Trustee  acknowledges  receipt of
the REMIC I Regular  Interests and declares that it holds and will hold the same
in trust for the exclusive use and benefit of all present and future  Holders of
the  Class  R-II  Interest  and  REMIC  II (as  holder  of the  REMIC I  Regular
Interests). The rights of the Holder of the Class R-II Interest and REMIC II (as
holder of the REMIC I  Regular  Interests)  to  receive  distributions  from the
proceeds  of  REMIC  II in  respect  of the  Class  R-II  Interest  and  Regular
Certificate,  respectively, and all ownership interests evidenced or constituted
by the Class R-II Interest and the Regular  Certificates,  shall be as set forth
in this Agreement.  The Class R-II Interest and the Regular  Certificates  shall
constitute the entire beneficial ownership interest in REMIC II.

       SECTION 2.08.    Issuance of Residual Certificates.

       The  Trustee  acknowledges  the  assignment  to it of the REMIC I Regular
Interests and, concurrently therewith and in exchange therefor,  pursuant to the
written  request of the Depositor  executed by an officer of the Depositor,  the
Securities  Administrator  has  executed and  authenticated  and the Trustee has
delivered to or upon the order of the  Depositor,  the Class R  Certificates  in
authorized  denominations.  The Class R Certificates  evidence  ownership in the
Class R-I Interest and the Class R-II Interest.

       SECTION 2.09.    Establishment of the Trust.

       The Depositor does hereby establish,  pursuant to the further  provisions
of this  Agreement and the laws of the State of New York, an express trust to be
known, for convenience, as "ACE Securities Corp., Home Equity Loan Trust, Series
2005-RM1" and does hereby appoint HSBC Bank USA, National Association as Trustee
in accordance with the provisions of this Agreement.


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                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                         OF THE MORTGAGE LOANS; ACCOUNTS

       SECTION 3.01.    Servicer to Act as Servicer.

       From and after the Closing Date to the related  Servicing  Transfer Date,
the ResMae  Mortgage  Loans will be serviced  and  administered  by RMC and RMAE
pursuant to the ResMae Servicing Agreement and the Litton Mortgage Loans will be
serviced and administered by Litton pursuant to the Litton Servicing  Agreement,
and the Servicer will have no responsibility to service or administer the ResMae
Mortgage Loans or the Litton  Mortgage Loans or have any other  obligation  with
respect to the ResMae  Mortgage Loans or the Litton  Mortgage  Loans  (including
reporting or remitting  funds to the Trustee)  during that period.  In addition,
all liabilities of the Interim Servicers incurred prior to the related Servicing
Transfer Date shall remain with the Interim Servicers.  On and after the Closing
Date with  respect  to the  Saxon  Mortgage  Loans and on and after the  related
Servicing  Transfer  Date with respect to the ResMae  Mortgage  Loans and Litton
Mortgage Loans,  the Servicer shall service and administer the Mortgage Loans on
behalf of the Trust Fund and in the best interests of and for the benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment) in
accordance  with the terms of this Agreement and the  respective  Mortgage Loans
and all applicable law and regulations  and, to the extent  consistent with such
terms, in the same manner in which it services and administers  similar mortgage
loans for its own  portfolio,  giving due  consideration  to customary and usual
standards  of  practice  of  prudent   mortgage   lenders  and  loan   servicers
administering similar mortgage loans but without regard to:

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

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

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

              (iv)   the  Servicer's  right  to  receive  compensation  for  its
       services hereunder.

       To the extent consistent with the foregoing, the Servicer shall also seek
to maximize  the timely and complete  recovery of principal  and interest on the
Mortgage Notes and shall waive (or permit a Sub-Servicer  to waive) a Prepayment
Charge only under the following  circumstances:  (i) such waiver is standard and
customary in servicing  similar  Mortgage  Loans and such waiver is related to a
default or reasonably  foreseeable default and would, in the reasonable judgment
of such Servicer,  maximize  recovery of total proceeds  taking into account the
value of such  Prepayment  Charge and the  related  Mortgage  Loan and,  if such
waiver is made in connection  with a refinancing  of the related  Mortgage Loan,
such  refinancing is related to a default or a reasonably  foreseeable  default,
(ii) such Prepayment  Charge is  unenforceable in accordance with applicable law
or the  collection of such related  Prepayment  Charge would  otherwise  violate
applicable  law or (iii)  the  collection  of such  Prepayment  Charge  would be


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<PAGE>


considered  "predatory"  pursuant to written guidance published or issued by any
applicable federal,  state or local regulatory  authority acting in its official
capacity  and  having  jurisdiction  over  such  matters.   Notwithstanding  any
provision in this Agreement to the contrary,  in the event the Prepayment Charge
payable  under the  terms of the  Mortgage  Note is less than the  amount of the
Prepayment  Charge  set  forth  in  the  Prepayment  Charge  Schedule  or  other
information provided to the Servicer,  the Servicer shall not have any liability
or obligation  with respect to such  difference,  and in addition shall not have
any  liability or  obligation  to pay the amount of any  uncollected  Prepayment
Charge if the failure to collect such amount is the direct  result of inaccurate
or incomplete information on the Prepayment Charge Schedule.

       Subject only to the  above-described  servicing  standards (the "Accepted
Servicing Practices") and the terms of this Agreement and of the Mortgage Loans,
the Servicer shall have full power and authority,  to do or cause to be done any
and all things in connection with such servicing and administration which it may
deem necessary or desirable with the goal of maximizing proceeds of the Mortgage
Loan. Without limiting the generality of the foregoing,  the Servicer in its own
name is  hereby  authorized  and  empowered  by the  Trustee  when the  Servicer
believes it appropriate in its best judgment,  to execute and deliver, on behalf
of the Trust Fund,  the  Certificateholders  and the Trustee or any of them, and
upon written notice to the Trustee,  any and all  instruments of satisfaction or
cancellation,  or of partial or full release or discharge or subordination,  and
all other comparable instruments, with respect to the related Mortgage Loans and
the related  Mortgaged  Properties and to institute  foreclosure  proceedings or
obtain a  deed-in-lieu  of  foreclosure  so as to convert the  ownership of such
properties,  and to hold or cause to be held title to such properties, on behalf
of the  Trustee,  for the benefit of the Trust Fund and the  Certificateholders.
The  Servicer  shall  service  and  administer  the  related  Mortgage  Loans in
accordance  with  applicable  state and  federal  law and shall  provide  to the
Mortgagors  any reports  required to be provided to them  thereby.  The Servicer
shall also comply in the performance of this Agreement with all reasonable rules
and  requirements  of each insurer under any standard hazard  insurance  policy.
Subject to Section 3.14,  the Trustee shall execute,  at the written  request of
the  Servicer,  and  furnish to the  Servicer a power of attorney in the form of
Exhibit D hereto and other  documents  necessary  or  appropriate  to enable the
Servicer to carry out its  servicing  and  administrative  duties  hereunder and
furnished to the Trustee by the  Servicer,  and the Trustee  shall not be liable
for the  actions of the  Servicer  under such  powers of  attorney  and shall be
indemnified by the Servicer for any cost,  liability or expense  incurred by the
Trustee in  connection  with the  Servicer's  use or misuse of any such power of
attorney.

       In accordance with Accepted Servicing Practices,  the Servicer shall make
or cause to be made Servicing Advances as necessary for the purpose of effecting
the  payment  of  taxes  and  assessments  on the  Mortgaged  Properties,  which
Servicing  Advances  shall be  reimbursable  in the first  instance from related
collections from the related Mortgagors pursuant to Section 3.07, and further as
provided in Section 3.09;  provided,  however, the Servicer shall only make such
Servicing  Advance if the related Mortgagor has not made such payment and if the
failure to make such  Servicing  Advance would result in the loss of the related
Mortgaged Property due to a tax sale or foreclosure as result of a tax lien. Any
cost incurred by the Servicer in effecting the payment of taxes and  assessments
on a Mortgaged  Property  shall not, for the purpose of  calculating  the Stated
Principal Balance of such Mortgage Loan or distributions to  Certificateholders,
be  added  to the  unpaid  principal  balance  of  the  related  Mortgage  Loan,
notwithstanding  that the terms of such Mortgage Loan so permit.  The parties to
this  Agreement  acknowledge  that  Servicing  Advances  shall  be  reimbursable
pursuant to Section 3.09 of this


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<PAGE>


Agreement,  and agree that no Servicing  Advance shall be rejected or disallowed
by any party unless it has been shown that such  Servicing  Advance was not made
in accordance with the terms of this Agreement.

       Notwithstanding  anything in this Agreement to the contrary, the Servicer
may not make  any  future  advances  with  respect  to a  Mortgage  Loan and the
Servicer shall not permit any modification  with respect to any related Mortgage
Loan that would  change the  Mortgage  Rate,  reduce or increase  the  principal
balance  (except for reductions  resulting from actual payments of principal) or
change  the final  maturity  date on such  related  Mortgage  Loan  (unless,  as
provided in Section  3.06,  the related  Mortgagor is in default with respect to
the related  Mortgage  Loan or such default is, in the judgment of the Servicer,
reasonably foreseeable) or any modification,  waiver or amendment of any term of
any related  Mortgage  Loan that would both (A) effect an exchange or reissuance
of such  Mortgage  Loan under  Section 1001 of the Code (or final,  temporary or
proposed Treasury  regulations  promulgated  thereunder) and (B) cause any Trust
REMIC  created  hereunder  to fail to qualify  as a REMIC  under the Code or the
imposition of any tax on "prohibited  transactions" or "contributions  after the
startup date" under the REMIC Provisions.

       In the event that the Mortgage Loan Documents relating to a Mortgage Loan
contain provisions requiring the related Mortgagor to arbitrate disputes (at the
option of the Trustee,  on behalf of the Trust),  the Trustee hereby  authorizes
the Servicer to waive the Trustee's right or option to arbitrate disputes and to
send written notice of such waiver to the Mortgagor,  although the Mortgagor may
still require arbitration at its option.

       From and after the  Servicing  Transfer  Date,  the  Servicer  will fully
furnish,  in accordance with the Fair Credit  Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and unfavorable)
on its  borrower  credit  files to  Equifax,  Experian  and Trans  Union  Credit
Information Company or their successors on a monthly basis.

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

       The Servicer may arrange for the  subservicing  of any Mortgage Loan by a
Sub-Servicer  pursuant  to  a  Sub-Servicing   Agreement;   provided  that  such
sub-servicing  arrangement and the terms of the related Sub-Servicing  Agreement
must provide for the  servicing of such  Mortgage  Loans in a manner  consistent
with the servicing arrangements  contemplated hereunder. Each Sub-Servicer shall
be (i) authorized to transact  business in the state or states where the related
Mortgaged  Properties  it is to  service  are  situated,  if and  to the  extent
required by applicable law to enable the Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing Agreement and (ii) a Freddie Mac or Fannie
Mae  approved  mortgage   servicer.   Notwithstanding   the  provisions  of  any
Sub-Servicing  Agreement,  any of the provisions of this  Agreement  relating to
agreements or  arrangements  between the Servicer or a Sub-Servicer or reference
to actions taken through the Servicer or  otherwise,  the Servicer  shall remain
obligated and liable to the  Depositor,  the Trustee and the  Certificateholders
for the servicing and  administration  of the Mortgage Loans in accordance  with
the  provisions  of this  Agreement  without  diminution  of such  obligation or
liability  by virtue of such  Sub-Servicing  Agreements  or  arrangements  or by
virtue of indemnification from the Sub-Servicer and to the same extent and under
the same  terms and  conditions  as if the  Servicer  alone were  servicing  and
administering


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<PAGE>


the Mortgage Loans. Every  Sub-Servicing  Agreement entered into by the Servicer
shall contain a provision giving the successor  Servicer the option to terminate
such  agreement in the event a successor  Servicer is appointed.  All actions of
each  Sub-Servicer  performed  pursuant to the related  Sub-Servicing  Agreement
shall be performed as an agent of the Servicer with the same force and effect as
if performed directly by the Servicer.

       For  purposes of this  Agreement,  the  Servicer  shall be deemed to have
received any  collections,  recoveries  or payments with respect to the Mortgage
Loans that are received by a  Sub-Servicer  regardless  of whether such payments
are remitted by the Sub-Servicer to the Servicer.

       SECTION 3.03.    Successor Sub-Servicers.

       Any  Sub-Servicing  Agreement  shall  provide that the Servicer  shall be
entitled to terminate any Sub-Servicing  Agreement and to either itself directly
service the related Mortgage Loans or enter into a Sub-Servicing  Agreement with
a successor  Sub-Servicer  which qualifies under Section 3.02. Any Sub-Servicing
Agreement  shall include the provision  that such  agreement may be  immediately
terminated  by any  successor to the  Servicer  (which may be the Trustee or the
Master Servicer) without fee, in accordance with the terms of this Agreement, in
the event that the Servicer (or any  successor to the Servicer)  shall,  for any
reason,  no longer be the  Servicer of the  related  Mortgage  Loans  (including
termination due to a Servicer Event of Default).

       SECTION 3.04.    No Contractual  Relationship Between Sub-Servicer,
                        Trustee or the Certificateholders.

       Any  Sub-Servicing  Agreement  and any  other  transactions  or  services
relating to the Mortgage Loans  involving a  Sub-Servicer  shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Master Servicer, Trustee
and the Certificateholders shall not be deemed parties thereto and shall have no
claims,  rights,  obligations,   duties  or  liabilities  with  respect  to  any
Sub-Servicer except as set forth in Section 3.05.

       SECTION 3.05.    Assumption or  Termination of  Sub-Servicing  Agreement
                        by Successor Servicer.

       In connection  with the  assumption of the  responsibilities,  duties and
liabilities and of the authority,  power and rights of the Servicer hereunder by
a successor  Servicer (which may be the Trustee or the Master Servicer) pursuant
to Section  8.02,  it is understood  and agreed that the  Servicer's  rights and
obligations under any Sub-Servicing Agreement then in force between the Servicer
and a Sub-Servicer  shall be assumed  simultaneously by such successor  Servicer
without act or deed on the part of such successor Servicer;  provided,  however,
that any successor Servicer may terminate the Sub-Servicer.

       The Servicer shall,  upon the reasonable  request of the Master Servicer,
but at its own expense,  deliver to the  assuming  party  documents  and records
relating to each Sub-Servicing  Agreement and an accounting of amounts collected
and held by it and  otherwise  use its best  efforts to effect the  orderly  and
efficient transfer of the Sub-Servicing Agreements to the assuming party.


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       The Servicing Fee payable to any such successor Servicer shall be payable
from payments received on the Mortgage Loans in the amount and in the manner set
forth in this Agreement.

       SECTION 3.06.    Collection of Certain Mortgage Loan Payments.

       The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the related  Mortgage Loans, and shall, to
the extent such procedures  shall be consistent with this Agreement and Accepted
Servicing Practices,  follow such collection  procedures as it would follow with
respect to mortgage loans  comparable to the Mortgage Loans and held for its own
account.  Consistent with the foregoing,  the Servicer may in its discretion (i)
waive any late payment charge or, if applicable, penalty interest or (ii) extend
the due dates for the  Monthly  Payments  due on a  Mortgage  Note  related to a
Mortgage  Loan for a period  of not  greater  than 180 days;  provided  that any
extension pursuant to this clause shall not affect the amortization  schedule of
any Mortgage Loan for purposes of any computation hereunder. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of  the  Servicer,  such  default  is  reasonably  foreseeable,   the  Servicer,
consistent with Accepted Servicing  Practices may waive, modify or vary any term
of such Mortgage Loan  (including  modifications  that change the Mortgage Rate,
forgive the payment of principal or interest or extend the final  maturity  date
of such Mortgage Loan),  accept payment from the related  Mortgagor of an amount
less than the Stated  Principal  Balance in final  satisfaction of such Mortgage
Loan, or consent to the postponement of strict  compliance with any such term or
otherwise grant  indulgence to any Mortgagor if in the Servicer's  determination
such waiver, modification,  postponement or indulgence is not materially adverse
to the  interests of the  Certificateholders  (taking into account any estimated
Realized Loss that might result absent such action).

       SECTION  3.07.     Collection of Taxes, Assessments and Similar Items;
                          Servicing Accounts.

       To the extent the terms of a Mortgage  provide for Escrow  Payments,  the
Servicer  shall  establish  and maintain one or more  accounts  (the  "Servicing
Accounts"),  into which all collections from the Mortgagors (or related advances
from  Sub-Servicers)  for the payment of taxes,  assessments,  fire,  flood, and
hazard  insurance  premiums,  and  comparable  items  for  the  account  of  the
Mortgagors  ("Escrow  Payments")  shall be  deposited  and  retained.  Servicing
Accounts shall be Eligible Accounts.  The Servicer shall deposit in the clearing
account in which it customarily  deposits  payments and  collections on mortgage
loans in  connection  with its mortgage  loan  servicing  activities  on a daily
basis,  and in no event more than one Business Day after the Servicer's  receipt
thereof,  all Escrow  Payments  collected on account of the  Mortgage  Loans and
shall thereafter deposit such Escrow Payments in the Servicing  Accounts,  in no
event  later than the second  Business  Day after the deposit of good funds into
the clearing  account,  and retain  therein,  all Escrow  Payments  collected on
account of the Mortgage  Loans,  for the purpose of effecting the timely payment
of any such items as required under the terms of this Agreement.  Withdrawals of
amounts from a Servicing  Account may be made only to (i) effect timely  payment
of  taxes,  assessments,   fire,  flood,  and  hazard  insurance  premiums,  and
comparable  items;  (ii)  reimburse  itself out of related  collections  for any
Servicing  Advances  made  pursuant to Section  3.01 (with  respect to taxes and
assessments)   and  Section  3.11  (with  respect  to  fire,  flood  and  hazard
insurance);  (iii)  refund to  Mortgagors  any sums as may be  determined  to be


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overages;  (iv) pay interest,  if required and as described below, to Mortgagors
on balances in the Servicing  Account;  or (v) clear and terminate the Servicing
Account at the termination of the Servicer's obligations and responsibilities in
respect of the Mortgage Loans under this Agreement in accordance with Article X.
As part of its  servicing  duties,  the  Servicer  shall  pay to the  Mortgagors
interest on funds in Servicing  Accounts,  to the extent required by law and, to
the  extent  that  interest  earned  on  funds  in  the  Servicing  Accounts  is
insufficient,  to pay such  interest  from its or their own funds,  without  any
reimbursement therefor. Notwithstanding the foregoing, the Servicer shall not be
obligated  to collect  Escrow  Payments  if the related  Mortgage  Loan does not
require such payments but the Servicer shall  nevertheless  be obligated to make
Servicing  Advances as provided in Section 3.01 and Section  3.11.  In the event
the Servicer shall deposit in the Servicing  Accounts any amount not required to
be deposited therein, it may at any time withdraw such amount from the Servicing
Accounts, any provision to the contrary notwithstanding.

       To the extent that a Mortgage does not provide for Escrow  Payments,  the
Servicer (i) shall determine whether any such payments are made by the Mortgagor
in a manner and at a time that is necessary  to avoid the loss of the  Mortgaged
Property due to a tax sale or the foreclosure as a result of a tax lien and (ii)
shall  ensure that all  insurance  required to be  maintained  on the  Mortgaged
Property  pursuant to this Agreement is maintained.  If any such payment has not
been made and the  Servicer  receives  notice of a tax lien with  respect to the
Mortgage  Loan being  imposed,  the Servicer  shall,  promptly and to the extent
required  to  avoid  loss of the  Mortgaged  Property,  advance  or  cause to be
advanced funds necessary to discharge such lien on the Mortgaged Property unless
the Servicer  determines the advance to be nonrecoverable.  The Servicer assumes
full  responsibility for the payment of all such bills and shall effect payments
of all such bills  irrespective of the Mortgagor's  faithful  performance in the
payment of same or the making of the Escrow  Payments  and shall make  Servicing
Advances to effect such payments subject to its determination of recoverability.

       SECTION 3.08.    Collection Account and Distribution Account.

       (a)    On behalf of the Trust Fund,  the  Servicer  shall  establish  and
maintain one or more "Collection Accounts", held in trust for the benefit of the
Trustee and the  Certificateholders.  On behalf of the Trust Fund,  the Servicer
shall  deposit  or cause to be  deposited  in the  clearing  account in which it
customarily  deposits  payments and  collections on mortgage loans in connection
with its mortgage loan  servicing  activities on a daily basis,  and in no event
more than one  Business  Day after the  Servicer's  receipt  thereof,  and shall
thereafter  deposit  in the  Collection  Account,  in no  event  later  than two
Business Days after the deposit of good funds into the clearing account,  as and
when received or as otherwise  required  hereunder,  the following  payments and
collections  received or made by it on or  subsequent  to the Cut-off Date other
than amounts attributable to a Due Date on or prior to the Cut-off Date:

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

              (ii)   all  payments  on account of  interest  (net of the related
       Servicing  Fee and  any  Prepayment  Interest  Excess)  on  each  related
       Mortgage Loan;


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<PAGE>


              (iii)  all Insurance Proceeds and Liquidation Proceeds (other than
       proceeds  collected in respect of any  particular  REO  Property) and all
       Subsequent Recoveries with respect to the related Mortgage Loans;

              (iv)   any  amounts  required  to be  deposited  by  the  Servicer
       pursuant  to  Section  3.10 in  connection  with any losses  realized  on
       Permitted  Investments  with  respect  to  funds  held in the  Collection
       Account;

              (v)    any  amounts  required  to be  deposited  by  the  Servicer
       pursuant  to the second  paragraph  of Section  3.11(a) in respect of any
       blanket policy deductibles;

              (vi)   any  Purchase  Price  or  Substitution   Shortfall   Amount
       delivered to the Servicer  and all  proceeds  (net of amounts  payable or
       reimbursable  to the  Servicer,  the Master  Servicer,  the Trustee,  the
       Custodian or the Securities Administrator) of Mortgage Loans purchased in
       accordance with Section 2.03, Section 3.13 or Section 10.01; and

              (vii)  any  Prepayment   Charges  collected  by  the  Servicer  in
       connection with the Principal  Prepayment of any of the Mortgage Loans or
       amounts  required to be deposited by the  Servicer in  connection  with a
       breach of its obligations under Section 2.05.

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

       (b)    On behalf of the Trust Fund,  the Securities  Administrator  shall
establish  and  maintain one or more  accounts  (such  account or accounts,  the
"Distribution Account"), held in trust for the benefit of the Trustee, the Trust
Fund and the Certificateholders. On behalf of the Trust Fund, the Servicer shall
deliver to the  Securities  Administrator  in  immediately  available  funds for
deposit in the Distribution Account on or before 12:00 noon New York time on the
Servicer  Remittance  Date,  that portion of the Available  Distribution  Amount
(calculated  without  regard to the  references in clause (2) of the  definition
thereof to amounts that may be withdrawn from the Distribution  Account) for the
related  Distribution  Date then on deposit in the  Collection  Account  and the
amount of all Prepayment  Charges  collected by the Servicer in connection  with
the  Principal  Prepayment  of any of the Mortgage  Loans then on deposit in the
Collection  Account  and the  amount of any  funds  reimbursable  to an  Advance
Financing  Person  pursuant  to Section  3.25.  If the balance on deposit in the
Collection  Account exceeds  $100,000 as of the  commencement of business on any
Business Day and the Collection  Account  constitutes an Eligible Account solely
pursuant to clause (ii) of the  definition  of "Eligible  Account," the Servicer
shall, on or before 5:00 p.m. New York time on such Business Day,  withdraw from
the  Collection  Account  any and all  amounts  payable or  reimbursable  to the
Depositor,  the  Servicer,  the Trustee,  the Master  Servicer,  the  Securities
Administrator  or the Seller pursuant to Section 3.09 and shall pay such amounts
to the Persons entitled thereto or shall establish a separate Collection Account
(which  shall  also be an  Eligible  Account)  and  withdraw  from the  existing


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Collection  Account  the amount on deposit  therein  in excess of  $100,000  and
deposit such excess in the newly created Collection Account.

       With respect to any remittance  received by the Securities  Administrator
on or after the first  Business  Day  following  the  Business Day on which such
payment was due, the Securities  Administrator shall send written notice thereof
to the related Servicer. The Servicer shall pay to the Securities  Administrator
interest  on any such late  payment by the  Servicer  at an annual rate equal to
Prime Rate (as defined in The Wall Street  Journal) plus one  percentage  point,
but in no event greater than the maximum  amount  permitted by  applicable  law.
Such interest shall be paid by the Servicer to the Securities  Administrator  on
the date such late  payment is made and shall cover the period  commencing  with
the day  following  such first  Business Day and ending with the Business Day on
which such payment is made, both  inclusive.  The payment by the Servicer of any
such  interest,  or the failure of the  Securities  Administrator  to notify the
Servicer of such interest,  shall not be deemed an extension of time for payment
or a waiver of any Event of Default by the Servicer.

       (c)    Funds in the  Collection  Accounts  and funds in the  Distribution
Account  may be  invested  in  Permitted  Investments  in  accordance  with  the
provisions  set forth in Section  3.10.  The  Servicer  shall give notice to the
Trustee, the Securities Administrator and the Master Servicer of the location of
the Collection Account maintained by it when established and prior to any change
thereof. The Securities  Administrator shall give notice to the Servicer and the
Depositor of the location of the Distribution Account when established and prior
to any change thereof.

       (d)    Funds held in the Collection  Account at any time may be delivered
by the Servicer in immediately  available funds to the Securities  Administrator
for deposit in the Distribution Account. In the event the Servicer shall deliver
to the  Securities  Administrator  for deposit in the  Distribution  Account any
amount not required to be deposited therein, it may at any time request that the
Securities  Administrator withdraw such amount from the Distribution Account and
remit  to  it  any  such   amount,   any   provision   herein  to  the  contrary
notwithstanding.  In no event shall the Securities Administrator incur liability
as a result of withdrawals from the Distribution Account at the direction of the
Servicer in accordance with the immediately preceding sentence. In addition, the
Servicer  shall  deliver  to the  Securities  Administrator  no  later  than the
Servicer  Remittance  Date the amounts  set forth in clauses  (i)  through  (iv)
below:

              (i)    any P&I Advances, as required pursuant to Section 5.03;

              (ii)   any amounts  required to be  deposited  pursuant to Section
       3.21(d) or 3.21(f) in connection with any related REO Property;

              (iii)  any  amounts to be paid in  connection  with a purchase  of
       Mortgage Loans and REO Properties pursuant to Section 10.01; and

              (iv)   any amounts  required to be  deposited  pursuant to Section
       3.22 in connection with any Prepayment Interest Shortfalls.


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       SECTION 3.09.    Withdrawals from the Collection Accounts and
                        Distribution Account.

       (a)    The Servicer shall,  from time to time, make  withdrawals from the
Collection  Account for any of the following purposes or as described in Section
5.03:

              (i)    to remit to the Securities Administrator for deposit in the
       Distribution  Account the amounts required to be so remitted  pursuant to
       Section  3.08(b) or  permitted  to be so  remitted  pursuant to the first
       sentence of Section 3.08(d);

              (ii)   subject to Section 3.13(d),  to reimburse itself (including
       any  successor  Servicer)  for P&I  Advances  made by it, but only to the
       extent of amounts  received which represent Late  Collections (net of the
       related  Servicing  Fees) of Monthly  Payments on related  Mortgage Loans
       with respect to which such P&I Advances were made in accordance  with the
       provisions of Section 5.03;

              (iii)  subject  to  Section  3.13(d),  to pay  itself  any  unpaid
       Servicing Fees and reimburse itself any unreimbursed  Servicing  Advances
       with respect to each related Mortgage Loan, but only to the extent of any
       Liquidation Proceeds and Insurance Proceeds received with respect to such
       related Mortgage Loan;

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

              (v)    to pay to itself or the  Seller,  as the case may be,  with
       respect to each related  Mortgage Loan that has previously been purchased
       or  replaced  pursuant  to Section  2.03 or Section  3.13(c)  all amounts
       received  thereon not included in the Purchase Price or the  Substitution
       Shortfall Amount;

              (vi)   to  reimburse  itself   (including  any  successor  to  the
       Servicer) for

                     (A) any P&I Advance or Servicing Advance previously made by
                     it which the Servicer has determined to be a Nonrecoverable
                     P&I  Advance  or  a  Nonrecoverable  Servicing  Advance  in
                     accordance  with the  provisions  of Section 5.03  provided
                     however,  that  the  Servicer  shall  not  be  entitled  to
                     reimbursement  for any Servicing  Advance made prior to the
                     Cut-off  Date  if  such  Servicer   determines   that  such
                     Servicing  Advance  constitutes a Nonrecoverable  Servicing
                     Advance; or

                     (B) any unpaid Servicing Fees to the extent not recoverable
                     from  Liquidation  Proceeds,  Insurance  Proceeds  or other
                     amounts  received with respect to the related Mortgage Loan
                     under Section 3.06(a)(iii);

              (vii)  to reimburse itself or the Depositor for expenses  incurred
       by or  reimbursable  to  itself  or the  Depositor,  as the  case may be,
       pursuant to Section 3.01 or Section 7.03;


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<PAGE>


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

              (ix)   to pay, or to reimburse  itself for advances in respect of,
       expenses  incurred in connection with any related  Mortgage Loan pursuant
       to Section 3.13(b);

              (x)    to pay to  itself  any  Prepayment  Interest  Excess on the
       related  Mortgage  Loans to the extent not  retained  pursuant to Section
       3.08(a)(ii)); and

              (xi)   to clear and terminate the Collection  Account  pursuant to
       Section 10.01.

       The Servicer shall keep and maintain separate  accounting,  on a Mortgage
Loan by Mortgage Loan basis,  for the purpose of justifying any withdrawal  from
the  related  Collection  Account,  to the  extent  held by or on  behalf of it,
pursuant to subclauses  (ii),  (iii),  (v), (vi),  (vii),  (viii),  (ix) and (x)
above.

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

              (i)    to make distributions to  Certificateholders  in accordance
       with Section 5.01;

              (ii)   to pay to itself,  the  Custodian  and the Master  Servicer
       amounts to which it is  entitled  pursuant  to Section  9.05 or any other
       provision of this Agreement and any Extraordinary Trust Fund Expenses;

              (iii)  to  reimburse  itself or the Master  Servicer  pursuant  to
       Section 8.02;

              (iv)   reserved;

              (v)    to pay any amounts in respect of taxes  pursuant to Section
       11.01(g)(v);

              (vi)   to pay the Master Servicing Fee to the Master Servicer;

              (vii)  to pay the Credit  Risk  Management  Fee to the Credit Risk
       Manager; and

              (viii) to clear and terminate the Distribution Account pursuant to
       Section 10.01.

       SECTION 3.10.    Investment of Funds in the Investment Accounts.

       (a)    The Servicer may direct, by means of written directions (which may
be standing directions),  any depository institution  maintaining the Collection
Account to invest the


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<PAGE>


funds  in the  Collection  Account  (for  purposes  of  this  Section  3.10,  an
"Investment  Account") in one or more Permitted  Investments bearing interest or
sold at a discount,  and maturing,  unless payable on demand,  (i) no later than
the Business Day immediately preceding the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement,  if a Person other
than the Securities Administrator is the obligor thereon, and (ii) no later than
the date on which such funds are  required  to be  withdrawn  from such  account
pursuant to this Agreement,  if the Securities  Administrator  is the obligor on
such Permitted  Investment.  Amounts in the Distribution Account may be invested
in  Permitted  Investments  as  directed in writing by the Master  Servicer  and
maturing,  unless  payable  on  demand,  (i) no  later  than  the  Business  Day
immediately  preceding the date on which such funds are required to be withdrawn
from  such  account  pursuant  to this  Agreement,  if a Person  other  than the
Securities Administrator is the obligor thereon, and (ii) no later than the date
on which such funds are required to be withdrawn  from such account  pursuant to
this Agreement, if the Securities Administrator is the obligor thereon. All such
Permitted  Investments shall be held to maturity,  unless payable on demand. Any
investment of funds shall be made in the name of the Trustee (in its capacity as
such) or in the name of a nominee of the Trustee.  The Securities  Administrator
shall  be  entitled  to  sole  possession  over  each  such  investment  in  the
Distribution  Account and,  subject to subsection (b) below, the income thereon,
and any certificate or other instrument  evidencing any such investment shall be
delivered directly to the Securities  Administrator or its agent,  together with
any document of transfer  necessary to transfer title to such  investment to the
Trustee or its  nominee.  In the event  amounts  on  deposit  in the  Collection
Account are at any time  invested in a Permitted  Investment  payable on demand,
the party with investment discretion over such Investment Account shall:

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

                  (y) demand payment of all amounts due thereunder promptly upon
                  receipt  by such  party of  written  notice  from the  related
                  Servicer that such Permitted Investment would not constitute a
                  Permitted Investment in respect of funds thereafter on deposit
                  in the Investment Account.

       (b)    All  income  and  gain  realized  from  the  investment  of  funds
deposited in the Collection Account shall be for the benefit of the Servicer and
shall be subject to its withdrawal in accordance with Section 3.09. The Servicer
shall  deposit in the  Collection  Account  the amount of any loss  incurred  in
respect  of any such  Permitted  Investment  made  with  funds  in such  account
immediately  upon  realization of such loss. All earnings and gain realized from
the investment of funds deposited in the  Distribution  Account shall be for the
benefit of the Master  Servicer.  The Master  Servicer  shall remit from its own
funds for deposit into the Distribution  Account the amount of any loss incurred
on Permitted Investments in the Distribution Account.

       (c)    Except as otherwise  expressly provided in this Agreement,  if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default  occurs  in any  other  performance  required  under any  Permitted
Investment, the Trustee may and, subject to Section 9.01 and Section 9.02(a)(v),
shall,  at the written  direction  of the  Servicer,  take such


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<PAGE>


action as may be appropriate to enforce such payment or  performance,  including
the institution and prosecution of appropriate proceedings.

       (d)    The Trustee,  the Master Servicer or their  respective  Affiliates
are permitted to receive  additional  compensation that could be deemed to be in
the Trustee's or the Master Servicer's economic self-interest for (i) serving as
investment adviser,  administrator,  shareholder  servicing agent,  custodian or
sub-custodian with respect to certain of the Permitted  Investments,  (ii) using
Affiliates to effect  transactions  in certain  Permitted  Investments and (iii)
effecting transactions in certain Permitted Investments. Such compensation shall
not be  considered an amount that is  reimbursable  or payable to the Trustee or
the Master  Servicer  pursuant to Section 3.09 or 3.10 or  otherwise  payable in
respect of Extraordinary Trust Fund Expenses. Such additional compensation shall
not be an expense of the Trust Fund.

       SECTION 3.11.    Maintenance of Hazard Insurance, Errors and Omissions
                        and Fidelity Coverage and Primary Mortgage Insurance.

       (a)    The terms of each Mortgage  Note require the related  Mortgagor to
maintain fire, flood and hazard insurance policies.  To the extent such policies
are not maintained, the Servicer shall cause to be maintained for each Mortgaged
Property fire and hazard insurance with extended coverage as is customary in the
area where the  Mortgaged  Property  is  located in an amount  which is at least
equal to the lesser of the current  principal  balance of the  related  Mortgage
Loan and the amount  necessary to compensate fully for any damage or loss to the
improvements  which are a part of such property on a replacement  cost basis, in
each case in an amount not less than such  amount as is  necessary  to avoid the
application of any coinsurance  clause contained in the related hazard insurance
policy. The Servicer shall also cause to be maintained fire and hazard insurance
on each REO Property  with  extended  coverage as is customary in the area where
the  Mortgaged  Property is located in an amount  which is at least equal to the
lesser of (i) the maximum  insurable value of the improvements  which are a part
of such  property  and (ii) the  outstanding  principal  balance of the  related
Mortgage Loan at the time it became an REO  Property.  Theh Servicer will comply
in the performance of this Agreement with all reasonable  rules and requirements
of each insurer under any such hazard  policies.  Any amounts to be collected by
the Servicer  under any such  policies  (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or amounts
to be released to the Mortgagor in accordance with Accepted Servicing Practices,
subject to the terms and  conditions of the related  Mortgage and Mortgage Note)
shall be deposited in the Collection Account,  subject to withdrawal pursuant to
Section 3.09, if received in respect of a Mortgage  Loan, or in the REO Account,
subject to withdrawal pursuant to Section 3.21, if received in respect of an REO
Property.  Any cost incurred by the Servicer in  maintaining  any such insurance
shall not, for the purpose of calculating  distributions to  Certificateholders,
be  added  to the  unpaid  principal  balance  of  the  related  Mortgage  Loan,
notwithstanding that the terms of such Mortgage Loan so permit. It is understood
and agreed that no earthquake or other additional insurance is to be required of
any Mortgagor  other than pursuant to such  applicable  laws and  regulations as
shall at any time be in force and as shall require such additional insurance. If
the Mortgaged  Property or REO Property is at any time in an area  identified in
the  Federal  Register  by the  Federal  Emergency  Management  Agency as having
special  flood  hazards,  the  Servicer  will  cause  to be  maintained  a flood
insurance policy in respect thereof.  Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid principal  balance of the related Mortgage
Loan and (ii) the maximum  amount of such  insurance  available  for the


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<PAGE>


related Mortgaged  Property under the national flood insurance program (assuming
that the area in which such Mortgaged  Property is located is  participating  in
such program).

       In the event that the Servicer shall obtain and maintain a blanket policy
with an insurer  having a General  Policy Rating of B:VI or better in Best's Key
Rating  Guide or  otherwise  acceptable  to Fannie Mae or Freddie  Mac  insuring
against  hazard  losses  on  all  of  the  related   Mortgage  Loans,  it  shall
conclusively  be deemed to have  satisfied  its  obligations  to cause  fire and
hazard  insurance  to be  maintained  on  the  Mortgaged  Properties,  it  being
understood and agreed that such policy may contain a deductible clause, in which
case the Servicer  shall, in the event that there shall not have been maintained
on the related  Mortgaged  Property or REO Property a policy  complying with the
first two sentences of this Section 3.11,  and there shall have been one or more
losses which would have been covered by such policy,  deposit to the  Collection
Account from its own funds the amount not  otherwise  payable  under the blanket
policy because of such deductible  clause.  In connection with its activities as
administrator and servicer of the related Mortgage Loans, the Servicer agrees to
prepare and  present,  on behalf of itself,  the  Trustee,  the Trust Fund,  the
Certificateholders,  claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.

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

       (c)    The  Servicer  shall  not take any  action  that  would  result in
noncoverage under any applicable  primary mortgage  insurance policy of any loss
which,  but for the actions of the Servicer would have been covered  thereunder.
The  Servicer  shall  use its best  efforts  to keep in  force  and  effect  any
applicable primary mortgage insurance policy and, to the extent that the related
Mortgage  Loan  requires the  Mortgagor to maintain  such  insurance,  any other
primary mortgage  insurance  applicable to any Mortgage Loan. Except as required
by applicable law or the related Mortgage Loan Documents, the Servicer shall not
cancel or refuse to renew any such primary mortgage  insurance policy that is in
effect at the date of the initial  issuance of the related  Mortgage Note and is
required to be kept in force hereunder.

       The  Servicer  agrees  to  present  on  behalf  of the  Trustee  and  the
Certificateholders  claims to the applicable  insurer under any primary mortgage
insurance  policies and, in this regard, to take such reasonable action as shall
be necessary to permit recovery under any primary  mortgage  insurance  policies
respecting  defaulted  Mortgage  Loans.  Pursuant to Section  3.08,  any amounts
collected by the Servicer under any primary mortgage insurance policies shall be
deposited in the Collection  Account,  subject to withdrawal pursuant to Section
3.09.


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<PAGE>


Notwithstanding  any provision to the contrary,  the Servicer shall not have any
responsibility  with respect to a primary  mortgage  insurance policy unless the
Servicer has been made aware of such policy,  as reflected on the Mortgage  Loan
Schedule or  otherwise  and have been  provided  with  adequate  information  to
administer such policy.

       SECTION 3.12.    Enforcement of Due-on-Sale Clauses; Assumption
                        Agreements

       The Servicer  shall,  to the extent it has knowledge of any conveyance of
any related  Mortgaged  Property by any related  Mortgagor  (whether by absolute
conveyance or by contract of sale,  and whether or not the Mortgagor  remains or
is to remain liable under the Mortgage Note and/or the  Mortgage),  exercise its
rights to accelerate the maturity of such Mortgage Loan under the  "due-on-sale"
clause, if any, applicable thereto;  provided,  however, that the Servicer shall
not exercise any such rights if prohibited by law from doing so. If the Servicer
reasonably  believes  that it is unable  under  applicable  law to enforce  such
"due-on-sale" clause, or if any of the other conditions set forth in the proviso
to the preceding sentence apply, the Servicer shall enter into an assumption and
modification  agreement  from or with the person to whom such  property has been
conveyed or is proposed to be  conveyed,  pursuant to which such person  becomes
liable under the Mortgage Note and, to the extent  permitted by applicable state
law, the Mortgagor  remains liable  thereon.  The Servicer is also authorized to
enter into a substitution of liability  agreement with such person,  pursuant to
which the  original  Mortgagor  is released  from  liability  and such person is
substituted  as the  Mortgagor  and  becomes  liable  under the  Mortgage  Note,
provided  that no such  substitution  shall  be  effective  unless  such  person
satisfies  the then current  underwriting  criteria of the Servicer for mortgage
loans similar to the related  Mortgage  Loans. In connection with any assumption
or substitution, the Servicer shall apply such underwriting standards and follow
such  practices  and  procedures  as shall be normal  and  usual in its  general
mortgage  servicing  activities  and as it applies to other mortgage loans owned
solely by it.  The  Servicer  shall not take or enter  into any  assumption  and
modification  agreement,  however,  unless  (to the  extent  practicable  in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable  hazard insurance  policy.  Any fee collected by
the Servicer in respect of an assumption or substitution of liability  agreement
will be  retained by such  Servicer as  additional  servicing  compensation.  In
connection  with any such  assumption,  no material  term of the  Mortgage  Note
(including  but not limited to the related  Mortgage  Rate and the amount of the
Monthly  Payment)  may be  amended or  modified,  except as  otherwise  required
pursuant to the terms  thereof.  The  Servicer  shall notify the Trustee (or the
Custodian) that any such substitution or assumption agreement has been completed
by  forwarding  to the Trustee the  executed  original of such  substitution  or
assumption agreement, which document shall be added to the related Mortgage File
and shall,  for all purposes,  be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part thereof.

       Notwithstanding  the foregoing  paragraph or any other  provision of this
Agreement,  the  Servicer  shall not be deemed to be in  default,  breach or any
other  violation of its  obligations  hereunder by reason of any assumption of a
Mortgage  Loan by operation  of law or by the terms of the Mortgage  Note or any
assumption which the Servicer may be restricted by law from preventing,  for any
reason  whatever.  For purposes of this Section 3.12, the term  "assumption"  is
deemed  to also  include  a sale  (of the  Mortgaged  Property)  subject  to the
Mortgage that is not  accompanied by an assumption or  substitution of liability
agreement.


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<PAGE>


       SECTION 3.13.    Realization Upon Defaulted Mortgage Loans.

       (a)    The Servicer shall use its best efforts,  consistent with Accepted
Servicing  Practices,  to  foreclose  upon or otherwise  comparably  convert the
ownership of  properties  securing  such of the Mortgage  Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent  payments  pursuant to Section 3.06. The Servicer shall
be  responsible  for  all  costs  and  expenses  incurred  by  it  in  any  such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Servicer as contemplated in Sections 3.09 and 3.21.
The foregoing is subject to the provision that, in any case in which a Mortgaged
Property shall have suffered damage from an Uninsured  Cause, the Servicer shall
not be required to expend its own funds toward the  restoration of such property
unless it shall determine in its discretion that such  restoration will increase
the proceeds of liquidation of the related Mortgage Loan after  reimbursement to
itself for such expenses.

       (b)    Notwithstanding  the foregoing  provisions of this Section 3.13 or
any other provision of this  Agreement,  with respect to any Mortgage Loan as to
which the Servicer has received  actual  notice of, or has actual  knowledge of,
the  presence  of any toxic or  hazardous  substance  on the  related  Mortgaged
Property, the Servicer shall not, on behalf of the Trust Fund, either (i) obtain
title to such  Mortgaged  Property as a result of or in lieu of  foreclosure  or
otherwise,  or (ii)  otherwise  acquire  possession of, or take any other action
with respect to, such  Mortgaged  Property,  if, as a result of any such action,
the Trust Fund,  the Trustee or the  Certificateholders  would be  considered to
hold  title to, to be a  "mortgagee-in-possession"  of, or to be an  "owner"  or
"operator" of such Mortgaged  Property  within the meaning of the  Comprehensive
Environmental Response,  Compensation and Liability Act of 1980, as amended from
time to time, or any  comparable  law,  unless the Servicer has also  previously
determined, based on its reasonable judgment and a prudent report prepared by an
Independent Person who regularly conducts  environmental  audits using customary
industry standards, that:

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

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

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


                                       89
<PAGE>


       If the Servicer  determines,  as described above,  that it is in the best
economic  interest of the Trust Fund to take such  actions as are  necessary  to
bring any such Mortgaged Property into compliance with applicable  environmental
laws,  or to take such  action  with  respect to the  containment,  clean-up  or
remediation of hazardous substances,  hazardous materials,  hazardous wastes, or
petroleum-based  materials  affecting  any  such  Mortgaged  Property,  then the
Servicer shall take such action as it deems to be in the best economic  interest
of the Trust  Fund.  The cost of any such  compliance,  containment,  cleanup or
remediation  shall be advanced by the Servicer,  subject to the Servicer's right
to be reimbursed  therefor from the  Collection  Account as provided in Sections
3.09(a)(iii)  or  3.09(a)(ix),  such right of  reimbursement  being prior to the
rights of  Certificateholders  to receive any amount in the  Collection  Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.

       (c)    The  Servicer  shall have the right to  purchase  from REMIC I any
defaulted Mortgage Loan serviced by it that is 90 days or more delinquent, which
the  Servicer  determines  in  good  faith  will  otherwise  become  subject  to
foreclosure  proceedings  (evidence  of such  determination  to be  delivered in
writing to the Trustee,  in form and substance  satisfactory to the Servicer and
the Trustee  prior to  purchase),  at a price equal to the Purchase  Price.  The
Purchase Price for any Mortgage Loan purchased  hereunder  shall be deposited in
the Collection Account, and the Trustee,  upon receipt of written  certification
from the Servicer of such deposit,  shall release or cause to be released to the
Servicer the related  Mortgage  File and the Trustee  shall  execute and deliver
such  instruments  of transfer or  assignment,  in each case  without  recourse,
representation  or  warranty,  as the  Servicer  shall  furnish  and as shall be
necessary to vest in the Servicer  title to any Mortgage Loan released  pursuant
hereto.

       (d)    Proceeds   received  in   connection   with  any  Final   Recovery
Determination,  as well as any recovery  resulting from a partial  collection of
Insurance  Proceeds or  Liquidation  Proceeds,  in respect of any Mortgage Loan,
will be applied in the  following  order of priority:  first,  to reimburse  the
Servicer  for any related  unreimbursed  Servicing  Advances  and P&I  Advances,
pursuant  to Section  3.09(a)(ii)  or  (a)(iii);  second,  to accrued and unpaid
interest on the Mortgage Loan, to the date of the Final Recovery  Determination,
or to the Due Date prior to the  Distribution  Date on which such amounts are to
be distributed if not in connection  with a Final  Recovery  Determination;  and
third,  as a recovery of principal of the  Mortgage  Loan.  If the amount of the
recovery  so  allocated  to interest is less than the full amount of accrued and
unpaid  interest due on such Mortgage  Loan, the amount of such recovery will be
allocated by the  Servicer as follows:  first,  to unpaid  Servicing  Fees;  and
second,  to the balance of the interest  then due and owing.  The portion of the
recovery  so  allocated  to unpaid  Servicing  Fees shall be  reimbursed  to the
Servicer pursuant to Section 3.09(a)(iii). The portion of the recovery allocated
to  interest  (net of unpaid  Servicing  Fees) and the  portion of the  recovery
allocated to principal of the Mortgage Loan shall be applied as follows:  first,
to reimburse the Servicer for any related unreimbursed Servicing or P&I Advances
in accordance with Section 3.09(a)(ii) and any other amounts reimbursable to the
related Servicer pursuant to Section 3.09, and second, as part of the amounts to
be transferred to the Distribution Account in accordance with Section 3.08(b).

       SECTION 3.14.    Trustee to Cooperate; Release of Mortgage Files.

       (a)    Upon becoming  aware of the payment in full of any Mortgage  Loan,
or the receipt by the Servicer of a  notification  that payment in full has been
escrowed   in  a  manner   customary   for  such   purposes   for   payment   to
Certificateholders  on the next  Distribution  Date,  the


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Servicer will promptly furnish to the Custodian,  on behalf of the Trustee,  two
copies  of a request  for  release  substantially  in the form  attached  to the
Custodial  Agreement  signed by a Servicing  Officer or in a mutually  agreeable
electronic format which will, in lieu of a signature on its face, originate from
a Servicing Officer (which certification shall include a statement to the effect
that all amounts  received in connection  with such payment that are required to
be deposited in the  Collection  Account have been or will be so deposited)  and
shall  request  that the  Custodian,  on behalf of the  Trustee,  deliver to the
Servicer  the related  Mortgage  File.  Upon receipt of such  certification  and
request, the Custodian, on behalf of the Trustee, shall within five (5) Business
Days  release  the related  Mortgage  File to the  Servicer  and the Trustee and
Custodian  shall have no further  responsibility  with  regard to such  Mortgage
File.  Upon any such payment in full,  the Servicer is  authorized,  to give, as
agent for the Trustee,  as the  mortgagee  under the  Mortgage  that secured the
Mortgage Loan, an instrument of satisfaction  (or assignment of mortgage without
recourse)  regarding  the  Mortgaged  Property  subject to the  Mortgage,  which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons  entitled  thereto  against  receipt  therefor  of such
payment,  it being understood and agreed that no expenses incurred in connection
with such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account.

       (b)    From  time  to  time  and as  appropriate  for  the  servicing  or
foreclosure  of any Mortgage  Loan,  the Trustee shall execute such documents as
shall  be  prepared  and  furnished  to the  Trustee  by the  Servicer  (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings.  The Custodian,  on behalf of the Trustee, shall, upon the
request  of the  Servicer,  and  delivery  to the  Custodian,  on  behalf of the
Trustee,  of two copies of a request for release  signed by a Servicing  Officer
substantially in the form attached to the Custodial  Agreement (or in a mutually
agreeable  electronic  format  which will,  in lieu of a signature  on its face,
originate from a Servicing  Officer),  release within five (5) Business Days the
related  Mortgage File held in its  possession or control to the Servicer.  Such
trust  receipt  shall  obligate the Servicer to return the Mortgage  File to the
Custodian  on behalf of the Trustee,  when the need  therefor by the Servicer no
longer exists unless the Mortgage Loan shall be liquidated,  in which case, upon
receipt of a  certificate  of a Servicing  Officer  similar to that  hereinabove
specified,  the Mortgage File shall be released by the  Custodian,  on behalf of
the Trustee, to the Servicer.

       Notwithstanding the foregoing,  in connection with a Principal Prepayment
in full of any Mortgage  Loan,  the Master  Servicer may request  release of the
related  Mortgage File from the Custodian,  in accordance with the provisions of
the Custodial Agreement, in the event the Servicer fails to do so.

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


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termination of such a lien upon completion of the foreclosure or trustee's sale.
So long as no Servicer  Event of Default shall have occurred and be  continuing,
the Servicer  shall have the right to execute any and all such court  pleadings,
requests  and other  documents  as  attorney-in-fact  for,  and on behalf of the
Trustee.

       SECTION 3.15.    Servicing Compensation.

       As  compensation  for its  activities  hereunder,  the Servicer  shall be
entitled to the  Servicing Fee with respect to each Mortgage Loan serviced by it
payable  solely from  payments of  interest  in respect of such  Mortgage  Loan,
subject to Section 3.22. In addition,  the Servicer shall be entitled to recover
unpaid Servicing Fees out of Insurance  Proceeds or Liquidation  Proceeds to the
extent  permitted by Section  3.09(a)(iii)  and out of amounts  derived from the
operation  and sale of an REO Property to the extent  permitted by Section 3.21.
The right to receive the  Servicing  Fee may not be  transferred  in whole or in
part  except  in  connection   with  the  transfer  of  all  of  the  Servicer's
responsibilities  and obligations  under this Agreement to the extent  permitted
herein.

       Additional  servicing  compensation in the form of assumption  fees, late
payment charges and other  miscellaneous  fees (other than  Prepayment  Charges)
shall be  retained by the  Servicer  only to the extent such fees or charges are
received  by the  Servicer.  The  Servicer  shall also be  entitled  pursuant to
Section  3.09(a)(iv)  to withdraw  from the  Collection  Account and pursuant to
Section  3.21(b) to  withdraw  from any REO  Account,  as  additional  servicing
compensation,  interest or other income earned on deposits  therein,  subject to
Section 3.10. In addition,  the Servicer shall be entitled to retain or withdraw
from the  Collection  Account,  pursuant to Section  3.09(a)(x),  any Prepayment
Interest  Excess with respect to the Mortgage Loans serviced by it as additional
servicing  compensation.  The  Servicer  shall be required  to pay all  expenses
incurred by it in connection with its servicing  activities  hereunder and shall
not be  entitled  to  reimbursement  therefor  except as  specifically  provided
herein.

       SECTION 3.16.    Collection Account Statements.

       Upon request,  not later than fifteen days after each Distribution  Date,
the Servicer shall forward to the Master Servicer, the Securities Administrator,
the Trustee and the Depositor a statement  prepared by the  institution at which
the Collection  Account is maintained setting forth the status of the Collection
Account as of the close of business on such Distribution  Date and showing,  for
the period covered by such statement,  the aggregate amount of deposits into and
withdrawals from the Collection Account of each category of deposit specified in
Section  3.08(a) and each  category of  withdrawal  specified  in Section  3.09.
Copies of such  statement  and any similar  statements  provided by the Servicer
shall be provided by the Securities  Administrator to any  Certificateholder and
to any  Person  identified  to the  Securities  Administrator  as a  prospective
transferee  of a  Certificate,  upon  request at the  expense of the  requesting
party,  provided such  statement is delivered by the Servicer to the  Securities
Administrator.

       SECTION 3.17.    Statement as to Compliance.

       Not later than March 15th of each calendar year  commencing in 2006,  the
Servicer shall deliver to the Trustee,  the Master Servicer and the Depositor an
Officers'  Certificate  in a form  acceptable for filing with the Securities and
Exchange Commission as an exhibit to Form 8-K or other required form (upon which
the Master  Servicer can  conclusively


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rely in connection with its obligations under Section 5.06) stating,  as to each
signatory  thereof,  that (i) a review of the activities of the Servicer  during
the preceding year and of  performance  under this Agreement has been made under
such officers'  supervision  and (ii) to the best of such  officer's  knowledge,
based on such review,  the Servicer has fulfilled all of its  obligations  under
this  Agreement  throughout  such  year,  or, if there has been a default in the
fulfillment of any such  obligation,  specifying each such default known to such
officer and the nature and status thereof. Copies of any such statement shall be
provided by the Trustee to any Certificateholder, upon request at the expense of
the  requesting  party,  provided such statement is delivered by the Servicer to
the Trustee.

       SECTION 3.18.    Independent Public Accountants' Servicing Report.

       Not later than March 15th of each calendar year  commencing in 2006,  the
Servicer,  at  its  expense,   shall  cause  a  nationally  recognized  firm  of
independent  certified public accountants to furnish to the Servicer a report in
a form  acceptable for filing with the Securities and Exchange  Commission as an
exhibit to Form 10-K or other  required  form stating that (i) it has obtained a
letter of  representation  regarding  certain matters from the management of the
Servicer which includes an assertion that the Servicer has complied with certain
minimum residential mortgage loan servicing standards, identified in the Uniform
Single  Attestation  Program for Mortgage  Bankers  established  by the Mortgage
Bankers  Association  of America,  with respect to the servicing of  residential
mortgage  loans during the most recently  completed  fiscal year and (ii) on the
basis of an  examination  conducted by such firm in  accordance  with  standards
established  by the American  Institute of Certified  Public  Accountants,  such
representation  is fairly stated and such firm has determined  that the Servicer
has  complied in all material  respects,  subject to such  exceptions  and other
qualifications that may be appropriate. Immediately upon receipt of such report,
the Servicer  shall  furnish a copy of such report to the Master  Servicer,  the
Trustee and each Rating Agency.  Copies of such  statement  shall be provided by
the  Trustee  to  any  Certificateholder  upon  request  at the  expense  of the
requesting  party,  provided that such statement is delivered by the Servicer to
the Trustee.

       SECTION 3.19.    Annual Certification.

       (a)    The Servicer  shall deliver to the Master  Servicer,  on or before
March 15th of each calendar year beginning in 2006 (or, if any such day is not a
Business Day, the immediately  preceding  Business Day) or such alternative date
reasonably  specified by the Master Servicer which shall occur not later than 15
days prior to the date any Form 10-K is required to be filed with the Commission
in  connection  with  the  transactions   contemplated  by  this  Agreement,   a
certification in the form attached hereto as Exhibit C. Such certification shall
be signed by the  senior  officer in charge of  servicing  of the  Servicer.  In
addition,  the Servicer shall provide such other information with respect to the
related Mortgage Loans and the servicing and  administration  thereof within the
control of the Servicer which shall be required to enable the Master Servicer to
comply with the reporting  requirements  of the  Securities  and Exchange Act of
1934, as amended, pursuant to Section 5.06 hereof.

       (b)    The  Servicer  shall   indemnify  and  hold  harmless  the  Master
Servicer,  the Securities  Administrator,  the Trustee,  the Depositor and their
respective  officers,  directors,  agents and  affiliates  from and  against any
losses,  damages,  penalties,  fines,  forfeitures,  reasonable  legal  fees and
related  costs,  judgments and other costs and expenses  arising out of or


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based upon a breach by the Servicer or any of its officers, directors, agents or
affiliates  of its  obligations  under  this  Section  3.19  or  the  Servicer's
negligence,  bad faith or  willful  misconduct  in  connection  therewith.  Such
indemnity  shall survive the termination or resignation of the parties hereto or
the termination of this Agreement. If the indemnification provided for herein is
unavailable or insufficient to hold harmless the Master Servicer, the Securities
Administrator,  the Trustee and the Depositor,  then the Servicer agrees that it
shall  contribute  to the amount  paid or payable  by the Master  Servicer,  the
Securities  Administrator,  the  Trustee  and the  Depositor  as a result of the
losses,  claims,  damages or liabilities of the Master Servicer,  the Securities
Administrator,   the  Trustee  and  the  Depositor  in  such  proportion  as  is
appropriate to reflect the relative fault of the Master Servicer, the Securities
Administrator, the Trustee and the Depositor on the one hand and the Servicer on
the other in connection with a breach of the Servicer's  obligations  under this
Section 3.19.

       SECTION 3.20.    Access to Certain Documentation.

       The Servicer shall provide to the Office of Thrift Supervision, the FDIC,
and any other federal or state banking or insurance  regulatory  authority  that
may exercise authority over any Certificate  Owner,  access to the documentation
regarding  the  related   Mortgage  Loans   required  by  applicable   laws  and
regulations.  Such  access  shall be  afforded  without  charge,  but only  upon
reasonable  request  and  during  normal  business  hours at the  offices of the
Servicer  designated  by it.  Nothing  in this  Section  3.20  shall  limit  the
obligation  of the  Servicer  to  comply  with any  applicable  law  prohibiting
disclosure  of  information  regarding  the  Mortgagors  and the  failure of the
Servicer  to  provide  access as  provided  in this  Section as a result of such
obligation  shall not  constitute  a breach  of this  Section.  Nothing  in this
Section 3.20 shall require the Servicer to collect, create, collate or otherwise
generate  any  information  that it does not  generate  in its  usual  course of
business. The Servicer shall not be required to make copies of or ship documents
to any Person  unless  provisions  have been made for the  reimbursement  of the
costs thereof.

       SECTION 3.21.    Title, Management and Disposition of REO Property.

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


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

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

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

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

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

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

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

       Subject to compliance  with  applicable  laws and regulations as shall at
any time be in force, and notwithstanding the foregoing, the Servicer, on behalf
of the Trust Fund, shall not:

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


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

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

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

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

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

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

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

              (x)    none of the provisions of this Section 3.21(c)  relating to
       any such  contract  or to  actions  taken  through  any such  Independent
       Contractor  shall be deemed to relieve the  Servicer of any of its duties
       and  obligations  to the  Trustee on behalf of the Trust Fund and for the
       benefit  of the  Certificateholders  with  respect to the  operation  and
       management of any such REO Property; and

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

       The  Servicer  shall be  entitled  to enter into any  agreement  with any
Independent  Contractor  performing  services  for it  related to its duties and
obligations  hereunder for  indemnification  of the Servicer by such Independent
Contractor,  and  nothing in this  Agreement  shall be deemed to limit or modify
such  indemnification.  The Servicer shall be solely liable for all fees owed by
it to any such  Independent  Contractor,  irrespective of whether the Servicer's
compensation  pursuant to Section 3.15 is sufficient to pay such fees.  Any such
agreement  shall  include a provision  that such  agreement  may be  immediately
terminated  by the  Trustee  (as  successor  Servicer)  or any  other  successor
Servicer  (including the Master Servicer) without fee,


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in the event the Servicer shall for any reason, no longer be the Servicer of the
related  Mortgage  Loans  (including  termination  due to a  Servicer  Event  of
Default).

       (d)    In addition to the withdrawals  permitted  under Section  3.21(c),
the Servicer may from time to time make withdrawals from the REO Account for any
REO Property:  (i) to pay itself unpaid Servicing Fees in respect of the related
Mortgage Loan; and (ii) to reimburse itself or any Sub-Servicer for unreimbursed
Servicing  Advances  and  Advances  made in respect of such REO  Property or the
related  Mortgage  Loan. On the Servicer  Remittance  Date,  the Servicer  shall
withdraw  from  each  REO  Account   maintained  by  it  and  deposit  into  the
Distribution Account in accordance with Section 3.08(d)(ii), for distribution on
the related  Distribution  Date in accordance with Section 5.01, the income from
the related REO Property  received during the prior calendar  month,  net of any
withdrawals made pursuant to Section 3.21(c) or this Section 3.21(d).

       (e)    Subject to the time constraints set forth in Section 3.21(a), each
REO Disposition shall be carried out by the Servicer at such price and upon such
terms and conditions as the Servicer shall deem necessary or advisable, as shall
be normal and usual in accordance with Accepted Servicing Practices.

       (f)    The proceeds from the REO Disposition,  net of any amount required
by law to be remitted to the Mortgagor  under the related  Mortgage Loan and net
of any payment or  reimbursement  to the  Servicer as provided  above,  shall be
deposited in the Distribution  Account in accordance with Section 3.08(d)(ii) on
the Servicer  Remittance  Date in the month  following  the receipt  thereof for
distribution on the related  Distribution  Date in accordance with Section 5.01.
Any REO  Disposition  shall  be for  cash  only  (unless  changes  in the  REMIC
Provisions   made  subsequent  to  the  Startup  Day  allow  a  sale  for  other
consideration).

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

       SECTION  3.22.    Obligations of the Servicer in Respect of Prepayment
                         Interest Shortfalls; Relief Act Interest Shortfalls.

       The Servicer  shall deliver to the Securities  Administrator  for deposit
into the  Distribution  Account  on or  before  12:00  noon New York time on the
Servicer Remittance Date from its own funds an amount equal to the lesser of (i)
the aggregate  amount of the  Prepayment  Interest  Shortfalls  attributable  to
prepayments in full on the related  Mortgage Loans for the related  Distribution
Date  resulting  solely from  voluntary  Principal  Prepayments  received by the
Servicer during the related  Prepayment  Period and (ii) the aggregate amount of
the related  Servicing  Fees payable to the Servicer on such  Distribution  Date
with respect to the related  Mortgage  Loans.  The  Servicer  shall not have the
right to reimbursement for any amounts remitted to the Securities  Administrator
in respect of this Section 3.22.  The Servicer shall not be obligated to pay the
amounts set forth in this Section 3.22 with respect to shortfalls resulting from
the application of the Relief Act.


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       SECTION 3.23.    Obligations of the Servicer in Respect of Mortgage Rates
                        and Monthly Payments.

       In the event that a shortfall  in any  collection  on or  liability  with
respect to any Mortgage Loan results from or is  attributable  to adjustments to
Mortgage Rates,  Monthly Payments or Stated Principal Balances that were made by
the Servicer in a manner not consistent  with the terms of the related  Mortgage
Note and this  Agreement,  the related  Servicer,  upon  discovery or receipt of
notice thereof,  immediately  shall deliver to the Securities  Administrator for
deposit in the  Distribution  Account  from its own funds the amount of any such
shortfall and shall indemnify and hold harmless the Trust Fund, the Trustee, the
Securities  Administrator,  the Master Servicer, the Depositor and any successor
Servicer in respect of any such liability.  Such  indemnities  shall survive the
termination or discharge of this Agreement.  Notwithstanding the foregoing, this
Section 3.23 shall not limit the ability of the Servicer to seek recovery of any
such amounts from the related  Mortgagor under the terms of the related Mortgage
Note and Mortgage, to the extent permitted by applicable law.

       SECTION 3.24.    Reserve Fund.

       (a)    No later than the Closing Date, the Securities Administrator shall
establish and maintain a separate,  segregated trust account entitled,  "Reserve
Fund,  Wells  Fargo  Bank,  N.A.,  in trust for the  registered  holders  of ACE
Securities  Corp.  Home  Equity  Loan  Trust,  Series  2005-RM1,   Asset  Backed
Pass-Through  Certificates." On the Closing Date, the Depositor will deposit, or
cause to be  deposited,  into the Reserve Fund $1,000.  In addition,  the amount
deposited in the Reserve Fund shall be increased by any payments received by the
Securities  Administrator  under the Group I Cap  Contract  and  deposited  into
Reserve  Fund  for  the  benefit  of  the  Class  A-1  Certificates,   Mezzanine
Certificates  and the Class B  Certificates  and under the Group II Cap Contract
and deposited in the Reserve Fund for the benefit of the Class A-2 Certificates,
the Mezzanine Certificates and the Class B Certificates.

       (b)    On each  Distribution  Date,  the Securities  Administrator  shall
deposit into the Reserve Fund the amounts  described in Section  5.01(a)(7)(vi),
rather than  distributing such amounts to the Class CE  Certificateholders,  and
Section  5.01(a)(7)(vii).   On  each  such  Distribution  Date,  the  Securities
Administrator  shall hold all such amounts for the benefit of the Holders of the
Class A Certificates,  the Mezzanine  Certificates  and the Class B Certificates
and will distribute such amounts to the Holders of the Class A Certificates, the
Mezzanine  Certificates  and  the  Class  B  Certificates,  in the  amounts  and
priorities set forth in Section  5.01(a).  If no Net WAC Rate Carryover  Amounts
are payable on a Distribution Date, the Securities  Administrator shall deposit,
into the Reserve Fund on behalf of the Class CE Certificateholders, from amounts
otherwise distributable to the Class CE Certificateholders,  an amount such that
when  added to other  amounts  already  on  deposit  in the  Reserve  Fund,  the
aggregate amount on deposit therein is equal to $1,000.

       (c)    For  federal  and  state  income  tax   purposes,   the  Class  CE
Certificateholders  will be deemed to be the owners of the Reserve  Fund and all
amounts  deposited into the Reserve Fund (other than the initial deposit therein
of $1,000) and any amounts paid to the Reserve Fund from the Cap Contracts shall
be  treated as amounts  distributed  by REMIC II to the  Holders of the Class CE
Certificates.  Upon the termination of the Trust Fund, or the payment in full of
the  Class  A  Certificates,   the  Mezzanine   Certificates  and  the  Class  B
Certificates,  all  amounts


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remaining  on deposit in the Reserve Fund will be released by the Trust Fund and
distributed to the Class CE Certificateholders  or their designees.  The Reserve
Fund will be part of the Trust  Fund but not part of any REMIC and any  payments
to the Holders of the Class A  Certificates,  the Mezzanine  Certificates or the
Class B Certificates of Net WAC Rate Carryover Amounts will not be payments with
respect to a "regular  interest"  in a REMIC  within the meaning of Code Section
860(G)(a)(1).

       (d)    By   accepting   a   Class   CE   Certificate,   each   Class   CE
Certificateholder  hereby agrees that the Securities  Administrator will deposit
into the Reserve  Fund the amounts  described  above on each  Distribution  Date
rather than  distributing  such amounts to the Class CE  Certificateholders.  By
accepting a Class CE Certificate, each Class CE Certificateholder further agrees
that its agreement to such action by the Securities  Administrator  is given for
good  and  valuable  consideration,  the  receipt  and  sufficiency  of which is
acknowledged by such acceptance.

       (e)    At the  direction  of the  Holders  of a  majority  in  Percentage
Interest in the Class CE Certificates, the Securities Administrator shall direct
any depository  institution  maintaining the Reserve Fund to invest the funds in
such account in one or more Permitted  Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, (i) no later than the Business
Day  immediately  preceding  the date on which  such  funds are  required  to be
withdrawn from such account  pursuant to this Agreement,  if a Person other than
the Securities Administrator or an Affiliate manages or advises such investment,
and (ii) no later than the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if the Securities Administrator or
an Affiliate manages or advises such investment. All income and gain earned upon
such investment  shall be deposited into the Reserve Fund. In no event shall the
Securities  Administrator  be liable for any  investments  made pursuant to this
clause (e). If the Holders of a majority in Percentage  Interest in the Class CE
Certificates fail to provide  investment  instructions,  funds on deposit in the
Reserve Fund shall be held  uninvested by the Securities  Administrator  without
liability for interest or compensation.

       (f)    For federal tax return and information reporting, the right of the
Class  A  Certificateholders,  the  Mezzanine  Certificateholders  and  Class  B
Certificateholders  to receive  payments from the Reserve Fund in respect of any
Net WAC Rate Carryover  Amount shall be assigned a value of $80,000 with respect
to Certificates  covered by the Group I Cap Contract and $32,000 with respect to
Certificates covered by the Group II Cap Contract.

       SECTION 3.25.    Advance Facility.

       (a)    Notwithstanding anything to the contrary contained herein, (i) the
Servicer  is hereby  authorized  to enter  into an  advance  facility  ("Advance
Facility")  but no more than two Advance  Facilities  without the prior  written
consent of the Trustee, which consent shall not be unreasonably withheld,  under
which (A) the related Servicer sells,  assigns or pledges to an advancing person
(an "Advance Financing Person") its rights under this Agreement to be reimbursed
for any P&I  Advances  or  Servicing  Advances  and/or (B) an Advance  Financing
Person agrees to finance some or all P&I Advances or Servicing Advances required
to be made by the Servicer  pursuant to this  Agreement and (ii) the Servicer is
hereby  authorized to assign its rights to the Servicing Fee (which rights shall
terminate upon the resignation,  termination or removal of the Servicer pursuant
to the terms of this Agreement); it being understood that neither


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<PAGE>


the  Trust  Fund nor any party  hereto  shall  have a right or claim  (including
without  limitation any right of offset) to any amounts for reimbursement of P&I
Advances or  Servicing  Advances so assigned or to the portion of the  Servicing
Fee so assigned. Subject to the provisions of the first sentence of this Section
3.25(a),   no   consent   of   the   Depositor,    Trustee,   Master   Servicer,
Certificateholders  or any other party is required before the Servicer may enter
into  an  Advance  Facility,  but  the  Servicer  shall  provide  notice  to the
Depositor,  Master Servicer and the Trustee of the existence of any such Advance
Facility promptly upon the consummation  thereof stating (a) the identity of the
Advance  Financing  Person  and  (b) the  identity  of any  Person  ("Servicer's
Assignee") who has the right to receive amounts in  reimbursement  of previously
unreimbursed P&I Advances or Servicing  Advances.  Notwithstanding the existence
of any Advance  Facility  under which an advancing  person agrees to finance P&I
Advances and/or Servicing Advances on the Servicer's behalf, such Servicer shall
remain  obligated  pursuant to this Agreement to make P&I Advances and Servicing
Advances  pursuant  to and as  required  by this  Agreement,  and  shall  not be
relieved of such obligations by virtue of such Advance Facility.

       (b)    Reimbursement  amounts  ("Advance  Reimbursement  Amounts")  shall
consist solely of amounts in respect of P&I Advances and/or  Servicing  Advances
made with respect to the related  Mortgage Loans for which the Servicer would be
permitted to reimburse  itself in accordance with this  Agreement,  assuming the
Servicer had made the related P&I Advance(s) and/or Servicing Advance(s).

       (c)    The Servicer shall maintain and provide to any successor  Servicer
(with,  upon  request,  a copy  to  the  Trustee)  a  detailed  accounting  on a
loan-by-loan  basis as to  amounts  advanced  by,  pledged or  assigned  to, and
reimbursed to any advancing person.  The successor Servicer shall be entitled to
rely on any such  information  provided  by the  predecessor  Servicer,  and the
successor Servicer shall not be liable for any errors in such information.

       (d)    Reimbursement  amounts  distributed  with respect to each Mortgage
Loan shall be allocated to  outstanding  unreimbursed  P&I Advances or Servicing
Advances  (as the case may be) made  with  respect  to that  Mortgage  Loan on a
"first-in,  first out" (FIFO) basis. The documentation  establishing any Advance
Facility shall require the Servicer to provide to the related  advancing  person
or its designee loan-by-loan information with respect to each such reimbursement
amount  distributed to such advancing person or Advance Facility trustee on each
Distribution Date, to enable the advancing person or Advance Facility trustee to
make the FIFO allocation of each such reimbursement  amount with respect to each
Mortgage  Loan.  The Servicer  shall  remain  entitled to be  reimbursed  by the
advancing  person or Advance Facility trustee for all P&I Advances and Servicing
Advances  funded  by the  Servicer  to  the  extent  the  related  rights  to be
reimbursed  therefor  have not been sold,  assigned  or pledged to an  advancing
person.

       (e)    Any  amendment to this  Section 3.25 or to any other  provision of
this  Agreement  that may be necessary or  appropriate to effect the terms of an
Advance  Facility  as  described  generally  in  this  Section  3.25,  including
amendments to add provisions  relating to a successor  Servicer,  may be entered
into by the Trustee, the Depositor, and the related Servicer without the consent
of any  Certificateholder,  notwithstanding  anything  to the  contrary  in this
Agreement,  provided,  that the Trustee has been  provided an Opinion of Counsel
that such amendment is authorized  hereunder and has no material  adverse effect
on the  Certificateholders,  which  opinion  shall be an  expense  of the  party
requesting  such  opinion but in any case shall not


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<PAGE>


be an expense of the  Trustee or the Trust  Fund;  provided,  further,  that the
amendment  shall not be deemed to adversely  affect in any material  respect the
interests  of the  Certificateholders  if the Person  requesting  the  amendment
obtains a letter from each Rating  Agency  (instead of  obtaining  an Opinion of
Counsel  to such  effect)  stating  that the  amendment  would not result in the
downgrading  or  withdrawal  of the  respective  ratings  then  assigned  to the
Certificates;  it being understood and agreed that any such rating letter in and
of itself will not represent a  determination  as to the materiality of any such
amendment  and will  represent  a  determination  only as to the  credit  issues
affecting  any such  rating.  Prior to entering  into an Advance  Facility,  the
Servicer  shall notify the lender under such facility in writing  that:  (a) the
P&I Advances and/or Servicing  Advances financed by and/or pledged to the lender
are obligations  owed to the Servicer on a non-recourse  basis payable only from
the cash flows and proceeds  received under this Agreement for  reimbursement of
P&I Advances and/or Servicing  Advances only to the extent provided herein,  and
neither the Master Servicer, the Securities  Administrator,  the Trustee nor the
Trust  are  otherwise  obligated  or liable  to repay  any P&I  Advances  and/or
Servicing  Advances financed by the lender; (b) the Servicer will be responsible
for remitting to the lender the applicable  amounts collected by it as Servicing
Fees and as reimbursement  for P&I Advances and/or Servicing  Advances funded by
the lender, as applicable, subject to the restrictions and priorities created in
this   Agreement;   and  (c)  neither  the  Master   Servicer,   the  Securities
Administrator  nor the Trustee  shall have any  responsibility  to calculate any
amount   payable  under  an  Advance   Facility  or  to  track  or  monitor  the
administration of the financing  arrangement between the Servicer and the lender
or the payment of any amount under an Advance Facility.

       (f)    The Servicer shall indemnify the Master  Servicer,  the Securities
Administrator, the Trustee and the Trust Fund for any cost, liability or expense
relating to the Advance Facility including, without limitation, a claim, pending
or threatened, by an Advance Financing Person.

       SECTION 3.26.    Servicer Indemnification.

       The Servicer  agrees to indemnify  the Trustee,  Master  Servicer and the
Securities  Administrator,  from, and hold the Trustee,  Master Servicer and the
Securities  Administrator  harmless  against,  any loss,  liability  or  expense
(including  reasonable attorney's fees and expenses) incurred by any such Person
by reason of the Servicer's willful  misfeasance,  bad faith or gross negligence
in the  performance  of its  duties  under  this  Agreement  or by reason of the
Servicer's   reckless  disregard  of  its  obligations  and  duties  under  this
Agreement.  Such  indemnity  shall survive the  termination or discharge of this
Agreement and the  resignation or removal of Servicer,  the Trustee,  the Master
Servicer and the  Securities  Administrator.  Any payment  hereunder made by the
Servicer  to any such Person  shall be from the  Servicer's  own funds,  without
reimbursement from REMIC I therefor.


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                                   ARTICLE IV

                       ADMINISTRATION AND MASTER SERVICING
                  OF THE MORTGAGE LOANS BY THE MASTER SERVICER

       SECTION 4.01.    Master Servicer.

       The Master  Servicer  shall,  from and after the Closing Date  supervise,
monitor and oversee the obligations of the Servicer under this Agreement and the
Interim  Servicers under the Servicing  Agreements to service and administer the
related  Mortgage  Loans in accordance  with the terms of this Agreement and the
Servicing  Agreements  and shall have full power and authority to do any and all
things which it may deem  necessary or desirable in connection  with such master
servicing and  administration.  In performing  its  obligations  hereunder,  the
Master Servicer shall act in a manner  consistent with Accepted Master Servicing
Practices.  Furthermore,  the Master Servicer shall oversee and consult with the
Servicer and the Interim  Servicers as necessary from  time-to-time to carry out
the Master Servicer's obligations hereunder,  shall receive, review and evaluate
all reports,  information  and other data provided to the Master Servicer by the
Servicer and the Interim  Servicers and shall cause the Servicer and the Interim
Servicers to perform and observe the covenants, obligations and conditions to be
performed  or  observed  by the  Servicer  under this  Agreement  or the Interim
Servicers   under  the  Servicing   Agreements.   The  Master   Servicer   shall
independently and separately  monitor the Servicer's and the Interim  Servicers'
servicing  activities with respect to each related Mortgage Loan,  reconcile the
results  of such  monitoring  with such  information  provided  in the  previous
sentence  on a  monthly  basis  and  coordinate  corrective  adjustments  to the
Servicer's or the Interim Servicers' and Master Servicer's records, and based on
such reconciled and corrected  information,  prepare the statements specified in
Section 5.03 and any other information and statements required to be provided by
the Master Servicer  hereunder.  The Master Servicer shall reconcile the results
of its Mortgage Loan monitoring  with the actual  remittances of the Servicer or
the Interim  Servicers to the Distribution  Account pursuant to the terms hereof
based on  information  provided to the Master  Servicer by the  Servicer and the
Interim Servicers.  Notwithstanding  anything to the contrary herein, the Master
Servicer  shall  have  no  obligation  to  supervise,  monitor  or  oversee  the
performance of the Interim Servicers under the Servicing  Agreements on or after
the related Servicing Transfer Date.

       The Trustee shall furnish the Servicer,  the related Interim Servicer and
the Master  Servicer with any limited powers of attorney and other  documents in
form as provided to it  necessary or  appropriate  to enable the  Servicer,  the
related  Interim  Servicer and the Master Servicer to service and administer the
related   Mortgage   Loans  and  REO   Property.   The  Trustee  shall  have  no
responsibility  for any  action of the  Master  Servicer,  the  Servicer  or the
related  Interim  Servicer  pursuant to any such  limited  power of attorney and
shall be indemnified by the Master Servicer, the Servicer or the related Interim
Servicer,  as  applicable,  for any cost,  liability or expense  incurred by the
Trustee in connection with such Person's misuse of any such power of attorney.

       The Trustee, the Custodian and the Securities Administrator shall provide
access to the  records and  documentation  in  possession  of the  Trustee,  the
Custodian or the Securities  Administrator  regarding the related Mortgage Loans
and REO Property and the servicing thereof to the Certificateholders,  the FDIC,
and the supervisory agents and examiners of the FDIC, such


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access being  afforded only upon  reasonable  prior  written  request and during
normal  business  hours at the  office  of the  Trustee,  the  Custodian  or the
Securities Administrator;  provided, however, that, unless otherwise required by
law, none of the Trustee, the Custodian or the Securities Administrator shall be
required to provide  access to such records and  documentation  if the provision
thereof would violate the legal right to privacy of any Mortgagor.  The Trustee,
the Custodian and the Securities  Administrator  shall allow  representatives of
the above entities to photocopy any of the records and  documentation  and shall
provide  equipment for that purpose at a charge that covers the  Trustee's,  the
Custodian's or the Securities Administrator's actual costs.

       The  Trustee  shall  execute  and  deliver to the  Servicer,  the related
Interim  Servicer  or the Master  Servicer  upon  request  any court  pleadings,
requests for trustee's sale or other documents necessary or desirable to (i) the
foreclosure  or trustee's  sale with respect to a Mortgaged  Property;  (ii) any
legal action  brought to obtain  judgment  against any Mortgagor on the Mortgage
Note or any other  Mortgage Loan  Document;  (iii) obtain a deficiency  judgment
against the Mortgagor;  or (iv) enforce any other rights or remedies provided by
the Mortgage Note or any other Mortgage Loan Document or otherwise  available at
law or equity.

       SECTION 4.02.    REMIC-Related Covenants.

       For as long as each REMIC shall  exist,  the  Trustee and the  Securities
Administrator  shall act in accordance  herewith to treat such REMIC as a REMIC,
and  the  Trustee  and  the  Securities  Administrator  shall  comply  with  any
directions of the Seller,  the  Servicer,  the related  Interim  Servicer or the
Master Servicer to assure such continuing treatment. In particular,  the Trustee
shall  not (a) sell or permit  the sale of all or any  portion  of the  Mortgage
Loans or of any  investment  of deposits in an Account  unless such sale is as a
result of a repurchase of the Mortgage  Loans  pursuant to this Agreement or the
Trustee has received a REMIC Opinion  prepared at the expense of the Trust Fund;
and (b) other than with respect to a substitution  pursuant to the Mortgage Loan
Purchase Agreement or Section 2.03 of this Agreement, as applicable,  accept any
contribution  to any REMIC after the Startup Day without receipt of a Opinion of
Counsel stating that such contribution will not result in an Adverse REMIC Event
as defined in Section 11.01(f).

       SECTION 4.03.    Monitoring of Servicer.

       (a)    The  Master  Servicer  shall be  responsible  for  monitoring  the
compliance by the Servicer with their respective duties under this Agreement and
the  Interim   Servicers  with  their  respective  duties  under  the  Servicing
Agreements.  In the review of the Servicer's or the related  Interim  Servicer's
activities,  the Master  Servicer may rely upon an officer's  certificate of the
Servicer or the  related  Interim  Servicer  with  regard to the  Servicer's  or
Interim  Servicer's  compliance  with the terms of this Agreement or the related
Servicing Agreement,  as applicable.  In the event that the Master Servicer,  in
its  judgment,  determines  that the  Servicer or the related  Interim  Servicer
should be  terminated  in  accordance  with the terms hereof or the terms of the
related  Servicing  Agreement  or that a notice  should be sent  pursuant to the
terms hereof or the terms of the related Servicing Agreement with respect to the
occurrence of an event that, unless cured,  would constitute a Servicer Event of
Default,  or an event of default  under the  related  Servicing  Agreement,  the
Master  Servicer shall notify the Servicer,  the related Interim  Servicer,  the
Seller and the Trustee  thereof and the Master  Servicer shall issue such notice
or take such other action as it deems appropriate.


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<PAGE>


       (b)    The  Master  Servicer,  for the  benefit  of the  Trustee  and the
Certificateholders,  shall enforce the  obligations  of the Servicer  under this
Agreement and the Interim Servicers under the Servicing Agreements and shall, in
the event that the Servicer fails to perform its  obligations in accordance with
this  Agreement,  subject to this Section and Article  VIII,  the Trustee  shall
terminate  the rights and  obligations  of the Servicer  hereunder in accordance
with the provisions of Article VIII. In the event that an Interim Servicer fails
to perform its obligations in accordance with the related  Servicing  Agreement,
the Master  Servicer shall  terminate the rights and  obligations of the Interim
Servicer, as servicer, in accordance with the related Servicing Agreement.  Such
enforcement,  including, without limitation, the legal prosecution of claims and
the pursuit of other appropriate remedies, shall be in such form and carried out
to such an extent  and at such time as the  Master  Servicer,  in its good faith
business  judgment,  would  require  were it the owner of the  related  Mortgage
Loans.  The Master  Servicer shall pay the costs of such  enforcement at its own
expense, provided that the Master Servicer shall not be required to prosecute or
defend any legal action except to the extent that the Master Servicer shall have
received  reasonable  indemnity  for its costs and  expenses  in  pursuing  such
action.

       (c)    The Master  Servicer  shall be  entitled to be  reimbursed  by the
Servicer or the related  Interim  Servicer,  as  applicable  (or from amounts on
deposit in the  Distribution  Account if the  Servicer  or the  related  Interim
Servicer is unable to fulfill  its  obligations  hereunder  or under the related
Servicing  Agreement)  for all  reasonable  out-of-pocket  or third  party costs
associated with the transfer of servicing from the  predecessor  Servicer (or if
the predecessor  Servicer is the Master Servicer,  from the Servicer immediately
preceding  the Master  Servicer)  or the  related  Interim  Servicer,  including
without  limitation,  any  reasonable  out-of-pocket  or  third  party  costs or
expenses  associated  with the complete  transfer of all servicing  data and the
completion, correction or manipulation of such servicing data as may be required
by the Master Servicer to correct any errors or insufficiencies in the servicing
data or otherwise to enable the Master Servicer to service the related  Mortgage
Loans properly and effectively, upon presentation of reasonable documentation of
such costs and expenses.

       (d)    The Master  Servicer  shall  require the  Servicer and the Interim
Servicers to comply with the remittance  requirements and other  obligations set
forth in this Agreement and the Servicing Agreements.

       (e)    If the Master  Servicer  acts as  successor  to the Servicer or an
Interim  Servicer,  it will not assume  liability  for the  representations  and
warranties of the terminated Servicer or Interim Servicer.

       SECTION 4.04.    Fidelity Bond.

       The Master Servicer,  at its expense,  shall maintain in effect a blanket
fidelity bond and an errors and omissions  insurance policy,  affording coverage
with respect to all directors,  officers,  employees and other Persons acting on
such  Master  Servicer's  behalf,  and  covering  errors  and  omissions  in the
performance  of the  Master  Servicer's  obligations  hereunder.  The errors and
omissions  insurance  policy  and the  fidelity  bond  shall be in such form and
amount  generally  acceptable  for  entities  serving  as  master  servicers  or
trustees.


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<PAGE>


       SECTION 4.05.    Power to Act; Procedures.

       The Master  Servicer  shall master  service the Mortgage  Loans and shall
have  full  power  and  authority,  subject  to the  REMIC  Provisions  and  the
provisions of Article XI, to do any and all things that it may deem necessary or
desirable in  connection  with the master  servicing and  administration  of the
Mortgage  Loans,  including  but not limited to the power and  authority  (i) to
execute  and  deliver,  on behalf  of the  Certificateholders  and the  Trustee,
customary  consents  or waivers and other  instruments  and  documents,  (ii) to
consent to transfers of any Mortgaged  Property and  assumptions of the Mortgage
Notes and  related  Mortgages,  (iii) to  collect  any  Insurance  Proceeds  and
Liquidation Proceeds,  and (iv) to effectuate foreclosure or other conversion of
the  ownership of the  Mortgaged  Property  securing any Mortgage  Loan, in each
case, in accordance  with the provisions of this Agreement;  provided,  however,
that the Master Servicer shall not (and,  consistent  with its  responsibilities
under  Section  4.03,  shall not  permit the  Servicer  or the  related  Interim
Servicer to)  knowingly or  intentionally  take any action,  or fail to take (or
fail to cause to be taken) any action  reasonably  within  its  control  and the
scope of duties  more  specifically  set  forth  herein,  that,  under the REMIC
Provisions,  if taken or not taken,  as the case may be,  would cause REMIC I or
REMIC II to fail to qualify as a REMIC or result in the imposition of a tax upon
the Trust Fund (including but not limited to the tax on prohibited  transactions
as defined in Section  860F(a)(2) of the Code and the tax on  contributions to a
REMIC set forth in Section  860G(d) of the Code) unless the Master  Servicer has
received an Opinion of Counsel  (but not at the expense of the Master  Servicer)
to the effect that the contemplated action will not cause REMIC I or REMIC II to
fail to qualify as a REMIC or result in the  imposition of a tax upon REMIC I or
REMIC II, as the case may be. The Trustee  shall  furnish  the Master  Servicer,
upon  written  request  from a  Servicing  Officer,  with any powers of attorney
prepared and delivered to it and  reasonably  acceptable to it by empowering the
Master  Servicer,  the Servicer or the related  Interim  Servicer to execute and
deliver  instruments  of  satisfaction  or  cancellation,  or of partial or full
release or discharge,  and to foreclose  upon or otherwise  liquidate  Mortgaged
Property, and to appeal, prosecute or defend in any court action relating to the
Mortgage Loans or the Mortgaged  Property,  in accordance with this Agreement or
the Servicing  Agreements,  and the Trustee shall execute and deliver such other
documents  prepared and delivered to it and reasonably  acceptable to it, as the
Master Servicer,  the Servicer or the related Interim  Servicer may request,  to
enable the Master Servicer to master service and administer the related Mortgage
Loans and carry  out its  duties  hereunder,  in each  case in  accordance  with
Accepted Master Servicing Practices (and the Trustee shall have no liability for
misuse of any such powers of attorney by the Master  Servicer,  the  Servicer or
the related  Interim  Servicer and shall be indemnified by the Master  Servicer,
the  Servicer or the related  Interim  Servicer,  as  applicable,  for any cost,
liability or expense  incurred by the Trustee in  connection  with such Person's
use or misuse of any such  power of  attorney).  If the Master  Servicer  or the
Trustee has been  advised  that it is likely that the laws of the state in which
action is to be taken  prohibit  such action if taken in the name of the Trustee
or that the Trustee would be adversely  affected  under the "doing  business" or
tax laws of such state if such action is taken in its name, the Master  Servicer
shall join with the  Trustee in the  appointment  of a  co-trustee  pursuant  to
Section 9.10. In the  performance of its duties  hereunder,  the Master Servicer
shall be an  independent  contractor  and shall not,  except in those  instances
where it is taking action in the name of the Trustee,  be deemed to be the agent
of the Trustee.


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       SECTION 4.06.    Due-on-Sale Clauses; Assumption Agreements.

       To the extent Mortgage Loans contain enforceable due-on-sale clauses, the
Master  Servicer shall cause the Servicer or the related  Interim  Servicer,  as
applicable,  to enforce such clauses in  accordance  with this  Agreement or the
related  Servicing  Agreement.  If applicable law prohibits the enforcement of a
due-on-sale  clause or such clause is otherwise not enforced in accordance  with
this  Agreement or the related  Servicing  Agreement  and, as a  consequence,  a
Mortgage Loan is assumed,  the original Mortgagor may be released from liability
in accordance with this Agreement or the related Servicing Agreement.

       SECTION  4.07.    Documents, Records and Funds in Possession of Master
                         Servicer To Be Held for Trustee.

       (a)    The Master  Servicer  shall  transmit to the Trustee or  Custodian
such documents and instruments coming into the possession of the Master Servicer
from time to time as are  required by the terms  hereof to be  delivered  to the
Trustee or Custodian.  Any funds  received by the Master  Servicer in respect of
any Mortgage Loan or which  otherwise  are  collected by the Master  Servicer as
Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall
be  remitted to the  Securities  Administrator  for deposit in the  Distribution
Account.  The Master  Servicer  shall,  and,  subject  to  Section  3.20 of this
Agreement or, to the extent provided therein,  the related Servicing  Agreement,
shall cause the Servicer or the related  Interim  Servicer to, provide access to
information and documentation  regarding the Mortgage Loans to the Trustee,  its
agents and  accountants  at any time upon  reasonable  request and during normal
business   hours,   and  to   Certificateholders   that  are  savings  and  loan
associations,  banks or insurance  companies,  the Office of Thrift Supervision,
the FDIC and the supervisory agents and examiners of such Office and Corporation
or  examiners  of any other  federal or state  banking or  insurance  regulatory
authority  if so  required  by  applicable  regulations  of the Office of Thrift
Supervision or other  regulatory  authority,  such access to be afforded without
charge but only upon  reasonable  request in writing and during normal  business
hours at the offices of the Master Servicer designated by it. In fulfilling such
a request the Master  Servicer  shall not be  responsible  for  determining  the
sufficiency of such information.

       (b)    All  Mortgage  Files and funds  collected or held by, or under the
control of, the Master Servicer,  in respect of any Mortgage Loans, whether from
the collection of principal and interest  payments or from Liquidation  Proceeds
or  Insurance  Proceeds,  shall be  remitted  to the  Trustee for deposit in the
Distribution Account.

       SECTION 4.08.    Standard Hazard Insurance and Flood Insurance Policies.

       For each Mortgage Loan, the Master  Servicer shall enforce the obligation
of the  Servicer  under  this  Agreement  or each  Interim  Servicer  under  the
Servicing  Agreements  to maintain or cause to be  maintained  standard fire and
casualty  insurance and, where  applicable,  flood insurance,  all in accordance
with  the  provisions  of this  Agreement  or the  Servicing  Agreements.  It is
understood  and agreed that such  insurance  shall be with insurers  meeting the
eligibility  requirements  set forth in  Section  3.11 of the  Agreement  or the
eligibility  requirements  set  forth in the  Servicing  Agreements  and that no
earthquake or other  additional  insurance is to be required of any Mortgagor or
to be maintained on property acquired in respect of a defaulted loan, other than
pursuant  to such  applicable  laws and  regulations  as shall at any time be in
force and as shall require such additional insurance.


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       SECTION 4.09.    Presentment of Claims and Collection of Proceeds.

       The Master Servicer shall enforce the Servicer's  obligations  under this
Agreement or each Interim Servicer's  obligations under the Servicing Agreements
to prepare and present on behalf of the Trustee and the  Certificateholders  all
claims  under the  Insurance  Policies  and take  such  actions  (including  the
negotiation,  settlement,  compromise or enforcement of the insured's  claim) as
shall be  necessary  to realize  recovery  under  such  policies.  Any  proceeds
disbursed to the Master Servicer in respect of such policies, bonds or contracts
shall be  promptly  remitted  to the  Trustee  for  deposit in the  Distribution
Account upon receipt, except that any amounts realized that are to be applied to
the repair or  restoration  of the  related  Mortgaged  Property  as a condition
precedent  to the  presentation  of claims on the related  Mortgage  Loan to the
insurer under any applicable insurance policy need not be so or remitted.

       SECTION 4.10.    Maintenance of Primary Mortgage Insurance Policies.

       (a)    The Master  Servicer shall not take, or permit the Servicer or the
related  Interim  Servicer to take (to the extent such action is  prohibited  by
this Agreement or the related Servicing Agreement), any action that would result
in noncoverage  under any primary  mortgage  insurance policy of any loss which,
but for the actions of the Master Servicer,  the Servicer or the related Interim
Servicer, as applicable, would have been covered thereunder. The Master Servicer
shall use its best  reasonable  efforts  to cause the  Servicer  or the  related
Interim  Servicer to keep in force and effect (to the extent  that the  Mortgage
Loan  requires  the  Mortgagor to maintain  such  insurance),  primary  mortgage
insurance  applicable to each Mortgage Loan in accordance with the provisions of
this Agreement or the related  Servicing  Agreement.  The Master  Servicer shall
not,  and shall not permit the  Servicer or the  related  Interim  Servicer  to,
cancel or  refuse to renew any  primary  mortgage  insurance  policy  that is in
effect at the date of the initial  issuance of the Mortgage Note and is required
to be kept in force  hereunder  except in accordance with the provisions of this
Agreement or the related Servicing Agreement.

       (b)    The Master  Servicer  agrees to cause the  Servicer or the related
Interim   Servicer   to   present,   on   behalf   of  the   Trustee   and   the
Certificateholders,  claims to the insurer under any primary mortgage  insurance
policies  and,  in this  regard,  to take  such  reasonable  action  as shall be
necessary  to permit  recovery  under any primary  mortgage  insurance  policies
respecting defaulted Mortgage Loans.

       SECTION 4.11.    Trustee to Retain Possession of Certain Insurance
                        Policies and Documents.

       The Trustee or the  applicable  Custodian,  shall retain  possession  and
custody of the  originals  (to the extent  available)  of any  primary  mortgage
insurance  policies,  or  certificate  of  insurance  if  applicable,   and  any
certificates  of renewal as to the  foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the  Certificates  have been distributed in full and the Master Servicer and the
Servicer  and the  related  Interim  Servicer  have  otherwise  fulfilled  their
respective  obligations under this Agreement and the related Servicing Agreement
the Trustee or the Custodian  shall also retain  possession  and custody of each
Mortgage File in accordance with and subject to the terms and conditions of this
Agreement  and the  Custodial  Agreement.  The Master  Servicer  shall  promptly
deliver  or cause to be  delivered  to the  Trustee or the  Custodian,  upon the
execution or receipt  thereof the  originals of any primary  mortgage  insurance
policies,  any certificates of renewal,  and


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<PAGE>


such other documents or instruments that constitute Mortgage Loan Documents that
come into the possession of the Master Servicer from time to time.

       SECTION 4.12.    Realization Upon Defaulted Mortgage Loans.

       The Master  Servicer  shall cause the  Servicer  or the  related  Interim
Servicer to  foreclose  upon,  repossess  or  otherwise  comparably  convert the
ownership of Mortgaged  Properties  securing such of the Mortgage  Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made  for  collection  of  delinquent  payments,  all in  accordance  with  this
Agreement or the related Servicing Agreement.

       SECTION 4.13.    Compensation for the Master Servicer.

       As compensation for the activities of the Master Servicer hereunder,  the
Master  Servicer  shall be entitled to the Master  Servicing  Fee and the income
from  investment  of or  earnings  on  the  funds  from  time  to  time  in  the
Distribution  Account,  as provided in Section  3.10.  The Master  Servicing Fee
payable to the Master  Servicer  in  respect of any  Distribution  Date shall be
reduced in accordance  with Section 4.18. The Master  Servicer shall be required
to pay all expenses  incurred by it in connection with its activities  hereunder
and shall not be entitled to  reimbursement  therefor except as provided in this
Agreement.

       SECTION 4.14.    REO Property.

       (a)    In the event the Trust Fund acquires ownership of any REO Property
in respect of any related  Mortgage  Loan, the deed or certificate of sale shall
be  issued  to the  Trustee,  or to  its  nominee,  on  behalf  of  the  related
Certificateholders.  The Master Servicer shall cause the Servicer or the related
Interim  Servicer to sell, any REO Property as  expeditiously as possible and in
accordance  with the  provisions  of this  Agreement  or the  related  Servicing
Agreement.  Further, the Master Servicer shall cause the Servicer or the related
Interim  Servicer to sell any REO Property prior to three years after the end of
the calendar  year of its  acquisition  by REMIC I unless (i) the Trustee  shall
have been  supplied  by the  Servicer or the related  Interim  Servicer  with an
Opinion of Counsel to the effect  that the holding by the Trust Fund of such REO
Property  subsequent to such three-year period will not result in the imposition
of taxes on  "prohibited  transactions"  of any REMIC  hereunder  as  defined in
section  860F of the Code or cause any REMIC  hereunder  to fail to qualify as a
REMIC at any time that any Certificates are outstanding, in which case the Trust
Fund may continue to hold such  Mortgaged  Property  (subject to any  conditions
contained  in such  Opinion of  Counsel)  or (ii) the  Servicer  or the  related
Interim  Servicer  shall  have  applied  for,  prior to the  expiration  of such
three-year  period,  an  extension  of  such  three-year  period  in the  manner
contemplated  by Section  856(e)(3)  of the Code,  in which case the  three-year
period shall be extended by the applicable extension period. The Master Servicer
shall  cause the  Servicer  or the  related  Interim  Servicer  to  protect  and
conserve,  such REO  Property  in the manner and to the extent  required by this
Agreement  or the  related  Servicing  Agreement  in  accordance  with the REMIC
Provisions  and in a manner  that does not result in a tax on "net  income  from
foreclosure  property"  or  cause  such  REO  Property  to  fail to  qualify  as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code.

       (b)    The  Master  Servicer  shall  cause the  Servicer  or the  related
Interim  Servicer to deposit all funds collected and received in connection with
the operation of any REO


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Property in the REO Account or in the account  delegated  for such amounts under
the related Servicing Agreement.

       SECTION 4.15.    Annual Officer's Certificate as to Compliance.

       (a)    The Master  Servicer  shall  deliver to the Trustee and the Rating
Agencies on or before March 15 of each year,  commencing  on March 15, 2006,  an
Officer's  Certificate,  certifying  that  with  respect  to the  period  ending
December 31 of the prior year:  (i) such  Servicing  Officer  has  reviewed  the
activities of such Master Servicer during the preceding calendar year or portion
thereof  and its  performance  under  this  Agreement,  (ii) to the best of such
Servicing  Officer's  knowledge,  based on such review, such Master Servicer has
performed and fulfilled its duties,  responsibilities and obligations under this
Agreement in all material respects throughout such year, or, if there has been a
default in the fulfillment of any such duties,  responsibilities or obligations,
specifying each such default known to such Servicing  Officer and the nature and
status  thereof,  (iii)  nothing  has come to the  attention  of such  Servicing
Officer to lead such Servicing  Officer to believe that the Master  Servicer has
failed to perform any of its duties, responsibilities and obligations under this
Agreement in all material respects throughout such year, or, if there has been a
material  default  in  the  performance  or  fulfillment  of  any  such  duties,
responsibilities  or  obligations,  specifying  each such default  known to such
Servicing Officer and the nature and status thereof.

       (b)    Copies   of   such   statements   shall   be   provided   to   any
Certificateholder  upon request, by the Master Servicer or by the Trustee at the
Master  Servicer's  expense if the Master Servicer failed to provide such copies
(unless (i) the Master  Servicer  shall have failed to provide the Trustee  with
such  statement  or (ii) the Trustee  shall be unaware of the Master  Servicer's
failure to provide such statement).

       SECTION 4.16.    Annual Independent Accountant's Servicing Report.

       If the Master  Servicer  has,  during the  course of any  calendar  year,
directly  serviced any of the Mortgage  Loans,  then the Master  Servicer at its
expense shall cause a nationally recognized firm of independent certified public
accountants to furnish a statement to the Trustee,  the Rating  Agencies and the
Seller on or before March 15 of each year,  commencing  on March 15, 2006 to the
effect that,  with respect to the most recently ended fiscal year, such firm has
examined  certain  records  and  documents  relating  to the  Master  Servicer's
performance  of its servicing  obligations  under this Agreement and pooling and
servicing and trust  agreements in material  respects  similar to this Agreement
and to  each  other  and  that,  on the  basis  of  such  examination  conducted
substantially  in compliance  with the audit program for mortgages  serviced for
Freddie Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance  with this  Agreement,  or that such  examination has disclosed no
material  items of  noncompliance  except for (i) such  exceptions  as such firm
believes to be immaterial,  (ii) such other  exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation  Program
for Mortgage Bankers or the Audit Program for Mortgages  Serviced by Freddie Mac
requires  it to  report.  Copies of such  statements  shall be  provided  to any
Certificateholder  upon request by the Master Servicer, or by the Trustee at the
expense of the Master Servicer if the Master Servicer shall fail to provide such
copies (unless (i) the Master  Servicer shall have failed to provide the Trustee
with  such  statement  or (ii)  the  Trustee  shall  be  unaware  of the  Master


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Servicer's  failure  to  provide  such  statement).  If  such  report  discloses
exceptions  that are  material,  the Master  Servicer  shall  advise the Trustee
whether such  exceptions  have been or are  susceptible  of cure,  and will take
prompt action to do so.

       SECTION 4.17.    UCC.

       The  Depositor  agrees to file  continuation  statements  for any Uniform
Commercial Code financing statements which the Seller has informed the Depositor
were filed on the Closing Date in connection with the Trust. The Depositor shall
file any financing  statements or amendments  thereto  required by any change in
the Uniform Commercial Code.

       SECTION 4.18.    Obligation of the Master Servicer in Respect of
                        Prepayment Interest Shortfalls.

       In the event of any Prepayment Interest  Shortfalls,  the Master Servicer
shall  deposit  into  the  Distribution  Account  not  later  than  the  related
Distribution  Date an amount  equal to the lesser of (i) the  aggregate  amounts
required to be paid by the Servicer or the related Interim Servicer with respect
to Prepayment Interest Shortfalls  attributable to Principal Prepayments in full
on the Mortgage Loans for the related  Distribution Date, and not so paid by the
Servicer or the related  Interim  Servicer and (ii) the aggregate  amount of the
Master Servicing Fee payable to the Master Servicer for such  Distribution  Date
in accordance with Secction 4.13, without reimbursement therefor.

       SECTION 4.19.    Prepayment Penalty Verification.

       On or prior to each Servicer  Remittance Date, the Servicer shall provide
in an electronic format acceptable to the Master Servicer the data necessary for
the Master Servicer to perform its verification duties set forth in this Section
4.19. The Master Servicer or a third party  reasonably  acceptable to the Master
Servicer  and  the  Depositor  (the  "Verification  Agent")  will  perform  such
verification  duties and will use its best  efforts to issue its  findings  in a
report (the  "Verification  Report")  delivered  to the Master  Servicer and the
Depositor within ten (10) Business Days following the related Distribution Date;
provided,  however,  that if the  Verification  Agent is  unable  to  issue  the
Verification  Report within ten (10) Business  Days  following the  Distribution
Date, the  Verification  Agent may issue and deliver to the Master  Servicer and
the Depositor the  Verification  Report upon the completion of its  verification
duties.  The  Master  Servicer  shall  forward  the  Verification  Report to the
Servicer  and shall notify the  Servicer if the Master  Servicer has  determined
that the  Servicer  did not deliver  the  appropriate  Prepayment  Charge to the
Securities  Administrator  in  accordance  with  this  Agreement.  Such  written
notification from the Master Servicer shall include the loan number,  prepayment
penalty code and prepayment  penalty amount as calculated by the Master Servicer
or the Verification Agent, as applicable,  of each Mortgage Loan for which there
is a discrepancy. If the Servicer agrees with the verified amounts, the Servicer
shall adjust the immediately  succeeding Servicer Report and the amount remitted
to the  Trustee  with  respect  to  prepayments  accordingly.  If  the  Servicer
disagrees with the  determination  of the Master  Servicer,  the Servicer shall,
within five (5) Business Days of its receipt of the Verification Report,  notify
the Master  Servicer of such  disagreement  and provide the Master Servicer with
detailed  information  to support  its  position.  The  Servicer  and the Master
Servicer  shall  cooperate  to  resolve  any  discrepancy  on or  prior  to  the
immediately  succeeding Servicer Remittance Date, and the Servicer will indicate
the effect of


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<PAGE>


such  resolution  on the  related  Servicer  Report and shall  adjust the amount
remitted  with  respect  to  prepayments  on  such  Servicer   Remittance   Date
accordingly.

       During such time as the  Servicer and the Master  Servicer are  resolving
discrepancies with respect to the Prepayment  Charges, no payments in respect of
any disputed Prepayment Charges will be remitted to the Securities Administrator
for deposit in the  Distribution  Account and the Master  Servicer  shall not be
obligated  to deposit  such  payments,  unless  otherwise  required  pursuant to
Section 8.01 hereof.  In connection with such duties,  the Master Servicer shall
be able to rely  solely on the  information  provided  to it by the  Servicer in
accordance  with this Section.  The Master Servicer shall not be responsible for
verifying the accuracy of any of the information provided to it by the Servicer.


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                                   ARTICLE V

                         PAYMENTS TO CERTIFICATEHOLDERS

       SECTION 5.01.    Distributions.

       (a)    (1) On each  Distribution  Date,  the  following  amounts,  in the
following  order of  priority,  shall be  distributed  by REMIC I to REMIC II on
account of the REMIC I Regular  Interests  or  withdrawn  from the  Distribution
Account and distributed to the holders of the Class R  Certificates,  in respect
of the Class R-I Interest, as the case may be:

              (i)    to  Holders  of REMIC I Regular  Interest  I-LTAA,  REMIC I
       Regular  Interest  I-LTA1A,  REMIC I Regular  Interest  I-LTA1B,  REMIC I
       Regular  Interest  I-LTA2A,  REMIC I Regular  Interest  I-LTA2B,  REMIC I
       Regular  Interest  I-LTA2C,  REMIC I  Regular  Interest  I-LTM1,  REMIC I
       Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular
       Interest  I-LTM4,  REMIC I  Regular  Interest  I-LTM5,  REMIC  I  Regular
       Interest  I-LTM6,  REMIC I  Regular  Interest  I-LTM7,  REMIC  I  Regular
       Interest  I-LTM8,  REMIC I  Regular  Interest  I-LTM9,  REMIC  I  Regular
       Interest  I-LTB1,  REMIC I  Regular  Interest  I-LTB2,  REMIC  I  Regular
       Interest  I-LTB3,  REMIC I Regular  Interest  I-LTZZ  and REMIC I Regular
       Interest  I-LTP,  PRO RATA, in an amount equal to (A) the  Uncertificated
       Interest  for such  Distribution  Date,  plus (B) any  amounts in respect
       thereof  remaining  unpaid  from  previous  Distribution  Dates.  Amounts
       payable as Uncertificated Interest in respect of REMIC I Regular Interest
       I-LTZZ shall be reduced when the REMIC I Overcollateralization  Amount is
       less  than the  REMIC I  Required  Overcollateralization  Amount,  by the
       lesser of (x) the amount of such  difference  and (y) the Maximum  I-LTZZ
       Uncertificated  Interest  Deferral Amount and such amount will be payable
       to the  Holders  of REMIC I  Regular  Interest  I-LTA1A,  REMIC I Regular
       Interest  I-LTA1B,  REMIC I  Regular  Interest  I-LTA2A,  REMIC I Regular
       Interest  I-LTA2B,  REMIC I  Regular  Interest  I-LTA2C,  REMIC I Regular
       Interest  I-LTM1,  REMIC I  Regular  Interest  I-LTM2,  REMIC  I  Regular
       Interest  I-LTM3,  REMIC I  Regular  Interest  I-LTM4,  REMIC  I  Regular
       Interest  I-LTM5,  REMIC I  Regular  Interest  I-LTM6,  REMIC  I  Regular
       Interest  I-LTM7,  REMIC I  Regular  Interest  I-LTM8,  REMIC  I  Regular
       Interest  I-LTM9,  REMIC I  Regular  Interest  I-LTB1,  REMIC  I  Regular
       Interest  I-LTB2  and  REMIC  I  Regular  Interest  I-LTB3  in  the  same
       proportion as the  Overcollateralization  Increase Amount is allocated to
       the Corresponding  Certificates and the Uncertificated Balance of REMIC I
       Regular Interest I-LTZZ shall be increased by such amount;

              (ii)   to Holders of REMIC I Regular  Interest  I-LT1SUB,  REMIC I
       Regular Interest  I-LT1GRP,  REMIC I Regular Interest  I-LT2SUB,  REMIC I
       Regular Interest I-LT2GRP, and REMIC I Regular Interest I-LTXX, PRO RATA,
       in  an  amount  equal  to  (A)  the  Uncertificated   Interest  for  such
       Distribution  Date,  plus (B) any  amounts in respect  thereof  remaining
       unpaid from previous Distribution Dates;

              (iii)  to the Holders of REMIC I Regular  Interests,  in an amount
       equal to the remainder of the REMIC I Marker Allocation Percentage of the
       available funds for such Distribution  Date after the distributions  made
       pursuant to clause (i) above, allocated as follows:


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<PAGE>


                     (A)    98.00% of such  remainder  to the Holders of REMIC I
              Regular Interest I-LTAA, until the Uncertificated  Balance of such
              Uncertificated REMIC I Regular Interest is reduced to zero;

                     (B)    2.00% of such  remainder,  first,  to the Holders of
              REMIC  I  Regular  Interest  I-LTA1A,  REMIC  I  Regular  Interest
              I-LTA1B,  REMIC  I  Regular  Interest  I-LTA2A,  REMIC  I  Regular
              Interest  I-LTA2B,  REMIC  I  Regular  Interest  I-LTA2C,  REMIC I
              Regular Interest I-LTM1,  REMIC I Regular Interest I-LTM2, REMIC I
              Regular Interest I-LTM3,  REMIC I Regular Interest I-LTM4, REMIC I
              Regular Interest I-LTM5,  REMIC I Regular Interest I-LTM6, REMIC I
              Regular Interest I-LTM7,  REMIC I Regular Interest I-LTM8, REMIC I
              Regular Interest I-LTM9,  REMIC I Regular Interest I-LTB1, REMIC I
              Regular Interest I-LTB2 and REMIC I Regular Interest I-LTB3, 1% of
              and in the same proportion as principal  payments are allocated to
              the Corresponding Certificates,  until the Uncertificated Balances
              of such REMIC I Regular  Interests  are reduced to zero and second
              to the  Holders  of REMIC I  Regular  Interest  I-LTZZ,  until the
              Uncertificated Balance of such REMIC I Regular Interest is reduced
              to zero;

                     (C)    to the  Holders of REMIC I Regular  Interest  I-LTP,
              all Prepayment  Charges and on the  Distribution  Date immediately
              following  the  expiration  of the  latest  Prepayment  Charge  as
              identified on the Prepayment  Charge Schedule or any  Distribution
              Date thereafter until $100 has been  distributed  pursuant to this
              clause; then

                     (D)    any remaining amount to the Holders of the Class R-I
              Interest, in respect of the Class R-I Interest;

provided,  however,  that 98.00% and 2.00% of any  principal  payments  that are
attributable to an Overcollateralization  Reduction Amount shall be allocated to
Holders of REMIC I Regular  Interest I-LTAA and REMIC I Regular Interest I-LTZZ,
respectively.

              (iv)   to the Holders of REMIC I Regular  Interests,  in an amount
       equal to the  remainder of the REMIC I Sub WAC  Allocation  Percentage of
       available funds for such Distribution  Date after the distributions  made
       pursuant to clause (ii) above,  such that  distributions  of interest are
       deemed to be made to the  Holders of REMIC I Regular  Interest  I-LTISUB,
       REMIC I Regular Interest  I-LT1GRP,  REMIC I Regular  Interest  I-LT2SUB,
       REMIC I Regular  Interest  I-LT2GRP and REMIC I Regular  Interest I-LTXX,
       pro rata, in an amount equal to (A) the Uncertificated  Interest for each
       such REMIC I Regular  Interest for such  Distribution  Date, plus (B) any
       amounts in respect thereof  remaining  unpaid from previous  Distribution
       Dates and such that distributions of principal shall be deemed to be made
       to the REMIC I Regular Interests first, so as to keep the  Uncertificated
       Balance  of each REMIC I Regular  Interest  ending  with the  designation
       "GRP" equal to 0.01% of the  aggregate  Stated  Principal  Balance of the
       Mortgage Loans in the related Loan Group; second, to each REMIC I Regular
       Interest  ending with the designation  "SUB," so that the  Uncertificated
       Balance  of each such REMIC I Regular  Interest  is equal to 0.01% of the
       excess of (x) the  aggregate  Stated  Principal  Balance of the  Mortgage
       Loans  in the  related  Loan  Group  over  (y)  the  current  Certificate
       Principal  Balance of the Class A  Certificate  in the related Loan Group
       (except that if any such


                                      113
<PAGE>


       excess is a larger number than in the preceding  distribution period, the
       least amount of principal  shall be  distributed  to such REMIC I Regular
       Interests   such  that  the  REMIC  I   Subordinated   Balance  Ratio  is
       maintained);  and  third,  any  remaining  principal  to REMIC I  Regular
       Interest I-LTXX.

              (v)    Notwithstanding  the  distributions  described  in  Section
       5.01(a)(1),  distributions  of funds shall be made to  Certificateholders
       only in accordance with Section 5.01(2) through (7) and Section 5.01(b).

       (2)    On each  Distribution  Date,  the Securities  Administrator  shall
withdraw  from the  Distribution  Account to the  extent on  deposit  therein an
amount equal to the Group I Interest  Remittance  Amount and make the  following
disbursements  and transfers in the order of priority  described  below, in each
case to the extent of the Group I Interest  Remittance Amount remaining for such
Distribution Date:

       FIRST,  concurrently,  to the Holders of the Class A-1A  Certificates and
       Class  A-1B  Certificates,   the  Senior  Interest   Distribution  Amount
       allocable  to  each  such  Class,  on a pro  rata  basis,  based  on  the
       entitlement of each such Class; and

       SECOND,  concurrently,  to the Holders of the Class A-2A,  Class A-2B and
       Class  A-2C  Certificates,   the  Senior  Interest   Distribution  Amount
       allocable to each such Class,  to the extent  remaining  unpaid after the
       distribution of the Group II Interest  Remittance  Amount as set forth in
       Section 5.01(a)(3) below on a pro rata basis, based on the entitlement of
       each such Class.

       (3)    On each  Distribution  Date,  the Securities  Administrator  shall
withdraw  from the  Distribution  Account to the  extent on  deposit  therein an
amount equal to the Group II Interest  Remittance  Amount and make the following
disbursements  and transfers in the order of priority  described  below, in each
case to the extent of the Group II Interest Remittance Amount remaining for such
Distribution Date:

       FIRST,  concurrently,  to the Holders of the Class  A-2A,  Class A-2B and
       Class  A-2C  Certificates,   the  Senior  Interest   Distribution  Amount
       allocable  to  each  such  Class,  on a pro  rata  basis,  based  on  the
       entitlement of each such Class; and

       SECOND,  concurrently,  to the Holders of the Class A-1A Certificates and
       Class  A-1B  Certificates,   the  Senior  Interest   Distribution  Amount
       allocable to each such Class,  to the extent  remaining  unpaid after the
       distribution  of the Group I Interest  Remittance  Amount as set forth in
       Section 5.01(a)(2) above on a pro rata basis, based on the entitlement of
       each such Class.

       (4)    On each  Distribution  Date,  the Securities  Administrator  shall
withdraw  from the  Distribution  Account to the  extent on  deposit  therein an
amount  equal  to the  Group I  Interest  Remittance  Amount,  and the  Group II
Interest Remittance Amount remaining after the distributions required by clauses
(2) and (3) above and make the  following  disbursements  and  transfers  in the
order of  priority  described  below,  in each case to the extent of the Group I
Interest Remittance Amount and Group II Interest Remittance Amount remaining for
such Distribution Date:


                                      114
<PAGE>


                  sequentially,  to the  Holders  of the Class  M-1,  Class M-2,
                  Class M-3,  Class M-4,  Class M-5, Class M-6, Class M-7, Class
                  M-8,   Class  M-9,   Class  B-1,   Class  B-2  and  Class  B-3
                  Certificates,  in that order, the Interest Distribution Amount
                  allocable to each such Class.

       (5)    On each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event is in effect, the Securities  Administrator shall withdraw
from the  Distribution  Account to the extent on deposit therein an amount equal
to the  Group I  Principal  Distribution  Amount  and  the  Group  II  Principal
Distribution  Amount and  distribute  to the  Certificateholders  the  following
amounts, in the following order of priority:

              (vi)   The  Group  I  Principal   Distribution   Amount  shall  be
       distributed in the following order of priority:

              FIRST,  to the  Holders of the Class A-1A  Certificates  and Class
              A-1B Certificates as follows:

              (A) for each Distribution Date on which a Sequential Trigger Event
              is not in effect for such Distribution Date, concurrently,  to the
              Holders   of  the  Class   A-1A   Certificates   and  Class   A-1B
              Certificates,  on a pro  rata  basis,  based  on  the  Certificate
              Principal  Balance  of each  such  Class,  until  the  Certificate
              Principal Balance of each such Class has been reduced to zero; and

              (B) for each Distribution Date on which a Sequential Trigger Event
              is in effect  for such  Distribution  Date,  sequentially,  to the
              Holders   of  the  Class   A-1A   Certificates   and  Class   A-1B
              Certificates,  in that  order,  until  the  Certificate  Principal
              Balance of each such Class has been reduced to zero;

              SECOND, sequentially, to the Holders of the Class A-2A, Class A-2B
              and Class A-2C  Certificates,  in that  order,  after  taking into
              account the  distribution  of the Group II Principal  Distribution
              Amount as described  in Section  5.01(a)(5)(ii)  below,  until the
              Certificate  Principal Balance of each such Class has been reduced
              to zero.

              (vii)  The  Group  II  Principal   Distribution  Amount  shall  be
       distributed in the following order of priority:

              FIRST, sequentially,  to the Holders of the Class A-2A, Class A-2B
              and Class A-2C Certificates,  in that order, until the Certificate
              Principal Balance of each such Class has been reduced to zero; and

              SECOND,  to the Holders of the Class A-1A  Certificates  and Class
              A-1B  Certificates  after taking into account the  distribution of
              the Group I Principal  Distribution  Amount as described  above in
              Section 5.01(a)(5)(i) above as follows:

              (A) for each Distribution Date on which a Sequential Trigger Event
              is not in effect for such Distribution Date, concurrently,  to the
              Holders   of  the  Class   A-1A   Certificates   and  Class   A-1B
              Certificates,  on a pro  rata  basis,  based  on  the


                                      115
<PAGE>


              Certificate  Principal  Balance  of each  such  Class,  until  the
              Certificate  Principal Balance of each such class has been reduced
              to zero; and

              (B) for each Distribution Date on which a Sequential Trigger Event
              is in effect  for such  Distribution  Date,  sequentially,  to the
              Holders   of  the  Class   A-1A   Certificates   and  Class   A-1B
              Certificates,  in that  order,  until  the  Certificate  Principal
              Balance of each such Class has been reduced to zero.

              (viii) The  Group I  Principal  Distribution  Amount  and Group II
       Principal  Distribution Amount remaining after distributions  pursuant to
       Sections  5.01(a)(5)(i)  and  (ii)  above  shall  be  distributed  in the
       following order of priority:

              sequentially,  to the Holders of the Class M-1,  Class M-2,  Class
              M-3,  Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class
              M-9,  Class  B-1,  Class B-2 and Class B-3  Certificates,  in that
              order, until the Certificate  Principal Balance of each such Class
              has been reduced to zero.

       (6)    On each  Distribution  Date (a) on or after the Stepdown  Date and
(b) on which a Trigger  Event is not in  effect,  the  Securities  Administrator
shall withdraw from the Distribution Account to the extent on deposit therein an
amount  equal to the  Group I  Principal  Distribution  Amount  and the Group II
Principal  Distribution  Amount and  distribute  to the  Certificateholders  the
following amounts, in the following order of priority:

              (ix)   The  Group  I  Principal   Distribution   Amount  shall  be
       distributed in the following order of priority:

       FIRST,  concurrenty,  to the Holders of the Class A-1A  Certificates  and
       Class A-1B Certificates,  the Class A-1 Principal Distribution Amount, on
       a pro rata basis, based on the Certificate Principal Balance of each such
       Class,  until the  Certificate  Principal  Balance of each such Class has
       been reduced to zero; and

       SECOND,  sequentially,  to the Holders of the Class A-2A,  Class A-2B and
       Class A-2C  Certificates,  in that order,  after  taking into account the
       distribution  of the Group II Principal  Distribution  Amount pursuant to
       Section  5.01(a)(6)(ii)  below,  up to an amount equal to the amount,  if
       any, of the Class A-2 Principal  Distribution  Amount remaining unpaid on
       such Distribution  Date, until the Certificate  Principal Balance of each
       such Class has been reduced to zero.

              (x)    The  Group  II  Principal   Distribution  Amount  shall  be
       distributed in the following order of priority:

       FIRST,  sequentially,  to the Holders of the Class  A-2A,  Class A-2B and
       Class  A-2C  Certificates,   in  that  order,  the  Class  A-2  Principal
       Distribution Amount, until the Certificate Principal Balance of each such
       Class has been reduced to zero; and

       SECOND,  concurrently,  to the Holders of the Class A-1A Certificates and
       Class A-1B  Certificates,  after taking into account the  distribution of
       the  Group  I   Principal   Distribution   Amount   pursuant  to  Section
       5.01(a)(6)(i)  above, up to an amount


                                      116
<PAGE>


       equal to the  amount,  if any,  of the Class A-1  Principal  Distribution
       Amount remaining unpaid on such Distribution  Date, until the Certificate
       Principal Balance of each such Class has been reduced to zero.

              (xi)   The   Principal   Distribution   Amount   remaining   after
       distributions  pursuant to Sections 5.01(a)(6)(i) and (ii) above shall be
       distributed in the following order of priority:

              FIRST, to the Holders of the Class M-1 Certificates, the lesser of
              (x) the remaining Principal  Distribution Amount and (y) the Class
              M-1 Principal Distribution Amount, until the Certificate Principal
              Balance of the Class M-1 Certificates has been reduced to zero;

              SECOND, to the Holders of the Class M-2  Certificates,  the lesser
              of (x) the  excess  of (i) the  remaining  Principal  Distribution
              Amount  over (ii) the  amounts  distributed  to the Holders of the
              Class M-1 Certificates under clause first above, and (y) the Class
              M-2 Principal Distribution Amount, until the Certificate Principal
              Balance of the Class M-2 Certificates has been reduced to zero;

              THIRD, to the Holders of the Class M-3 Certificates, the lesser of
              (x) the excess of (i) the remaining Principal  Distribution Amount
              over (ii) the sum of the amounts distributed to the Holders of the
              Class M-1 Certificates under clause first above and to the Holders
              of the Class M-2  Certificates  under clause second above, and (y)
              the Class M-3 Principal Distribution Amount, until the Certificate
              Principal  Balance of the Class M-3  Certificates has been reduced
              to zero;

              FOURTH, to the Holders of the Class M-4  Certificates,  the lesser
              of (x) the  excess  of (i) the  remaining  Principal  Distribution
              Amount over (ii) the sum of the amounts distributed to the Holders
              of the Class M-1  Certificates  under clause  first above,  to the
              Holders of the Class M-2  Certificates  under clause  second above
              and to the  Holders  of the Class M-3  Certificates  under  clause
              third above, and (y) the Class M-4 Principal  Distribution Amount,
              until  the  Certificate   Principal   Balance  of  the  Class  M-4
              Certificates has been reduced to zero;

              FIFTH, to the Holders of the Class M-5 Certificates, the lesser of
              (x) the excess of (i) the remaining Principal  Distribution Amount
              over (ii) the sum of the amounts distributed to the Holders of the
              Class M-1 Certificates under clause first above, to the Holders of
              the Class M-2  Certificates  under  clause  second  above,  to the
              Holders of the Class M-3 Certificates under clause third above and
              to the Holders of the Class M-4  Certificates  under clause fourth
              above, and (y) the Class M-5 Principal  Distribution Amount, until
              the Certificate  Principal  Balance of the Class M-5  Certificates
              has been reduced to zero;

              SIXTH, to the Holders of the Class M-6 Certificates, the lesser of
              (x) the excess of (i) the remaining Principal  Distribution Amount
              over (ii) the sum of the amounts distributed to the Holders of the
              Class M-1 Certificates under clause first above, to the Holders of
              the Class M 2  Certificates  under  clause  second  above,  to the
              Holders of the Class M-3 Certificates under clause third above, to
              the  Holders of the Class M-4  Certificates  under  clause  fourth
              above  and to the  Holders  of the


                                      117
<PAGE>


              Class M-5 Certificates under clause fifth above, and (y) the Class
              M-6 Principal Distribution Amount, until the Certificate Principal
              Balance of the Class M-6 Certificates has been reduced to zero;

              SEVENTH, to the Holders of the Class M-7 Certificates,  the lesser
              of (x) the  excess  of (i) the  remaining  Principal  Distribution
              Amount over (ii) the sum of the amounts distributed to the Holders
              of the Class M-1  Certificates  under clause  first above,  to the
              Holders of the Class M 2  Certificates  under clause second above,
              to the Holders of the Class M-3  Certificates  under  clause third
              above, to the Holders of the Class M-4  Certificates  under clause
              fourth above, to the Holders of the Class M-5  Certificates  under
              clause   fifth   above  and  to  the  Holders  of  the  Class  M-6
              Certificates  under  clause  sixth  above,  and (y) the  Class M-7
              Principal  Distribution  Amount,  until the Certificate  Principal
              Balance of the Class M-7 Certificates has been reduced to zero;

              EIGHTH, to the Holders of the Class M-8  Certificates,  the lesser
              of (x) the  excess  of (i) the  remaining  Principal  Distribution
              Amount over (ii) the sum of the amounts distributed to the Holders
              of the Class M-1  Certificates  under clause  first above,  to the
              Holders of the Class M 2  Certificates  under clause second above,
              to the Holders of the Class M-3  Certificates  under  clause third
              above, to the Holders of the Class M-4  Certificates  under clause
              fourth above, to the Holders of the Class M-5  Certificates  under
              clause fifth above,  to the Holders of the Class M-6  Certificates
              under  clause  sixth  above  and to the  Holders  of the Class M-7
              Certificates  under clause  seventh  above,  and (y) the Class M-8
              Principal  Distribution  Amount,  until the Certificate  Principal
              Balance of the Class M-8 Certificates has been reduced to zero;

              NINTH, to the Holders of the Class M-9 Certificates, the lesser of
              (x) the excess of (i) the remaining Principal  Distribution Amount
              over (ii) the sum of the amounts distributed to the Holders of the
              Class M-1 Certificates under clause first above, to the Holders of
              the Class M 2  Certificates  under  clause  second  above,  to the
              Holders of the Class M-3 Certificates under clause third above, to
              the  Holders of the Class M-4  Certificates  under  clause  fourth
              above, to the Holders of the Class M-5  Certificates  under clause
              fifth above,  to the Holders of the Class M-6  Certificates  under
              clause sixth above,  to the Holders of the Class M-7  Certificates
              under  clause  seventh  above and to the  Holders of the Class M-8
              Certificates  under  clause  eighth  above,  and (y) the Class M-9
              Principal  Distribution  Amount,  until the Certificate  Principal
              Balance of the Class M-9 Certificates has been reduced to zero;

              TENTH, to the Holders of the Class B-1 Certificates, the lesser of
              (x) the excess of (i) the remaining Principal  Distribution Amount
              over (ii) the sum of the amounts distributed to the Holders of the
              Class M-1 Certificates under clause first above, to the Holders of
              the Class M 2  Certificates  under  clause  second  above,  to the
              Holders of the Class M-3 Certificates under clause third above, to
              the  Holders of the Class M-4  Certificates  under  clause  fourth
              above, to the Holders of the Class M-5  Certificates  under clause
              fifth above,  to the Holders of the Class M-6  Certificates


                                      118
<PAGE>


              under  clause  sixth  above,  to  the  Holders  of the  Class  M-7
              Certificates  under clause  seventh  above,  to the Holders of the
              Class  M-8  Certificates  under  clause  eighth  above  and to the
              Holders of the Class M-9  Certificates  under  clause ninth above,
              and (y) the Class B-1  Principal  Distribution  Amount,  until the
              Certificate  Principal  Balance of the Class B-1  Certificates has
              been reduced to zero;

              ELEVENTH, to the Holders of the Class B-2 Certificates, the lesser
              of (x) the  excess  of (i) the  remaining  Principal  Distribution
              Amount over (ii) the sum of the amounts distributed to the Holders
              of the Class M-1  Certificates  under clause  first above,  to the
              Holders of the Class M 2  Certificates  under clause second above,
              to the Holders of the Class M-3  Certificates  under  clause third
              above, to the Holders of the Class M-4  Certificates  under clause
              fourth above, to the Holders of the Class M-5  Certificates  under
              clause fifth above,  to the Holders of the Class M-6  Certificates
              under  clause  sixth  above,  to  the  Holders  of the  Class  M-7
              Certificates  under clause  seventh  above,  to the Holders of the
              Class M-8  Certificates  under clause eighth above, to the Holders
              of the Class M-9 Certificates  under clause ninth above and to the
              Holders of the Class B-1  Certificates  under  clause tenth above,
              and (y) the Class B-2  Principal  Distribution  Amount,  until the
              Certificate  Principal  Balance of the Class B-2  Certificates has
              been reduced to zero; and

              TWELFTH, to the Holders of the Class B-3 Certificates,  the lesser
              of (x) the  excess  of (i) the  remaining  Principal  Distribution
              Amount over (ii) the sum of the amounts distributed to the Holders
              of the Class M-1  Certificates  under clause  first above,  to the
              Holders of the Class M 2  Certificates  under clause second above,
              to the Holders of the Class M-3  Certificates  under  clause third
              above, to the Holders of the Class M-4  Certificates  under clause
              fourth above, to the Holders of the Class M-5  Certificates  under
              clause fifth above,  to the Holders of the Class M-6  Certificates
              under  clause  sixth  above,  to  the  Holders  of the  Class  M-7
              Certificates  under clause  seventh  above,  to the Holders of the
              Class M-8  Certificates  under clause eighth above, to the Holders
              of the Class M-9  Certificates  under clause  ninth above,  to the
              Holders of the Class B-1  Certificates  under  clause tenth above,
              and to the  Holders  of the Class B-2  Certificates  under  clause
              eleventh  above (y) the Class B-3 Principal  Distribution  Amount,
              until  the  Certificate   Principal   Balance  of  the  Class  B-3
              Certificates has been reduced to zero.

       (7)    On each Distribution Date, the Net Monthly Excess Cashflow (or, in
the case of clause (i) below,  the Net Monthly Excess Cashflow  exclusive of any
Overcollateralization Reduction Amount) shall be distributed as follows:

              (xii)  to the Holders of the Class or Classes of Certificates then
       entitled to receive  distributions in respect of principal,  in an amount
       equal to any Extra Principal Distribution Amount, payable to such Holders
       in accordance with the priorities set forth in Section 5.01(b) below;

              (xiii) sequentially,  to the Holders of the Class M-1,  Class M-2,
       Class M-3,  Class M-4,  Class M-5, Class M-6, Class M-7, Class M-8, Class
       M-9, Class B-1, Class B-2 and Class B-3  Certificates,  in that order, in
       an amount equal to the Interest  Carry Forward  Amount  allocable to each
       such Class;


                                      119
<PAGE>


              (xiv)  sequentially,  to the Holders of the Class M-1,  Class M-2,
       Class M-3,  Class M-4,  Class M-5, Class M-6, Class M-7, Class M-8, Class
       M-9, Class B-1, Class B-2 and Class B-3  Certificates,  in that order, in
       an amount equal to the Allocated  Realized Loss Amount  allocable to each
       such Class;

              (xv)   concurrently,  to the Holders of the Class A  Certificates,
       in  an  amount  equal  to  such  Certificates'  allocated  share  of  any
       Prepayment  Interest  Shortfalls  on the  related  Mortgage  Loans to the
       extent not covered by payments  pursuant to Section  3.22 or 4.18 of this
       Agreement  or pursuant to the  Servicing  Agreements  and any  shortfalls
       resulting  from the  application  of the Relief  Act or similar  state or
       local law or the  bankruptcy  code with  respect to the related  Mortgage
       Loans to the extent not previously reimbursed pursuant to Section 1.02;

              (xvi)  sequentially,  to the Holders of the Class M-1,  Class M-2,
       Class M-3,  Class M-4,  Class M-5, Class M-6, Class M-7, Class M-8, Class
       M-9, Class B-1, Class B-2 and Class B-3  Certificates,  in that order, in
       an amount equal to such  certificates'  share of any Prepayment  Interest
       Shortfalls  on the  Mortgage  Loans to the extent not covered by payments
       pursuant to Sections  3.22 or Section 4.18 of this  Agreement or pursuant
       to the Servicing  Agreements  and any Relief Act Interest  Shortfall,  in
       each case that were  allocated to such Class for such  Distribution  Date
       and for  any  prior  Distribution  Date,  to the  extent  not  previously
       reimbursed pursuant to Section 1.02;

              (xvii) to the Reserve Fund from amounts  otherwise  payable to the
       Class CE  Certificates,  and then from the  Reserve  Fund to the Class A,
       Class M-1,  Class M-2,  Class M-3, Class M-4, Class M-5, Class M-6, Class
       M-7,   Class  M-8,  Class  M-9,  Class  B-1,  Class  B-2  and  Class  B-3
       Certificates  in that order,  in an amount equal to the unpaid  amount of
       any  Net  WAC  Rate  Carryover  Amount  for  each  such  Class  for  such
       Distribution Date;

              (xviii) to the Reserve Fund,  the amount  required to be deposited
       therein  pursuant to Section  3.24(b),  after taking into account amounts
       received under the Cap Contracts;

              (xix)  to the Holders of the Class CE  Certificates  the  Interest
       Distribution  Amount and any  Overcollateralization  Reduction Amount for
       such Distribution Date; and

              (xx)   to the Holders of the Class R  Certificates,  in respect of
       the Class R-II  Interest,  any remaining  amounts;  provided that if such
       Distribution  Date is the  Distribution  Date  immediately  following the
       expiration  of the latest  Prepayment  Charge term as  identified  on the
       Mortgage Loan Schedule or any Distribution Date thereafter, then any such
       remaining amounts will be distributed  first, to the Holders of the Class
       P Certificates,  until the Certificate Principal Balance thereof has been
       reduced to zero; and second, to the Holders of the Class R Certificates.

       The Class CE  Certificates  are  intended  to receive all  principal  and
interest  received  by the Trust on the  Mortgage  Loans  that is not  otherwise
distributable  to any  other  Class of  Regular  Certificates  or REMIC  Regular
Interests.  If  the  Securities   Administrator  determines  that  the  Residual
Certificates are entitled to any  distributions  on any Distribution


                                      120
<PAGE>


Date other than the final Distribution Date, the Securities Administrator, prior
to any such distribution to any Residual Certificate, shall notify the Depositor
of such  impending  distribution.  Upon such  notification,  the Depositor  will
prepare and request that the other parties hereto enter into an amendment to the
Pooling  and  Servicing  Agreement  pursuant  to Section  12.01,  to revise such
mistake in the distribution provisions.

       On  each  Distribution  Date,  after  making  the  distributions  of  the
Available  Distribution Amount as set forth above, the Securities  Administrator
will first,  withdraw  from the Reserve Fund all income from the  investment  of
funds in the Reserve Fund and distribute such amount to the Holders of the Class
CE  Certificates,  and second,  withdraw from the Reserve Fund, to the extent of
amounts  remaining on deposit therein,  the amount of any Net WAC Rate Carryover
Amount for such Distribution Date and distribute such amount first, concurrently
to the  Class A  Certificates,  on a PRO RATA  basis;  second,  to the Class M-1
Certificates,  third, to the Class M-2  Certificates,  fourth,  to the Class M-3
Certificates,  fifth,  to the Class M-4  Certificates,  sixth,  to the Class M-5
Certificates,  seventh, to the Class M-6 Certificates,  eighth, to the Class M-7
Certificates,  ninth,  to the Class M-8  Certificates,  tenth,  to the Class M-9
Certificates, eleventh, to the Class B-1 Certificates, twelfth, to the Class B-2
Certificates and thirteenth, to the Class B-3 Certificates,  in each case to the
extent to the extent any Net WAC Rate Carryover Amount is allocable to each such
Class.

       (b)    (i) On each  Distribution  Date (a) prior to the Stepdown  Date or
(b) on which a Trigger  Event is in  effect,  the Extra  Principal  Distribution
Amount shall be distributed in the following order of priority;

       FIRST, to the Holders of the Class A Certificates as follows:

       (A)    for each Distribution Date on which a Sequential  Trigger Event is
       not in effect for such Distribution Date,  concurrently to the Holders of
       the Class A Certificates,  on a pro rata basis,  based on the Certificate
       Principal  Balance of each such Class,  until the  Certificate  Principal
       Balance of each such Class has been  reduced to zero;  provided,  however
       that the pro rata allocation to the Class A-2A, Class A-2B and Class A-2C
       Certificates  pursuant  to  this  clause  shall  be  based  on the  total
       Certificate  Principal  Balance of the Class  A-2A,  Class A-2B and Class
       A-2C Certificates, but shall be distributed to the Class A-2A, Class A-2B
       and Class A-2C Certificates on a sequential  basis, in that order,  until
       the Certificate  Principal Balance of each such Class has been reduced to
       zero; and

       (B)    for each Distribution Date on which a Sequential  Trigger Event is
       in effect for such Distribution Date,  concurrently to the Holders of the
       Class A  Certificates,  on a pro rata  basis,  based  on the  Certificate
       Principal  Balance of each such Class,  until the  Certificate  Principal
       Balance of each such Class has been  reduced to zero;  provided,  however
       that the pro rata  allocation  to the Class A-1A  Certificates  and Class
       A-1B  Certificates  pursuant to this  clause  shall be based on the total
       Certificate  Principal  Balance of the Class A-1A  Certificates and Class
       A-1B   Certificates,   but  shall  be   distributed  to  the  Class  A-1A
       Certificates  and the Class A-1B  Certificates on a sequential  basis, in
       that order,  until the Certificate  Principal  Balance of each such Class
       has been reduced to zero; provided,  further that the pro rata allocation
       to the Class  A-2A,  Class A-2B and Class A-2C


                                      121
<PAGE>


       Certificates  pursuant  to  this  clause  shall  be  based  on the  total
       Certificate  Principal  Balance of the Class  A-2A,  Class A-2B and Class
       A-2C Certificates, but shall be distributed to the Class A-2A, Class A-2B
       and Class A-2C Certificates on a sequential  basis, in that order,  until
       the Certificate  Principal Balance of each such Class has been reduced to
       zero.

       SECOND, sequentially, to the Holders of the Class M-1, Class M-2, Class M
       3, Class M-4,  Class M-5,  Class M-6,  Class M-7,  Class M-8,  Class M-9,
       Class B-1, Class B-2 and Class B-3 Certificates, in that order, until the
       Certificate  Principal  Balance  of each such  Class has been  reduced to
       zero.

              (ii)   On each Distribution Date (a) on or after the Stepdown Date
and (b) on which a Trigger Event is not in effect, distributions of principal to
the extent of the Extra  Principal  Distribution  Amount shall be distributed in
the following order of priority:

       FIRST,  (a) the lesser of (x) the Group I Principal  Distribution  Amount
       and (y) the Class A-1 Principal Distribution Amount, shall be distributed
       concurrently to the Holders of the Class A-1A Certificates and Class A-1B
       Certificates,  on a pro rata  basis,  based on the  Certificate  Princpal
       Balance of each such Class,  until the Certificate  Principal  Balance of
       each such  Class has been  reduced  to zero and (b) the lesser of (x) the
       Group II Principal  Distribution  Amount and (y) the Class A-2  Principal
       Distribution Amount, shall be distributed  sequentially to the Holders of
       the  Class  A-2A,  Class  A-2B and  Class  A-2C  Certificates  until  the
       Certificate  Principal  Balance  of each such  Class has been  reduced to
       zero;

       SECOND,  the lesser of (x) the excess of (i) the  Principal  Distribution
       Amount  over (ii) the amount  distributed  to the  Holders of the Class A
       Certificates pursuant to clause FIRST of this Section 5.01(b)(ii) and (y)
       the Class M-1 Principal  Distribution Amount, shall be distributed to the
       Holders of the Class M-1  Certificates,  until the Certificate  Principal
       Balance of such Class has been reduced to zero;

       THIRD,  the  lesser of (x) the excess of (i) the  Principal  Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class A Certificates pursuant to clause first of this Section 5.01(b)(ii)
       and to the  Holders  of the Class  M-1  Certificates  pursuant  to clause
       second  of this  Section  5.01(b)(ii)  and (y) the  Class  M-2  Principal
       Distribution Amount, shall be distributed to the Holders of the Class M-2
       Certificates,  until the Certificate  Principal Balance of such Class has
       been reduced to zero;

       FOURTH,  the lesser of (x) the excess of (i) the  Principal  Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class  A   Certificates   pursuant  to  clause   first  of  this  Section
       5.01(b)(ii),  to the  Holders of the Class M-1  Certificates  pursuant to
       clause second of this Section 5.01(b)(ii) and to the Holders of the Class
       M-2 Certificates pursuant to clause third of this Section 5.01(b)(ii) and
       (y) the Class M-3 Principal  Distribution Amount, shall be distributed to
       the  Holders  of  the  Class  M-3  Certificates,  until  the  Certificate
       Principal Balance of such Class has been reduced to zero;


                                      122
<PAGE>


       FIFTH,  the  lesser of (x) the excess of (i) the  Principal  Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class  A   Certificates   pursuant  to  clause   first  of  this  Section
       5.01(b)(ii),  to the  Holders of the Class M-1  Certificates  pursuant to
       clause  second of this Section  5.01(b)(ii),  to the Holders of the Class
       M-2 Certificates pursuant to clause third of this Section 5.01(b)(ii) and
       to the Holders of the Class M-3 Certificates pursuant to clause fourth of
       this Section  5.01(b)(ii)  and (y) the Class M-4  Principal  Distribution
       Amount,   shall  be   distributed   to  the  Holders  of  the  Class  M-4
       Certificates,  until the Certificate  Principal Balance of such Class has
       been reduced to zero;

       SIXTH,  the  lesser of (x) the excess of (i) the  Principal  Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class  A   Certificates   pursuant  to  clause   first  of  this  Section
       5.01(b)(ii),  to the  Holders of the Class M-1  Certificates  pursuant to
       clause  second of this Section  5.01(b)(ii),  to the Holders of the Class
       M-2 Certificates pursuant to clause third of this Section 5.01(b)(ii), to
       the Holders of the Class M-3  Certificates  pursuant to clause  fourth of
       this Section 5.01(b)(ii) and to the Holders of the Class M-4 Certificates
       pursuant to clause  fifth of this Section  5.01(b)(ii)  and (y) the Class
       M-5 Principal Distribution Amount, shall be distributed to the Holders of
       the Class M-5  Certificates,  until the Certificate  Principal Balance of
       such Class has been reduced to zero;

       SEVENTH,  the lesser of (x) the excess of (i) the Principal  Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class  A   Certificates   pursuant  to  clause   first  of  this  Section
       5.01(b)(ii),  to the  Holders of the Class M-1  Certificates  pursuant to
       clause  second of this Section  5.01(b)(ii),  to the Holders of the Class
       M-2 Certificates pursuant to clause third of this Section 5.01(b)(ii), to
       the Holders of the Class M-3  Certificates  pursuant to clause  fourth of
       this Section  5.01(b)(ii),  to the Holders of the Class M-4  Certificates
       pursuant to clause fifth of this Section  5.01(b)(ii)  and to the Holders
       of the Class M-5  Certificates  pursuant to clause  sixth of this Section
       5.01(b)(ii) and (y) the Class M-6 Principal Distribution Amount, shall be
       distributed  to the  Holders  of the  Class M-6  Certificates,  until the
       Certificate Principal Balance of such Class has been reduced to zero;

       EIGHTH,  the lesser of (x) the excess of (i) the  Principal  Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class  A   Certificates   pursuant  to  clause   first  of  this  Section
       5.01(b)(ii),  to the  Holders of the Class M-1  Certificates  pursuant to
       clause  second of this Section  5.01(b)(ii),  to the Holders of the Class
       M-2 Certificates pursuant to clause third of this Section 5.01(b)(ii), to
       the Holders of the Class M-3  Certificates  pursuant to clause  fourth of
       this Section  5.01(b)(ii),  to the Holders of the Class M-4  Certificates
       pursuant to clause fifth of this Section  5.01(b)(ii),  to the Holders of
       the Class M-5  Certificates  pursuant  to  clause  sixth of this  Section
       5.01(b)(ii) and to the Holders of the Class M-6 Certificates  pursuant to
       clause  seventh  of  this  Section  5.01(b)(ii)  and (y)  the  Class  M-7
       Principal Distribution Amount, shall be distributed to the Holders of the
       Class M-7 Certificates,  until the Certificate  Principal Balance of such
       Class has been reduced to zero;


                                      123
<PAGE>


       NINTH,  the  lesser of (x) the excess of (i) the  Principal  Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class  A   Certificates   pursuant  to  clause   first  of  this  Section
       5.01(b)(ii),  to the  Holders of the Class M-1  Certificates  pursuant to
       clause  second of this Section  5.01(b)(ii),  to the Holders of the Class
       M-2 Certificates pursuant to clause third of this Section 5.01(b)(ii), to
       the Holders of the Class M-3  Certificates  pursuant to clause  fourth of
       this Section  5.01(b)(ii),  to the Holders of the Class M-4  Certificates
       pursuant to clause fifth of this Section  5.01(b)(ii),  to the Holders of
       the Class M-5  Certificates  pursuant  to  clause  sixth of this  Section
       5.01(b)(ii),  to the  Holders of the Class M-6  Certificates  pursuant to
       clause  seventh of this  Section  5.01(b)(ii)  and to the  Holders of the
       Class  M-7  Certificates  pursuant  to  clause  eighth  of  this  Section
       5.01(b)(ii) and (y) the Class M-8 Principal Distribution Amount, shall be
       distributed  to the  Holders  of the  Class M-8  Certificates,  until the
       Certificate Principal Balance of such Class has been reduced to zero;

       TENTH,  the  lesser of (x) the excess of (i) the  Principal  Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class  A   Certificates   pursuant  to  clause   first  of  this  Section
       5.01(b)(ii),  to the  Holders of the Class M-1  Certificates  pursuant to
       clause  second of this Section  5.01(b)(ii),  to the Holders of the Class
       M-2 Certificates pursuant to clause third of this Section 5.01(b)(ii), to
       the Holders of the Class M-3  Certificates  pursuant to clause  fourth of
       this Section  5.01(b)(ii),  to the Holders of the Class M-4  Certificates
       pursuant to clause fifth of this Section  5.01(b)(ii),  to the Holders of
       the Class M-5  Certificates  pursuant  to  clause  sixth of this  Section
       5.01(b)(ii),  to the  Holders of the Class M-6  Certificates  pursuant to
       clause seventh of this Section  5.01(b)(ii),  to the Holders of the Class
       M-7  Certificates  pursuant to clause eighth of this Section  5.01(b)(ii)
       and to the Holders of the Class M-8 Certificates pursuant to clause ninth
       of this Section 5.01(b)(ii) and (y) the Class M-9 Principal  Distribution
       Amount,   shall  be   distributed   to  the  Holders  of  the  Class  M-9
       Certificates,  until the Certificate  Principal Balance of such Class has
       been reduced to zero;

       ELEVENTH,  the lesser of (x) the excess of (i) the Principal Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class  A   Certificates   pursuant  to  clause   first  of  this  Section
       5.01(b)(ii),  to the  Holders of the Class M-1  Certificates  pursuant to
       clause  second of this Section  5.01(b)(ii),  to the Holders of the Class
       M-2 Certificates pursuant to clause third of this Section 5.01(b)(ii), to
       the Holders of the Class M-3  Certificates  pursuant to clause  fourth of
       this Section  5.01(b)(ii),  to the Holders of the Class M-4  Certificates
       pursuant to clause fifth of this Section  5.01(b)(ii),  to the Holders of
       the Class M-5  Certificates  pursuant  to  clause  sixth of this  Section
       5.01(b)(ii),  to the  Holders of the Class M-6  Certificates  pursuant to
       clause seventh of this Section  5.01(b)(ii),  to the Holders of the Class
       M-7 Certificates  pursuant to clause eighth of this Section  5.01(b)(ii),
       to the Holders of the Class M-8 Certificates  pursuant to clause ninth of
       this Section 5.01(b)(ii) and to the Holders of the Class M-9 Certificates
       pursuant to clause  tenth of this Section  5.01(b)(ii)  and (y) the Class
       B-1 Principal Distribution Amount, shall be distributed to the Holders of
       the Class B-1  Certificates,  until the Certificate  Principal Balance of
       such Class has been reduced to zero;


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<PAGE>


       TWELFTH,  the lesser of (x) the excess of (i) the Principal  Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class  A   Certificates   pursuant  to  clause   first  of  this  Section
       5.01(b)(ii),  to the  Holders of the Class M-1  Certificates  pursuant to
       clause  second of this Section  5.01(b)(ii),  to the Holders of the Class
       M-2 Certificates pursuant to clause third of this Section 5.01(b)(ii), to
       the Holders of the Class M-3  Certificates  pursuant to clause  fourth of
       this Section  5.01(b)(ii),  to the Holders of the Class M-4  Certificates
       pursuant to clause fifth of this Section  5.01(b)(ii),  to the Holders of
       the Class M-5  Certificates  pursuant  to  clause  sixth of this  Section
       5.01(b)(ii),  to the  Holders of the Class M-6  Certificates  pursuant to
       clause seventh of this Section  5.01(b)(ii),  to the Holders of the Class
       M-7 Certificates  pursuant to clause eighth of this Section  5.01(b)(ii),
       to the Holders of the Class M-8 Certificates  pursuant to clause ninth of
       this Section  5.01(b)(ii),  to the Holders of the Class M-9  Certificates
       pursuant to clause tenth of this Section  5.01(b)(ii)  and to the Holders
       of the Class B-1 Certificates pursuant to clause eleventh of this Section
       5.01(b)(ii) and (y) the Class B-2 Principal Distribution Amount, shall be
       distributed  to the  Holders  of the  Class B-2  Certificates,  until the
       Certificate Principal Balance of such Class has been reduced to zero; and

       THITEENTH, the lesser of (x) the excess of (i) the Principal Distribution
       Amount over (ii) the sum of the amounts distributed to the Holders of the
       Class  A   Certificates   pursuant  to  clause   first  of  this  Section
       5.01(b)(ii),  to the  Holders of the Class M-1  Certificates  pursuant to
       clause  second of this Section  5.01(b)(ii),  to the Holders of the Class
       M-2 Certificates pursuant to clause third of this Section 5.01(b)(ii), to
       the Holders of the Class M-3  Certificates  pursuant to clause  fourth of
       this Section  5.01(b)(ii),  to the Holders of the Class M-4  Certificates
       pursuant to clause fifth of this Section  5.01(b)(ii),  to the Holders of
       the Class M-5  Certificates  pursuant  to  clause  sixth of this  Section
       5.01(b)(ii),  to the  Holders of the Class M-6  Certificates  pursuant to
       clause seventh of this Section  5.01(b)(ii),  to the Holders of the Class
       M-7 Certificates  pursuant to clause eighth of this Section  5.01(b)(ii),
       to the Holders of the Class M-8 Certificates  pursuant to clause ninth of
       this Section  5.01(b)(ii),  to the Holders of the Class M-9  Certificates
       pursuant to clause tenth of this Section  5.01(b)(ii),  to the Holders of
       the Class B-1  Certificates  pursuant to clause  eleventh of this Section
       5.01(b)(ii) and to the Holders of the Class B-2 Certificates  pursuant to
       clause twelfth of this Section 5.01(b)(ii)and (y) the Class B-3 Principal
       Distribution Amount, shall be distributed to the Holders of the Class B-3
       Certificates,  until the Certificate  Principal Balance of such Class has
       been reduced to zero.

       (c)    On each  Distribution  Date,  the Securities  Administrator  shall
withdraw any amounts then on deposit in the Distribution  Account that represent
Prepayment   Charges  and  shall   distribute   such  amounts  to  the  Class  P
Certificateholders as described above.

       (d)    All distributions  made with respect to each Class of Certificates
on each  Distribution  Date shall be  allocated  PRO RATA among the  outstanding
Certificates  in such  Class  based on their  respective  Percentage  Interests.
Payments in respect of each Class of Certificates on each Distribution Date will
be made to the Holders of the  respective  Class of record on the related Record
Date  (except  as  otherwise  provided  in  Section  5.01(f)  or  Section  10.01
respecting


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<PAGE>


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

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

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

       (f)    Except as  otherwise  provided  in  Section  10.01,  whenever  the
Securities Administrator expects that the final distribution with respect to any
Class of Certificates will be made on the next Distribution Date, the Securities
Administrator   shall,   no  later  than  three  (3)  days  before  the  related
Distribution  Date,  mail  to  each  Holder  on  such  date  of  such  Class  of
Certificates a notice to the effect that:

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

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

       Any funds not  distributed  to any Holder or Holders of  Certificates  of
such Class on such  Distribution  Date  because of the failure of such Holder or
Holders to tender their Certificates  shall, on such date, be set aside and held
in trust by the  Securities  Administrator  and


                                      126
<PAGE>


credited to the account of the appropriate  non-tendering  Holder or Holders. If
any  Certificates  as to which  notice has been given  pursuant to this  Section
5.01(f) shall not have been surrendered for cancellation within six months after
the time  specified in such notice,  the Securities  Administrator  shall mail a
second notice to the  remaining  non-tendering  Certificateholders  to surrender
their  Certificates for cancellation in order to receive the final  distribution
with  respect  thereto.  If within  one year  after the  second  notice all such
Certificates  shall not have been surrendered for  cancellation,  the Securities
Administrator  shall,  directly or through an agent,  mail a final notice to the
remaining  non-tendering   Certificateholders   concerning  surrender  of  their
Certificates  but shall continue to hold any remaining  funds for the benefit of
non-tendering  Certificateholders.  The costs and  expenses of  maintaining  the
funds in trust and of contacting  such  Certificateholders  shall be paid out of
the  assets  remaining  in such trust  fund.  If within one year after the final
notice any such  Certificates  shall not have been surrendered for cancellation,
the Securities  Administrator  shall pay to the Depositor all such amounts,  and
all  rights of  non-tendering  Certificateholders  in or to such  amounts  shall
thereupon cease. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust by the Securities  Administrator as a result of such
Certificateholder's  failure  to  surrender  its  Certificate(s)  on  the  final
Distribution  Date for final  payment  thereof in  accordance  with this Section
5.01(f). Any such amounts held in trust by the Securities Administrator shall be
held uninvested in an Eligible Account.

       (g)    Notwithstanding  anything to the contrary herein,  (i) in no event
shall the Certificate  Principal  Balance of a Class A Certificate,  a Mezzanine
Certificate or a Class B Certificate be reduced more than once in respect of any
particular  amount both (a) allocated to such Certificate in respect of Realized
Losses  pursuant  to  Section  5.04 and (b)  distributed  to the  Holder of such
Certificate in reduction of the Certificate  Principal  Balance thereof pursuant
to this Section 5.01 from Net Monthly Excess Cashflow and (ii) in no event shall
the Uncertificated Balance of a REMIC Regular Interest be reduced more than once
in respect of any  particular  amount both (a)  allocated to such REMIC  Regular
Interest  in  respect  of  Realized  Losses  pursuant  to  Section  5.04 and (b)
distributed  on such REMIC Regular  Interest in reduction of the  Uncertificated
Balance thereof pursuant to this Section 5.01.

       SECTION 5.02.    Statements to Certificateholders.

       On each  Distribution  Date, the Securities  Administrator  (based on the
information  set forth in the Servicer  Reports for such  Distribution  Date and
information  provided by the Trustee or the  counterparty  to the Cap  Contracts
with  respect  to  payments  made  pursuant  to the Cap  Contracts)  shall  make
available  to  each  Holder  of  the   Certificates,   a  statement  as  to  the
distributions made on such Distribution Date setting forth:

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

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


                                      127
<PAGE>


              (iii)  the  aggregate  Servicing  Fee received by the Servicer and
       the Interim  Servicers and the aggregate Master Servicing Fee received by
       the Master Servicer during the related Due Period;

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

              (v)    Reserved;

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

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

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

              (ix)   if available,  the book value of any REO Property as of the
       close  of  business  on the  last  Business  Day of  the  calendar  month
       preceding the Distribution Date;

              (x)    the aggregate  amount of Principal  Prepayments made during
       the related  Prepayment Period and the aggregate amount of any Prepayment
       Charges received in respect thereof;

              (xi)   the aggregate amount of Realized Losses incurred during the
       related  Prepayment  Period and the aggregate  amount of Realized  Losses
       incurred since the Closing Date;

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

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

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


                                      128
<PAGE>


              (xv)   the Interest  Distribution Amount in respect of the Class A
       Certificates,  the Mezzanine Certificates,  the Class B Certificates, and
       the Class CE  Certificates  for such  Distribution  Date and the Interest
       Carry Forward  Amount,  if any, with respect to the Class A Certificates,
       the  Mezzanine   Certificates  and  the  Class  B  Certificates  on  such
       Distribution  Date,  and in the  case of the  Class A  Certificates,  the
       Mezzanine   Certificates   and  the  Class  B   Certificates   separately
       identifying any reduction  thereof due to allocations of Realized Losses,
       Prepayment  Interest  Shortfalls,  Relief Act Interest Shortfalls and Net
       WAC Rate Carryover Amounts;

              (xvi)  the aggregate amount of any Prepayment  Interest  Shortfall
       for such Distribution  Date, to the extent not covered by payments by the
       Servicer  pursuant  to  Section  3.22 of  this  Agreement  or the  Master
       Servicer  pursuant  to  Section  4.18 of this  Agreement  or the  Interim
       Servicers pursuant to the Servicing Agreements;

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

              (xviii) the  Required Overcollateralization  Amount and the Credit
       Enhancement Percentage for such Distribution Date;

              (xix)  the Overcollateralization Increase Amount, if any, for such
       Distribution Date;

              (xx)   the  Overcollateralization  Reduction  Amount,  if any, for
       such Distribution Date;

              (xxi)  the  Net WAC  Rate  Carryover  Amount,  if  any,  for  such
       Distribution Date;

              (xxii) the Net WAC  Rate  Carryover  Amount,  if any,  outstanding
       after  reimbursements  therefor on such Distribution Date and any amounts
       received under the Cap Contracts;

              (xxiii) the respective Pass-Through  Rates applicable to the Class
       A Certificates, the Mezzanine Certificates, the Class B Certificates, and
       the Class CE Certificates for such Distribution Date;

              (xxiv) the amount of any deposit to the Reserve Fund  contemplated
       by Section 3.24(b);

              (xxv)  the  balance of the  Reserve  Fund prior to the  deposit or
       withdrawal of any amounts on such Distribution Date;

              (xxvi) the amount of any deposit to the Reserve  Fund  pursuant to
       Section 5.01(a)(7)(vi);

              (xxvii)the  balance of the  Reserve  Fund after all  deposits  and
       withdrawals on such Distribution Date;


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              (xxviii)  the  Loss  Severity  Percentage  with  respect  to  each
       Mortgage Loan; and

              (xxix) the Aggregate Loss Severity Percentage; and

       The  Securities  Administrator  will make  such  statement  (and,  at its
option,  any additional  files containing the same information in an alternative
format) available each month to the  Certificateholders  and the Rating Agencies
via  the   Securities   Administrator's   internet   website.   The   Securities
Administrator's    internet    website    shall    initially   be   located   at
http:\\www.ctslink.com  and  assistance  in using the website can be obtained by
calling the Securities  Administrator's customer service desk at 1-301-815-6600.
Parties  that are unable to use the above  distribution  options are entitled to
have a paper copy mailed to them via first  class mail by calling  the  customer
service desk and indicating  such. The Securities  Administrator  shall have the
right to change the way such  statements  are  distributed in order to make such
distribution more convenient and/or more accessible to the above parties and the
Securities  Administrator shall provide timely and adequate  notification to all
above parties regarding any such changes.

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

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

       Within a reasonable  period of time after the end of each calendar  year,
the  Securities  Administrator  shall furnish upon request to each Person who at
any time  during  the  calendar  year was a Holder of a Residual  Certificate  a
statement setting forth the amount, if any, actually distributed with respect to
the Residual Certificates, as appropriate,  aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.

       The  Securities  Administrator  shall,  upon  request,  furnish  to  each
Certificateholder during the term of this Agreement, such periodic,  special, or
other reports or  information,  whether or not provided for herein,  as shall be
reasonable with respect to the  Certificateholder,  as applicable,  or otherwise
with respect to the purposes of this Agreement,  all such reports or information
to be provided at the expense of the Certificateholder,  in accordance with such
reasonable and explicit instructions and directions as the Certificateholder may
provide.

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


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       SECTION 5.03.    Servicer Reports; P&I Advances.

       (a)    On or before 12:00 noon New York time on the 18th  calendar day of
each month,  and if the 18th calendar day is not a Business Day, the immediately
following  Business Day, the Servicer  shall deliver to the Master  Servicer and
the Securities  Administrator  by telecopy or electronic  mail (or by such other
means as the Servicer, the Master Servicer and the Securities  Administrator may
agree from time to time) a remittance  report  containing such  information with
respect to the related  Mortgage Loans and the related  Distribution  Date as is
reasonably  available to the Servicer as the Master  Servicer or the  Securities
Administrator  may  reasonably  require so as to enable the Master  Servicer  to
master  service the related  Mortgage  Loans and  oversee the  servicing  by the
Servicer and the Securities  Administrator to fulfill its obligations  hereunder
with respect to securities and tax reporting.

       (b)    The  amount  of P&I  Advances  to be made by the  Servicer  or the
related  Interim  Servicer  on any  Distribution  Date shall  equal,  subject to
Section  5.03(d),  (i) the  aggregate  amount of  Monthly  Payments  (net of the
related  Servicing  Fees),  due during the  related Due Period in respect of the
Mortgage  Loans  serviced by the  Servicer or Interim  Servicer,  which  Monthly
Payments   were   delinquent  as  of  the  close  of  business  on  the  related
Determination  Date and  (ii)  with  respect  to each REO  Property,  which  was
acquired during or prior to the related Prepayment Period and as to which an REO
Disposition did not occur during the related  Prepayment Period, an amount equal
to the excess,  if any, of the REO Imputed Interest on such REO Property for the
most recently ended calendar  month,  over the net income from such REO Property
deposited in the Collection Account or Custodial Acount pursuant to Section 3.21
of this Agreement or pursuant the related  Servicing  Agreement for distribution
on such  Distribution  Date;  provided,  however,  neither the  Servicer nor any
Interim  Servicer  shall be required to make P&I Advances with respect to Relief
Act Interest  Shortfalls,  or with respect to Prepayment  Interest Shortfalls in
excess of its  obligations  under  Section  3.22 or under the related  Servicing
Agreement.  For purposes of the preceding sentence,  the Monthly Payment on each
Balloon Mortgage Loan with a delinquent  Balloon Payment is equal to the assumed
monthly  payment  that would have been due on the  related Due Date based on the
original principal amortization schedule for such Balloon Mortgage Loan.

       By 12:00 noon New York time on the Servicer Remittance Date, the Servicer
shall remit in immediately  available funds to the Securities  Administrator for
deposit in the  Distribution  Account an amount equal to the aggregate amount of
P&I Advances,  if any, to be made in respect of the related  Mortgage  Loans for
the  related  Distribution  Date  either (i) from its own funds or (ii) from the
Collection Account, to the extent of any Amounts Held For Future Distribution on
deposit therein (in which case it will cause to be made an appropriate  entry in
the records of the Collection Account that Amounts Held For Future  Distribution
have been, as permitted by this Section 5.03,  used by the Servicer in discharge
of any such P&I Advance) or (iii) in the form of any combination of (i) and (ii)
aggregating  the total amount of P&I  Advances to be made by the  Servicer  with
respect to the related Mortgage Loans. In addition,  the Servicer shall have the
right to  reimburse  itself for any  outstanding  P&I Advance  made from its own
funds from  Amounts  Held for Future  Distribution.  Any Amounts Held For Future
Distribution  used by the Servicer to make P&I  Advances or to reimburse  itself
for outstanding P&I Advances shall be appropriately  reflected in the Servicer's
records and  replaced by the  Servicer by deposit in the  Collection  Account no
later than the close of business on the  Servicer  Remittance  Date  immediately
following the Due Period or Prepayment Period for which such amounts relate. The


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Securities Administrator will notify the Servicer and the Master Servicer by the
close of  business on the  Business  Day prior to the  Distribution  Date in the
event that the amount  remitted by the Servicer to the Securities  Administrator
on such date is less than the P&I  Advances  required to be made by the Servicer
for the related Distribution Date.

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

       (d)    Notwithstanding anything herein to the contrary, no P&I Advance or
Servicing  Advance  shall be required to be made  hereunder or under the related
Servicing  Agreement by the Servicer or the related Interim Servicer if such P&I
Advance or Servicing  Advance would, if made,  constitute a  Nonrecoverable  P&I
Advance or Nonrecoverable Servicing Advance,  respectively. The determination by
the Servicer or the related Interim  Servicer that it has made a  Nonrecoverable
P&I  Advance or a  Nonrecoverable  Servicing  Advance or that any  proposed  P&I
Advance or Servicing  Advance,  if made, would  constitute a Nonrecoverable  P&I
Advance or Nonrecoverable Servicing Advance, respectively, shall be evidenced by
a certification of a Servicing Officer delivered to the Master Servicer.

       (e)    Subject to and in accordance  with the provisions of Article VIII,
in the event the  Servicer  fails to make any  required  P&I  Advance,  then the
Master  Servicer (in its capacity as successor  servicer) or any other successor
Servicer shall be required to make such P&I Advance on the Distribution  Date on
which  the  Servicer  was  required  to  make  such  Advance,   subject  to  its
determination  of  recoverability.  In  addition,  in the event that the related
Interim  Servicer  fails  to make a  required  P&I  Advance  under  the  related
Servicing  Agreement,  the Master  Servicer  will be  required  to make such P&I
Advance, subject to its determination of recoverability.

       SECTION 5.04.    Allocation of Realized Losses.

       (a)    Prior to the  Determination  Date,  the  Servicer and each Interim
Servicer  shall  determine as to each  Mortgage Loan serviced by the Servicer or
such  Interim  Servicer  and any related REO Property and include in the monthly
remittance   report   provided  to  the  Master   Servicer  and  the  Securities
Administrator  (substantially in the form of Schedule 4 hereto) such information
as is  reasonably  available to the  Servicer  and the Interim  Servicers as the
Master Servicer or the Securities  Administrator may reasonably require so as to
enable the Master  Servicer to master service the Mortgage Loans and oversee the
servicing  by  the  Servicer  and  the  Interim  Servicers  and  the  Securities
Administrator  to fulfill its  obligations  hereunder with respect to securities
and tax  reporting,  which shall  include,  but not be limited to: (i) the total
amount  of  Realized  Losses,  if any,  incurred  in  connection  with any Final
Recovery  Determinations made during the related Prepayment Period; and (ii) the
respective  portions of such Realized Losses allocable to interest and allocable
to principal.  Prior to each  Determination  Date, the Servicer and each Interim
Servicer  shall also determine as to each Mortgage Loan: (i) the total amount of
Realized Losses,  if any,  incurred in


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<PAGE>


connection  with any  Deficient  Valuations  made during the related  Prepayment
Period;  and (ii) the total  amount of  Realized  Losses,  if any,  incurred  in
connection  with Debt  Service  Reductions  in respect of Monthly  Payments  due
during the related Due Period.

       (b)    All Realized Losses on the Mortgage Loans allocated to any REMIC I
Regular  Interest  pursuant to Section  5.04(c) on the  Mortgage  Loans shall be
allocated by the Securities  Administrator on each Distribution Date as follows:
first, to Net Monthly Excess  Cashflow;  second,  to the Class CE  Certificates;
third, to the Class B-3 Certificates until the Certificate  Principal Balance of
the Class B-3  Certificates has been reduced to zero,  fourth,  to the Class B-2
Certificates   until  the  Certificate   Principal  Balance  of  the  Class  B-2
Certificates  has been  reduced to zero,  fifth,  to the Class B-1  Certificates
until the Certificate  Principal  Balance of the Class B-1 Certificates has been
reduced to zero,  sixth,  to the Class M-9  Certificates,  until the Certificate
Principal  Balance  of the  Class M-9  Certificates  has been  reduced  to zero;
seventh, to the Class M-8 Certificates,  until the Certificate Principal Balance
of the Class M-8 Certificates has been reduced to zero; eighth, to the Class M-7
Certificates,   until  the  Certificate  Principal  Balance  of  the  Class  M-7
Certificates  has been reduced to zero;  ninth,  to the Class M-6  Certificates,
until the Certificate  Principal  Balance of the Class M-6 Certificates has been
reduced to zero;  tenth,  to the Class M-5  Certificates,  until the Certificate
Principal  Balance  of the  Class M-5  Certificates  has been  reduced  to zero;
eleventh, to the Class M-4 Certificates, until the Certificate Principal Balance
of the Class M-4  Certificates has been reduced to zero;  twelfth,  to the Class
M-3  Certificates,  until the  Certificate  Principal  Balance  of the Class M-3
Certificates   has  been  reduced  to  zero;   thirteenth,   to  the  Class  M-2
Certificates,   until  the  Certificate  Principal  Balance  of  the  Class  M-2
Certificates  has been  reduced  to  zero;  and  fourteenth,  to the  Class  M-1
Certificates,   until  the  Certificate  Principal  Balance  of  the  Class  M-1
Certificates  has been reduced to zero.  All Realized  Losses to be allocated to
the Certificate Principal Balances of all Classes on any Distribution Date shall
be so  allocated  after  the  actual  distributions  to be made on such  date as
provided above. All references above to the Certificate Principal Balance of any
Class of  Certificates  shall be to the  Certificate  Principal  Balance of such
Class  immediately  prior to the relevant  Distribution  Date,  before reduction
thereof by any  Realized  Losses,  in each case to be allocated to such Class of
Certificates, on such Distribution Date.

       Any allocation of Realized  Losses to a Mezzanine  Certificate or Class B
Certificate on any  Distribution  Date shall be made by reducing the Certificate
Principal Balance thereof by the amount so allocated; any allocation of Realized
Losses to a Class CE Certificates shall be made by reducing the amount otherwise
payable in respect thereof pursuant to Section 5.01(a)(7)(viii).  No allocations
of any Realized  Losses shall be made to the Certificate  Principal  Balances of
the Class A Certificates or Class P Certificates.

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

       In  addition,  in the event that the  Servicer  receives  any  Subsequent
Recoveries  with respect to a Mortgage  Loan,  the Servicer  shall  deposit such
funds into the  Collection  Account  pursuant to Section 3.08.  If, after taking
into account such Subsequent  Recoveries and


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any Subsequent  Recoveries  received by the Interim  Servicers,  the amount of a
Realized  Loss is  reduced,  the amount of such  Subsequent  Recoveries  will be
applied  to  increase  the  Certificate   Principal  Balance  of  the  Class  of
Subordinate  Certificates  with the highest  payment  priority to which Realized
Losses have been  allocated,  but not by more than the amount of Realized Losses
previously allocated to that Class of Subordinate  Certificates pursuant to this
Section  5.04  and not  previously  reimbursed  to  such  Class  of  Subordinate
Certificates  with Net Monthly Excess Cashflow  pursuant to Section  5.01(a)(7).
The  amount  of  any  remaining   Subsequent   Recoveries  will  be  applied  to
sequentially  increase  the  Certificate  Principal  Balance of the  Subordinate
Certificates, beginning with the Class of Subordinate Certificates with the next
highest payment  priority,  up to the amount of such Realized Losses  previously
allocated  to such Class of  Subordinate  Certificates  pursuant to this Section
5.04 and not  previously  reimbursed to such Class of  Subordinate  Certificates
with Net Monthly Excess Cashflow pursuant to Section 5.01(a)(7)(iii). Holders of
such  Certificates  will not be  entitled  to any  payment in respect of current
interest  on the  amount  of such  increases  for any  Interest  Accrual  Period
preceding  the  Distribution  Date on  which  such  increase  occurs.  Any  such
increases  shall  be  applied  to the  Certificate  Principal  Balance  of  each
Subordinate  Certificate  of  such  Class  in  accordance  with  its  respective
Percentage Interest.

       (c)    (i) The REMIC I Marker  Percentage  of all Realized  Losses on the
Mortgage  Loans  shall  be  allocated  by  the  Trustee,  based  solely  on  the
instructions of the Securities  Administrator,  on each Distribution Date to the
following REMIC I Regular  Interests in the specified  percentages,  as follows:
first, to Uncertificated Interest payable to the REMIC I Regular Interest I-LTAA
and REMIC I Regular Interest I-LTZZ up to an aggregate amount equal to the REMIC
I Interest Loss Allocation Amount,  98.00% and 2.00%,  respectively;  second, to
the  Uncertificated  Balances of the REMIC I Regular Interest I-LTAA and REMIC I
Regular Interest I-LTZZ up to an aggregate amount equal to the REMIC I Principal
Loss  Allocation  Amount,  98.00%  and  2.00%,   respectively;   third,  to  the
Uncertificated  Balances  of REMIC I Regular  Interest  I-LTAA,  REMIC I Regular
Interest I-LTB3 and REMIC I Regular  Interest I-LTZZ,  98.00%,  1.00% and 1.00%,
respectively,  until the  Uncertificated  Balance  of REMIC I  Regular  Interest
I-LTB3 has been reduced to zero; fourth, to the Uncertificated Balances of REMIC
I Regular Interest  I-LTAA,  REMIC I Regular Interest I-LTB2 and REMIC I Regular
Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC I Regular  Interest I-LTB2 has been reduced to zero;  fifth, to
the Uncertificated  Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTB1 and REMIC I Regular  Interest I-LTZZ,  98.00%,  1.00% and 1.00%,
respectively,  until the  Uncertificated  Balance  of REMIC I  Regular  Interest
I-LTB1 has been reduced to zero; sixth, to the Uncertificated  Balances of REMIC
I Regular Interest  I-LTAA,  REMIC I Regular Interest I-LTM9 and REMIC I Regular
Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest I-LTM9 has been reduced to zero; seventh, to
the Uncertificated  Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM8 and REMIC I Regular  Interest I-LTZZ,  98.00%,  1.00% and 1.00%,
respectively,  until the  Uncertificated  Balance  of REMIC I  Regular  Interest
I-LTM8 has been reduced to zero; eighth, to the Uncertificated Balances of REMIC
I Regular Interest  I-LTAA,  REMIC I Regular Interest I-LTM7 and REMIC I Regular
Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC I Regular  Interest I-LTM7 has been reduced to zero;  ninth, to
the Uncertificated  Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM6 and REMIC I Regular  Interest I-LTZZ,  98.00%,  1.00% and 1.00%,
respectively,  until the  Uncertificated  Balance  of REMIC I  Regular  Interest
I-LTM6 has been reduced to zero; tenth, to


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the Uncertificated  Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM5 and REMIC I Regular  Interest I-LTZZ,  98.00%,  1.00% and 1.00%,
respectively,  until the  Uncertificated  Balance  of REMIC I  Regular  Interest
I-LTM5 has been reduced to zero;  eleventh,  to the  Uncertificated  Balances of
REMIC I Regular  Interest  I-LTAA,  REMIC I Regular  Interest I-LTM4 and REMIC I
Regular  Interest  I-LTZZ,  98.00%,  1.00% and  1.00%,  respectively,  until the
Uncertificated  Balance of REMIC I Regular  Interest  I-LTM4 has been reduced to
zero;  twelfth,  to the  Uncertificated  Balances  of REMIC I  Regular  Interest
I-LTAA,  REMIC I Regular  Interest I-LTM3 and REMIC I Regular  Interest  I-LTZZ,
98.00%, 1.00% and 1.00%, respectively, until the Uncertificated Balance of REMIC
I  Regular  Interest  I-LTM3  has  been  reduced  to  zero;  thirteenth,  to the
Uncertificated  Balances  of REMIC I Regular  Interest  I-LTAA,  REMIC I Regular
Interest I-LTM2 and REMIC I Regular  Interest I-LTZZ,  98.00%,  1.00% and 1.00%,
respectively,  until the  Uncertificated  Balance  of REMIC I  Regular  Interest
I-LTM2 has been reduced to zero; and fourteenth,  to the Uncertificated Balances
of REMIC I Regular Interest I-LTAA,  REMIC I Regular Interest I-LTM1 and REMIC I
Regular  Interest  I-LTZZ,  98.00%,  1.00% and  1.00%,  respectively,  until the
Uncertificated  Balance of REMIC I Regular  Interest  I-LTM1 has been reduced to
zero.

              (ii)   The REMIC I Sub WAC  Allocation  Percentage of all Realized
       Losses shall be applied  after all  distributions  have been made on each
       Distribution Date first, so as to keep the Uncertificated Balance of each
       REMIC I Regular Interest ending with the designation "GRP" equal to 0.01%
       of the aggregate  Stated  Principal  Balance of the Mortgage Loans in the
       related Loan Group;  second, to each REMIC I Regular Interest ending with
       the designation  "SUB," so that the  Uncertificated  Balance of each such
       REMIC I  Regular  Interest  is equal to  0.01% of the  excess  of (x) the
       aggregate Stated  Principal  Balance of the Mortgage Loans in the related
       Loan  Group over (y) the  current  Certificate  Principal  Balance of the
       Class A  Certificate  in the related Loan Group  (except that if any such
       excess is a larger number than in the preceding  distribution period, the
       least amount of Realized  Losses shall be applied to such REMIC I Regular
       Interests   such  that  the  REMIC  I   Subordinated   Balance  Ratio  is
       maintained);  and third, any remaining Realized Losses shall be allocated
       to REMIC I Regular Interest I-LTXX.

       SECTION 5.05.    Compliance with Withholding Requirements.

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

       SECTION 5.06.    Reports Filed with Securities and Exchange Commission.

       The Depositor  shall prepare or cause to be prepared the initial  current
report on Form 8-K. Within 15 days after each Distribution  Date, the Securities
Administrator  shall,  in  accordance  with  industry  standards,  file with the
Commission via the Electronic Data Gathering and Retrieval System  ("EDGAR"),  a
Form 8-K (or other comparable Form containing the same


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or comparable information or other information mutually agreed upon) with a copy
of the statement to be furnished to the Certificateholders for such Distribution
Date  as  an  exhibit  thereto.  Prior  to  January  30,  2006,  the  Securities
Administrator  shall,  in  accordance  with industry  standards,  file a Form 15
Suspension  Notice with respect to the Trust Fund, if  applicable.  Prior to (i)
March 20, 2006 and (ii) unless and until a Form 15 Suspension  Notice shall have
been filed,  prior to March 20th of each year  thereafter,  the Master  Servicer
shall provide the Securities Administrator with a Master Servicer Certification,
together with a copy of the annual independent accountant's servicing report and
annual statement of compliance of the Servicer to be delivered  pursuant to this
Agreement  and, if applicable,  the annual  independent  accountant's  servicing
report and annual statement of compliance to be delivered by the Master Servicer
pursuant to Sections 4.15 and 4.16.  Prior to (i) March 31, 2006 and (ii) unless
and until a Form 15  Suspension  Notice shall have been filed,  March 31 of each
year  thereafter,  the  Securities  Administrator  shall  file a Form  10-K,  in
substance conforming to industry standards, with respect to the Trust. Such Form
10-K shall include the Master  Servicer  Certification  and other  documentation
provided by the Master Servicer pursuant to the second preceding  sentence.  The
Depositor  hereby  grants to the  Securities  Administrator  a limited  power of
attorney to execute and file each such document on behalf of the Depositor. Such
power of attorney  shall continue until either the earlier of (i) receipt by the
Securities Administrator from the Depositor of written termination of such power
of attorney and (ii) the termination of the Trust Fund. The Depositor  agrees to
promptly  furnish  to the  Securities  Administrator,  from  time to  time  upon
request,  such further information,  reports and financial statements within its
control  related  to  this  Agreement,  the  Mortgage  Loans  as the  Securities
Administrator  reasonably  deems  appropriate  to prepare and file all necessary
reports  with  the  Commission.  The  Securities  Administrator  shall  have  no
responsibility  to file any items  other than those  specified  in this  Section
5.06; provided,  however,  the Securities  Administrator will cooperate with the
Depositor in connection  with any  additional  filings with respect to the Trust
Fund as the Depositor deems necessary under the Securities Exchange Act of 1934,
as amended (the "Exchange  Act").  Fees and expenses  incurred by the Securities
Administrator  in  connection  with this Section 5.06 shall not be  reimbursable
from the Trust Fund.


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                                   ARTICLE VI

                                THE CERTIFICATES

       SECTION 6.01.    The Certificates.

       (a)    The  Certificates  in the  aggregate  will  represent  the  entire
beneficial  ownership  interest  in the  Mortgage  Loans  and all  other  assets
included in REMIC I.

       The  Certificates  will be  substantially  in the forms annexed hereto as
Exhibits  A-1 through A-6.  The  Certificates  of each Class will be issuable in
registered form only, in  denominations  of authorized  Percentage  Interests as
described in the definition thereof.  Each Certificate will share ratably in all
rights of the related Class.

       Upon original issue, the Certificates shall be executed and authenticated
by the  Securities  Administrator  and  delivered by the Trustee to and upon the
written order of the Depositor.  The Certificates shall be executed by manual or
facsimile signature on behalf of the Trust by the Securities Administrator by an
authorized signatory. Certificates bearing the manual or facsimile signatures of
individuals  who  were  at any  time  the  proper  officers  of  the  Securities
Administrator shall bind the Trust, notwithstanding that such individuals or any
of them  have  ceased  to hold  such  offices  prior to the  authentication  and
delivery of such  Certificates  or did not hold such offices at the date of such
Certificates.  No  Certificate  shall be  entitled  to any  benefit  under  this
Agreement or be valid for any purpose,  unless there appears on such Certificate
a  certificate  of  authentication  substantially  in the form  provided  herein
executed  by  the  Securities   Administrator  by  manual  signature,  and  such
certificate  of  authentication  shall  be  conclusive  evidence,  and the  only
evidence,  that such  Certificate  has been  duly  authenticated  and  delivered
hereunder. All Certificates shall be dated the date of their authentication.

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


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Depository or any successor  Depository)  to act as Book-Entry  Custodian  under
such  conditions as the predecessor  Book-Entry  Custodian and the Depository or
any successor Depository may prescribe, provided that the predecessor Book-Entry
Custodian  shall not be  relieved  of any of its duties or  responsibilities  by
reason of any such  appointment of other than the Depository.  If the Securities
Administrator  resigns or is removed in accordance  with the terms  hereof,  the
successor  Securities  Administrator  or, if it so elects,  the Depository shall
immediately  succeed to its predecessor's  duties as Book-Entry  Custodian.  The
Depositor  shall  have the  right to  inspect,  and to  obtain  copies  of,  any
Certificates held as Book-Entry Certificates by the Book-Entry Custodian.

       (c)    The Class B  Certificates  initially  offered and sold in offshore
transactions  in  reliance  on  Regulation  S shall be  issued  in the form of a
temporary  global  certificate in  definitive,  fully  registered  form (each, a
"Regulation S Temporary Global Certificate"),  which shall be deposited with the
Securities  Administrator  or  an  agent  of  the  Securities  Administrator  as
custodian for the Depository and registered in the name of Cede & Co. as nominee
of the  Depository  for the account of  designated  agents  holding on behalf of
Euroclear or  Clearstream.  Beneficial  interests in each Regulation S Temporary
Global Certificate may be held only through Euroclear or Clearstream;  provided,
however,  that such  interests  may be exchanged  for  interests in a Definitive
Certificate in accordance with the requirements described in Section 6.02. After
the  expiration  of the Release  Date, a  beneficial  interest in a Regulation S
Temporary Global  Certificate may be exchanged for a beneficial  interest in the
related  permanent  global  certificate of the same Class (each, a "Regulation S
Permanent Global  Certificate"),  in accordance with the procedures set forth in
Section 6.02. Each Regulation S Permanent Global  Certificate shall be deposited
with the Securities Administrator or an agent of the Securities Administrator as
custodian for the Depository and registered in the name of Cede & Co. as nominee
of the Depository.

       The Class B  Certificates  offered  and sold to  Qualified  Institutional
Buyers  ("QIBs") in reliance on Rule 144A under the Securities Act ("Rule 144A")
or institutional  investors that are accredited  investors within the meaning of
Rule  501(a)(1),  (2),  (3) or (7) of  Regulation  D under  the  Securities  Act
("Institutional  Accredited Investors") will be issued in the form of Book-Entry
Certificates.

       (d)    The Class CE  Certificates  and Class P  Certificates  offered and
sold to QIBs in reliance  on Rule 144A under the  Securities  Act ("Rule  144A")
will be issued in the form of Definitive Certificates.

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


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Administrator  may  establish  a  reasonable  record  date  in  connection  with
solicitations  of consents from or voting by  Certificateholders  and shall give
notice to the Depository of such record date.

       If (i)(A) the Depositor  advises the Securities  Administrator in writing
that the  Depository  is no longer  willing or able to  properly  discharge  its
responsibilities  as  Depository,  and (B) the  Depositor  is unable to locate a
qualified  successor,  (ii) the Depositor at its option  advises the  Securities
Administrator  in writing  that it elects to  terminate  the  book-entry  system
through the  Depository  or (iii) after the  occurrence  of a Servicer  Event of
Default,  Certificate Owners  representing in the aggregate not less than 51% of
the Ownership  Interests of the  Book-Entry  Certificates  advise the Securities
Administrator  through the Depository,  in writing,  that the  continuation of a
book-entry  system  through the Depository is no longer in the best interests of
the  Certificate   Owners,  the  Securities   Administrator   shall  notify  all
Certificate Owners, through the Depository,  of the occurrence of any such event
and of  the  availability  of  Definitive  Certificates  to  Certificate  Owners
requesting  the  same.  With  respect  to  a  Global  Certificate,  the  related
Certificate  Owner  (other  than a Holder of a  Regulation  S  Temporary  Global
Certificate) may request that its interest in a Global  Certificate be exchanged
for a Definitive Certificate.  Upon surrender to the Securities Administrator of
the Book-Entry  Certificates by the Book-Entry  Custodian or the Depository,  as
applicable,  or  the  Global  Certificates  by  the  Depository  accompanied  by
registration  instructions from the Depository for registration of transfer, the
Securities  Administrator shall cause the Definitive  Certificates to be issued.
Such Definitive  Certificates will be issued in minimum denominations of $10,000
except  that any  beneficial  ownership  that was  represented  by a  Book-Entry
Certificate,  or a Global  Certificate,  as  applicable  in an amount  less than
$10,000  immediately prior to the issuance of a Definitive  Certificate shall be
issued  in a  minimum  denomination  equal  to the  amount  represented  by such
Book-Entry  Certificate  or a Global  Certificate,  as  applicable.  None of the
Depositor,  the Servicer, the Master Servicer,  the Securities  Administrator or
the Trustee  shall be liable for any delay in the delivery of such  instructions
and may  conclusively  rely on,  and shall be  protected  in  relying  on,  such
instructions. Upon the issuance of Definitive Certificates all references herein
to obligations imposed upon or to be performed by the Depository shall be deemed
to be imposed upon and performed by the Securities Administrator,  to the extent
applicable  with respect to such  Definitive  Certificates,  and the  Securities
Administrator  shall  recognize the Holders of the  Definitive  Certificates  as
Certificateholders hereunder.

       SECTION 6.02.    Registration of Transfer and Exchange of Certificates.

       (a)    The Securities  Administrator shall cause to be kept at one of the
offices  or  agencies  to  be  appointed  by  the  Securities  Administrator  in
accordance  with the provisions of Section 9.11, a Certificate  Register for the
Certificates  in  which,  subject  to  such  reasonable  regulations  as it  may
prescribe,  the Securities  Administrator  shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.

       (b)    No  transfer  of any Class B  Certificate,  Class CE  Certificate,
Class P Certificate or Residual  Certificate  shall be made unless that transfer
is made pursuant to an effective registration statement under the Securities Act
of  1933,  as  amended  (the  "1933  Act"),   and  effective   registration   or
qualification   under  applicable  state  securities  laws,  or  is  made  in  a
transaction  that does not require such  registration or  qualification.  In the
event that such a transfer of a Class B Certificate, Class CE Certificate, Class
P Certificate  or Residual  Certificate  is to be made without  registration  or
qualification  (other than in connection  with the initial


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transfer of any such Certificate by the Depositor), the Securities Administrator
shall  require  receipt of: (i) if such  transfer is  purportedly  being made in
reliance  upon Rule 144A  under the 1933 Act,  written  certifications  from the
Certificateholder    desiring   to   effect   the   transfer   and   from   such
Certificateholder's  prospective transferee,  substantially in the form attached
hereto as  Exhibit  B-1;  (ii) if such  transfer  is  purportedly  being made in
reliance upon Rule 501(a) under the 1933 Act,  written  certifications  from the
Certificateholder    desiring   to   effect   the   transfer   and   from   such
Certificateholder's  prospective transferee,  substantially in the form attached
hereto as Exhibit  B-2;  (iii) if such  transfer  is  purportedly  being made in
reliance  on  Regulation  S,  a  written   certification  from  the  prospective
transferee, substantially in the form attached hereto as Exhibit B-1 and (iv) in
all  other  cases,  an  Opinion  of  Counsel   satisfactory  to  the  Securities
Administrator  that such  transfer  may be made  without  such  registration  or
qualification  (which  Opinion of  Counsel  shall not be an expense of the Trust
Fund or of the  Depositor,  the Trustee,  the Master  Servicer,  the  Securities
Administrator   or  the   Servicer),   together   with  copies  of  the  written
certification(s) of the Certificateholder desiring to effect the transfer and/or
such  Certificateholder's  prospective  transferee  upon which  such  Opinion of
Counsel  is  based,  if  any.  Neither  of  the  Depositor  nor  the  Securities
Administrator  is obligated to register or qualify any such  Certificates  under
the 1933 Act or any other  securities  laws or to take any action not  otherwise
required  under this  Agreement  to permit  the  transfer  of such  Certificates
without registration or qualification.  Any Certificateholder desiring to effect
the transfer of any such Certificate  shall, and does hereby agree to, indemnify
the Trustee, the Depositor,  the Master Servicer,  the Securities  Administrator
and the Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.

       A holder of a  beneficial  interest in a  Regulation  S Temporary  Global
Certificate  must provide  Euroclear or Clearstream,  as the case may be, with a
certificate  in the form of Annex A to Exhibit  B-1 hereto  certifying  that the
beneficial owner of the interest in such Global Certificate is not a U.S. Person
(as defined in Regulation S), and Euroclear or Clearstream,  as the case may be,
must provide to the Trustee and  Securities  Administrator  a certificate in the
form of Exhibit B-1 hereto  prior to (i) the  payment of  interest or  principal
with respect to such holder's  beneficial interest in the Regulation S Temporary
Global  Certificate  and (ii) any  exchange of such  beneficial  interest  for a
beneficial interest in a Regulation S Permanent Global Certificate.

       (c)    No transfer of a Class CE, Class P or Residual  Certificate or any
interest  therein  shall be made to any Plan subject to ERISA or Section 4975 of
the Code, any Person acting, directly or indirectly,  on behalf of any such Plan
or any Person  acquiring such  Certificates  with "Plan Assets" of a Plan within
the meaning of the Department of Labor  regulation  promulgated at 29 C.F.R. ss.
2510.3-101 ("Plan Assets") unless the Securities  Administrator is provided with
an  Opinion  of  Counsel  on which  the  Depositor,  the  Master  Servicer,  the
Securities  Administrator,   the  Trustee  and  the  Servicer  may  rely,  which
establishes  to  the  satisfaction  of the  Securities  Administrator  that  the
purchase of such  Certificates  is permissible  under  applicable  law, will not
constitute or result in any prohibited  transaction  under ERISA or Section 4975
of the Code and will not subject the Depositor,  the Servicer,  the Trustee, the
Master  Servicer,  the  Securities  Administrator  or  the  Trust  Fund  to  any
obligation or liability  (including  obligations or  liabilities  under ERISA or
Section  4975 of the Code) in addition to those  undertaken  in this  Agreement,
which Opinion of Counsel shall not be an expense of the Depositor, the Servicer,
the Trustee, the Master Servicer, the Securities Administrator,  the Trust Fund.
An  Opinion of Counsel  will not be  required  in  connection  with the  initial
transfer  of any  such  Certificate  by the  Depositor  to an  affiliate  of the
Depositor  (in which case,  the  Depositor or


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any affiliate  thereof shall have deemed to have represented that such affiliate
is  not  a  Plan  or  a  Person   investing  Plan  Assets)  and  the  Securities
Administrator  shall be  entitled  to  conclusively  rely upon a  representation
(which,  upon the request of the  Securities  Administrator,  shall be a written
representation)  from the  Depositor  of the  status  of such  transferee  as an
affiliate of the Depositor.

       Each Transferee of a Mezzanine Certificate or Class B Certificate will be
deemed  to have  represented  by  virtue  of its  purchase  or  holding  of such
Certificate (or interest  therein) that either (a) such Transferee is not a Plan
or purchasing such Certificate with Plan Assets,  (b) in the case of a Mezzanine
Certificate  or Class B-1  Certificate,  it has  acquired  and is  holding  such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 94-84 or FAN
97-03E,  as  amended by PTE 97-34,  62 Fed.  Reg.  39021  (July 21,  1997),  PTE
2000-58,  65 Fed. Reg. 67765  (November 13, 2000) and PTE 2002-41,  67 Fed. Reg.
54487 (August 22, 2002) (the  "Exemption"),  and that it understands  that there
are certain conditions to the availability of the Exemption  including that such
Certificate  must be rated,  at the time of purchase,  not lower than "BBB-" (or
its  equivalent)  by a Rating Agency and in the case of a Class B-1  Certificate
that it will obtain a representation from any transferee that such transferee is
an  accredited  investor so long as it is  required  to obtain a  representation
regarding compliance with the Securities Act or (c) the following conditions are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company general account" (as defined in PTCE 95-60, and (iii) the conditions set
forth in Sections I and III of PTCE 95-60 have been satisfied.

       If any  Certificate  or any  interest  therein  is  acquired  or  held in
violation  of the  conditions  described  in  this  Section  6.02(c),  the  next
preceding permitted  beneficial owner will be treated as the beneficial owner of
that  Certificate,  retroactive  to  the  date  of  transfer  to  the  purported
beneficial owner. Any purported beneficial owner whose acquisition or holding of
any certificate or interest  therein was effected in violation of the conditions
described  in this  Section  6.02(c)  shall  indemnify  and  hold  harmless  the
Depositor,  the Trustee,  the  Servicer,  the Master  Servicer,  the  Securities
Administrator  and the Trust  Fund  from and  against  any and all  liabilities,
claims,  costs or  expenses  incurred  by  those  parties  as a  result  of that
acquisition or holding.

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

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

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


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<PAGE>


       not register the Transfer of any Residual  Certificate  until its receipt
       of, an affidavit and agreement (a "Transfer  Affidavit and Agreement," in
       the form attached hereto as Exhibit B-3) from the proposed Transferee, in
       form  and  substance   satisfactory  to  the  Securities   Administrator,
       representing and warranting,  among other things, that such Transferee is
       a Permitted  Transferee,  that it is not acquiring its Ownership Interest
       in the Residual  Certificate that is the subject of the proposed Transfer
       as a nominee,  trustee or agent for any  Person  that is not a  Permitted
       Transferee,  that for so long as it retains its  Ownership  Interest in a
       Residual Certificate,  it will endeavor to remain a Permitted Transferee,
       and that it has  reviewed  the  provisions  of this  Section  6.02(d) and
       agrees to be bound by them.

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

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

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

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

              (iii)  (A) If any purported  Transferee shall become a Holder of a
Residual  Certificate  in violation of the  provisions of this Section  6.02(d),
then the last preceding  Permitted  Transferee shall be restored,  to the extent
permitted  by law, to all rights as holder  thereof  retroactive  to the date of
registration  of such  Transfer of such  Residual  Certificate.  The  Securities
Administrator  shall be under no liability to any


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<PAGE>


Person for any  registration  of Transfer of a Residual  Certificate  that is in
fact not  permitted  by this  Section  6.02(d) or for making any payments due on
such  Certificate  to the holder  thereof or for  taking any other  action  with
respect to such holder under the provisions of this Agreement.

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

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

              (v)    The  provisions of this Section  6.02(d) set forth prior to
this subsection (v) may be modified, added to or eliminated, provided that there
shall have been delivered to the Securities  Administrator at the expense of the
party seeking to modify, add to or eliminate any such provision the following:

              (A)    written  notification from each Rating Agency to the effect
       that the modification, addition to or elimination of such provisions will
       not cause such Rating Agency to downgrade its then-current ratings of any
       Class of Certificates; and


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

       (e)    Subject  to  the  preceding   subsections,   upon   surrender  for
registration  of  transfer  of any  Certificate  at any  office or agency of the
Securities  Administrator  maintained for such purpose pursuant to Section 9.11,
the Securities  Administrator  shall execute,  authenticate and deliver,  in the
name of the designated  Transferee or Transferees,  one or more new Certificates
of the same Class of a like aggregate Percentage Interest.

       (f)    At the  option  of the  Holder  thereof,  any  Certificate  may be
exchanged for other Certificates of the same Class with authorized denominations
and a like aggregate Percentage Interest,  upon surrender of such Certificate to
be exchanged at any office or agency of the Securities  Administrator maintained
for such purpose  pursuant to Section  9.11.  Whenever any  Certificates  are so
surrendered   for  exchange,   the  Securities   Administrator   shall  execute,
authenticate and deliver,  the Certificates which the  Certificateholder  making
the exchange is entitled to receive.  Every Certificate presented or surrendered
for transfer or exchange shall (if so required by the Securities  Administrator)
be duly endorsed by, or be  accompanied  by a written  instrument of transfer in
the form  satisfactory  to the  Securities  Administrator  duly executed by, the
Holder thereof or his attorney duly authorized in writing.

       (g)    No service charge to the Certificateholders  shall be made for any
transfer or exchange  of  Certificates,  but the  Securities  Administrator  may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.

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

       SECTION 6.03.    Mutilated, Destroyed, Lost or Stolen Certificates.

       If (i)  any  mutilated  Certificate  is  surrendered  to  the  Securities
Administrator,   or  the  Securities  Administrator  receives  evidence  to  its
satisfaction  of the  destruction,  loss or theft of any  Certificate and of the
ownership thereof, and (ii) there is delivered to Securities  Administrator such
security or indemnity as may be required by it to save it harmless, then, in the
absence  of  actual  knowledge  by  the  Securities   Administrator   that  such
Certificate  has  been  acquired  by  a  protected  purchaser,   the  Securities
Administrator,  shall execute,  authenticate and deliver,  in exchange for or in
lieu of any  such  mutilated,  destroyed,  lost  or  stolen  Certificate,  a new
Certificate of the same Class and of like denomination and Percentage  Interest.
Upon the issuance of any new  Certificate  under this  Section,  the  Securities
Administrator  may require the payment of a sum  sufficient  to cover any tax or
other governmental  charge that may be imposed in relation thereto and any other
expenses  (including  the fees and  expenses  of the  Securities  Administrator)
connected therewith. Any replacement Certificate issued pursuant to this Section
shall  constitute  complete  and  indefeasible  evidence  of  ownership  in  the
applicable REMIC


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created hereunder,  as if originally issued,  whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

       SECTION 6.04.    Persons Deemed Owners.

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

       SECTION 6.05.    Certain Available Information.

       On or prior to the date of the  first  sale of any  Class B  Certificate,
Class  CE  Certificate,  Class  P  Certificate  or  Residual  Certificate  to an
Independent   third  party,  the  Depositor  shall  provide  to  the  Securities
Administrator ten copies of any private placement memorandum or other disclosure
document  used by the  Depositor in  connection  with the offer and sale of such
Certificate. In addition, if any such private placement memorandum or disclosure
document is revised,  amended or supplemented at any time following the delivery
thereof to the Securities Administrator, the Depositor promptly shall inform the
Securities  Administrator  of such  event and shall  deliver  to the  Securities
Administrator  ten copies of the  private  placement  memorandum  or  disclosure
document,  as revised,  amended or  supplemented.  The Securities  Administrator
shall maintain at its office as set forth in Section 12.05 hereof and shall make
available  free of charge during normal  business hours for review by any Holder
of a Certificate or any Person  identified to the Securities  Administrator as a
prospective  transferee of a  Certificate,  originals or copies of the following
items:  (i) in the  case of a  Holder  or  prospective  transferee  of a Class B
Certificate,  Class CE Certificate, Class P Certificate or Residual Certificate,
the related private placement  memorandum or other disclosure  document relating
to such  Class  of  Certificates,  in the form  most  recently  provided  to the
Securities  Administrator;  and (ii) in all cases,  (A) this  Agreement  and any
amendments  hereof  entered  into  pursuant  to Section  11.01,  (B) all monthly
statements required to be delivered to  Certificateholders of the relevant Class
pursuant to Section 4.02 since the Closing Date, and all other notices, reports,
statements and written communications delivered to the Certificateholders of the
relevant  Class  pursuant to this  Agreement  since the Closing Date and (C) any
copies of all  Officers'  Certificates  of the  Servicer  since the Closing Date
delivered to the Master  Servicer to evidence such Person's  determination  that
any P&I Advance or Servicing  Advance was, or if made, would be a Nonrecoverable
P&I Advance or Nonrecoverable  Servicing Advance.  Copies and mailing of any and
all of the foregoing  items will be available from the Securities  Administrator
upon request at the expense of the Person requesting the same.


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                                  ARTICLE VII

               THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER

       SECTION 7.01.    Liability of the Depositor, the Servicer and the Master
                        Servicer.

       The Depositor,  the Servicer and the Master Servicer each shall be liable
in  accordance  herewith  only to the  extent  of the  obligations  specifically
imposed by this Agreement upon them in their respective capacities as Depositor,
the Servicer and Master Servicer and undertaken hereunder by the Depositor,  the
Servicer and the Master Servicer herein.

       SECTION 7.02.    Merger or Consolidation of the Depositor,  the Servicer
                        or the Master Servicer.

       Subject  to the  following  paragraph,  the  Depositor  will keep in full
effect its existence,  rights and franchises as a corporation  under the laws of
the jurisdiction of its incorporation.  Subject to the following paragraph,  the
Servicer  will keep in full effect its  existence,  rights and  franchises  as a
corporation under the laws of the jurisdiction of its incorporation.  Subject to
the  following  paragraph,  the  Master  Servicer  will keep in full  effect its
existence,  rights  and  franchises  as  a  national  banking  association.  The
Depositor,  the Servicer and the Master  Servicer  each will obtain and preserve
its  qualification to do business as a foreign  corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement,  the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

       The  Depositor,  the  Servicer  or the Master  Servicer  may be merged or
consolidated  with or into any Person,  or transfer all or substantially  all of
its assets to any Person,  in which case any Person resulting from any merger or
consolidation to which the Depositor,  the Servicer or the Master Servicer shall
be a party,  or any Person  succeeding  to the business of the  Depositor,  such
Servicer or the Master  Servicer,  shall be the successor of the Depositor,  the
Servicer  or the Master  Servicer,  as the case may be,  hereunder,  without the
execution  or filing of any paper or any  further  act on the part of any of the
parties  hereto,  anything  herein to the  contrary  notwithstanding;  provided,
however,  that any successor to the Servicer or the Master  Servicer  shall meet
the  eligibility  requirements  set forth in  clauses  (i) and (iii) of the last
paragraph of Section 8.02(a) or Section 7.06, as applicable.

       SECTION 7.03.    Limitation on Liability of the Depositor, the Servicer,
                        the Master Servicer and Others.

       None of the Depositor,  the Servicer, the Securities  Administrator,  the
Master  Servicer or any of the directors,  officers,  employees or agents of the
Depositor,  the Servicer or the Master  Servicer shall be under any liability to
the Trust Fund or the  Certificateholders for any action taken or for refraining
from the taking of any action in good faith pursuant to this  Agreement,  or for
errors in judgment; provided, however, that this provision shall not protect the
Depositor,  the Servicer, the Securities  Administrator,  the Master Servicer or
any such person against any breach of warranties,  representations  or covenants
made  herein or  against  any  specific  liability  imposed  on any such  Person
pursuant  hereto or against any  liability  which would  otherwise be imposed by
reason of willful misfeasance,  bad faith or gross negligence in


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<PAGE>


the performance of duties or by reason of reckless  disregard of obligations and
duties hereunder. The Depositor, the Servicer, the Securities Administrator, the
Master Servicer and any director,  officer,  employee or agent of the Depositor,
the Servicer,  the Securities  Administrator and the Master Servicer may rely in
good faith on any document of any kind which,  prima facie, is properly executed
and  submitted  by any Person  respecting  any matters  arising  hereunder.  The
Depositor, the Servicer, the Securities  Administrator,  the Master Servicer and
any director,  officer,  employee or agent of the Depositor,  the Servicer,  the
Securities  Administrator  or the Master  Servicer shall be indemnified and held
harmless by the Trust Fund against any loss,  liability  or expense  incurred in
connection with any legal action relating to this Agreement, the Certificates or
any Credit Risk Management  Agreement or any loss, liability or expense incurred
other than by reason of willful  misfeasance,  bad faith or gross  negligence in
the  performance  of duties  hereunder  or by reason of  reckless  disregard  of
obligations  and duties  hereunder.  None of the  Depositor,  the Servicer,  the
Securities Administrator or the Master Servicer shall be under any obligation to
appear in, prosecute or defend any legal action unless such action is related to
its respective duties under this Agreement and, in its opinion, does not involve
it in any expense or liability;  provided,  however, that each of the Depositor,
the Servicer,  the Securities  Administrator  and the Master Servicer may in its
discretion  undertake  any such action which it may deem  necessary or desirable
with respect to this  Agreement and the rights and duties of the parties  hereto
and the interests of the Certificateholders  hereunder. In such event, the legal
expenses and costs of such action and any liability  resulting therefrom (except
any loss,  liability or expense incurred by reason of willful  misfeasance,  bad
faith or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder) shall be expenses, costs
and  liabilities  of the  Trust  Fund,  and the  Depositor,  the  Servicer,  the
Securities  Administrator  and the  Master  Servicer  shall  be  entitled  to be
reimbursed  therefor from the Collection Account or the Distribution  Account as
and to the extent  provided  in Article  III and  Article  IV, any such right of
reimbursement being prior to the rights of the Certificateholders to receive any
amount in the Collection Account and the Distribution Account.

       Notwithstanding  anything to the contrary  contained herein, the Servicer
shall not be liable for any actions or  inactions  prior to the Cut-off  Date of
any prior servicer of the related  Mortgage Loans and the Master  Servicer shall
not be  liable  for any  action  or  inaction  of the  Servicer  or any  Interim
Servicer,  except to the extent expressly  provided  herein,  or the Credit Risk
Management Agreement.

       SECTION 7.04.    Limitation on Resignation of the Servicer.

       (a)    Except as expressly  provided  herein,  the Servicer shall neither
assign all or  substantially  all of its  rights  under  this  Agreement  or the
servicing  hereunder  nor  delegate  all or  substantially  all  of  its  duties
hereunder  nor sell or  otherwise  dispose  of all or  substantially  all of its
property  or assets  without,  in each case,  the prior  written  consent of the
Master  Servicer,  which consent shall not be unreasonably  withheld;  provided,
that in each  case,  there  must be  delivered  to the  Trustee  and the  Master
Servicer a letter  from each Rating  Agency to the effect that such  transfer of
servicing or sale or disposition  of assets will not result in a  qualification,
withdrawal or downgrade of the then-current  rating of any of the  Certificates.
Notwithstanding the foregoing, the Servicer,  without the consent of the Trustee
or the Master Servicer,  may retain  third-party  contractors to perform certain
servicing and loan administration functions, including without limitation hazard
insurance  administration,  tax payment and administration,  flood certification
and  administration,   collection  services  and  similar  functions,  provided,
however,


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<PAGE>


that the  retention  of such  contractors  by the  Servicer  shall not limit the
obligation of the Servicer to service the related Mortgage Loans pursuant to the
terms and conditions of this  Agreement.  The Servicer shall not resign from the
obligations  and  duties  hereby  imposed  on it except by consent of the Master
Servicer  or  upon  determination  that  its  duties  hereunder  are  no  longer
permissible  under  applicable law or as provided in Section  7.04(c).  Any such
determination  pursuant to the preceding  sentence  permitting  the  resignation
(other than pursuant to Section  7.04(c)) of the Servicer  shall be evidenced by
an Opinion of Counsel to such effect obtained at the expense of the Servicer and
delivered to the Trustee and the Rating Agencies. No resignation of the Servicer
shall become  effective until the Master Servicer or a successor  Servicer shall
have assumed the Servicer's  responsibilities,  duties,  liabilities (other than
those  liabilities  arising  prior to the  appointment  of such  successor)  and
obligations under this Agreement.

       (b)    Except as expressly provided herein, the Servicer shall not assign
or transfer  any of its rights,  benefits or  privileges  hereunder to any other
Person,  or delegate to or  subcontract  with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Servicer  hereunder.  The  foregoing  prohibition  on  assignment  shall not
prohibit  the  Servicer  from   designating  a  Sub-Servicer  as  payee  of  any
indemnification  amount payable to the Servicer  hereunder;  provided,  however,
that as  provided  in  Section  3.02,  no  Sub-Servicer  shall be a  third-party
beneficiary  hereunder and the parties hereto shall not be required to recognize
any Sub-Servicer as an indemnitee under this Agreement.

       (c)    Notwithstanding  anything to the contrary herein, the Servicer may
pledge or assign as  collateral  all its rights,  title and interest  under this
Agreement to a lender (the "Lender"), provided, that:

       (1)    upon a  Servicer  Event of  Default  and  receipt  of a notice  of
       termination  by the  Servicer,  the Lender may direct the Servicer or its
       designee to appoint a successor Servicer pursuant to the provisions,  and
       subject  to the  conditions,  set forth in  Section  8.02  regarding  the
       Servicer's appointment of a successor Servicer;

       (2)    the Lender's rights are subject to this Agreement; and

       (3)    the Servicer shall remain subject to termination as servicer under
       this Agreement pursuant to the terms hereof.

       SECTION 7.05.    Limitation on Resignation of the Master Servicer.

       The Master  Servicer  shall not resign  from the  obligations  and duties
hereby imposed on it except upon  determination that its duties hereunder are no
longer permissible under applicable law. Any such determination  pursuant to the
preceding  sentence  permitting the  resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect obtained at the expense of the
Master  Servicer  and  delivered  to the  Trustee  and the Rating  Agencies.  No
resignation of the Master Servicer shall become effective until the Trustee or a
successor Master Servicer  meeting the criteria  specified in Section 7.06 shall
have assumed the Master Servicer's responsibilities,  duties, liabilities (other
than those  liabilities  arising prior to the appointment of such successor) and
obligations under this Agreement.


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       SECTION 7.06.    Assignment of Master Servicing.

       The Master  Servicer  may sell and assign  its  rights and  delegate  its
duties and  obligations in its entirety as Master Servicer under this Agreement;
provided,  however, that: (i) the purchaser or transferee accept in writing such
assignment  and delegation  and assume the  obligations  of the Master  Servicer
hereunder  (a)  shall  have a net  worth of not less  than  $15,000,000  (unless
otherwise  approved by each Rating  Agency  pursuant to clause (ii) below);  (b)
shall be  reasonably  satisfactory  to the  Trustee (as  evidenced  in a writing
signed by the  Trustee);  and (c) shall  execute  and  deliver to the Trustee an
agreement,  in form and substance reasonably  satisfactory to the Trustee, which
contains an  assumption by such Person of the due and punctual  performance  and
observance  of each  covenant and condition to be performed or observed by it as
master servicer under this Agreement, any custodial agreement from and after the
effective date of such  agreement;  (ii) each Rating Agency shall be given prior
written notice of the identity of the proposed  successor to the Master Servicer
and each Rating Agency's rating of the Certificates in effect  immediately prior
to such  assignment,  sale and delegation  will not be downgraded,  qualified or
withdrawn as a result of such assignment, sale and delegation, as evidenced by a
letter to such effect  delivered to the Master  Servicer  and the  Trustee;  and
(iii) the Master  Servicer  assigning  and  selling the master  servicing  shall
deliver to the Trustee an officer's  certificate  and an Opinion of  Independent
counsel,  each stating that all  conditions  precedent to such action under this
Agreement  have been completed and such action is permitted by and complies with
the terms of this Agreement.  No such assignment or delegation  shall affect any
liability of the Master  Servicer  arising out of acts or omissions prior to the
effective date thereof.

       SECTION 7.07.    Rights of the Depositor in Respect of the Servicer and
                        the Master Servicer.

       Each of the  Master  Servicer  and the  Servicer  shall  afford  (and any
Sub-Servicing  Agreement shall provide that each Sub-Servicer  shall afford) the
Depositor and the Trustee, upon reasonable notice, during normal business hours,
access to all records maintained by the Master Servicer or the Servicer (and any
such Sub-Servicer) in respect of the Servicer's rights and obligations hereunder
and access to officers of the Master  Servicer or the Servicer (and those of any
such  Sub-Servicer)  responsible for such  obligations,  and the Master Servicer
shall  have  access  to all such  records  maintained  by the  Servicer  and any
Sub-Servicers.  Upon request, each of the Master Servicer and the Servicer shall
furnish to the Depositor and the Trustee its (and any such  Sub-Servicer's) most
recent financial  statements and such other  information  relating to the Master
Servicer's  or the  Servicer's  capacity to perform its  obligations  under this
Agreement as it possesses  (and that any such  Sub-Servicer  possesses).  To the
extent such information is not otherwise  available to the public, the Depositor
and the Trustee shall not disseminate any information  obtained  pursuant to the
preceding two sentences without the Master Servicer's or the Servicer's  written
consent,  except as required pursuant to this Agreement or to the extent that it
is appropriate to do so (i) to its legal counsel,  auditors,  taxing authorities
or other governmental agencies and the Certificateholders,  (ii) pursuant to any
law, rule, regulation,  order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Depositor and the Trustee
or the  Trust  Fund,  and in any  case,  the  Depositor  or the  Trustee,  (iii)
disclosure of any and all  information  that is or becomes  publicly  known,  or
information  obtained by the Trustee from sources other than the Depositor,  the
Servicer or the Master  Servicer,  (iv) disclosure as required  pursuant to this
Agreement or (v) disclosure of any and all information (A)


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in any  preliminary  or  final  offering  circular,  registration  statement  or
contract or other document  pertaining to the  transactions  contemplated by the
Agreement  approved  in advance by the  Depositor,  the  Servicer  or the Master
Servicer  or (B) to any  affiliate,  independent  or  internal  auditor,  agent,
employee or attorney  of the  Trustee  having a need to know the same,  provided
that the  Trustee  advises  such  recipient  of the  confidential  nature of the
information  being  disclosed,   shall  use  its  best  efforts  to  assure  the
confidentiality of any such disseminated non-public information. Nothing in this
Section  7.07 shall  limit the  obligation  of the  Servicer  to comply with any
applicable law  prohibiting  disclosure of information  regarding the Mortgagors
and the failure of the  Servicer to provide  access as provided in this  Section
7.07 as a result  of such  obligation  shall  not  constitute  a breach  of this
Section.  Nothing in this  Section  7.07 shall  require the Servicer to collect,
create,  collate or otherwise generate any information that it does not generate
in its usual  course of  business.  The  Servicer  shall not be required to make
copies of or ship  documents to any party unless  provisions  have been made for
the reimbursement of the costs thereof.  The Depositor may, but is not obligated
to, enforce the  obligations of the Master  Servicer and the Servicer under this
Agreement  and may, but is not  obligated  to,  perform,  or cause a designee to
perform,  any defaulted  obligation of the Master Servicer or the Servicer under
this  Agreement  or exercise  the rights of the Master  Servicer or any Servicer
under this Agreement; provided that neither the Master Servicer nor the Servicer
shall be relieved of any of its  obligations  under this  Agreement by virtue of
such performance by the Depositor or its designee.  The Depositor shall not have
any  responsibility  or liability for any action or failure to act by the Master
Servicer or the Servicer and is not  obligated to supervise the  performance  of
the Master Servicer or the Servicer under this Agreement or otherwise.

       SECTION 7.08.    Duties of the Credit Risk Manager.

       For and on behalf of the Depositor,  the Credit Risk Manager will provide
reports and recommendations concerning certain delinquent and defaulted Mortgage
Loans,  and as to the collection of any  Prepayment  Charges with respect to the
Mortgage Loans. Such reports and recommendations  will be based upon information
provided to the Credit  Risk  Manager  pursuant  to the Credit  Risk  Management
Agreements, and the Credit Risk Manager shall look solely to the Servicer and/or
Master  Servicer for all  information  and data  (including loss and delinquency
information  and data) relating to the servicing of the related  Mortgage Loans.
Upon  any  termination  of the  Credit  Risk  Manager  or the  appointment  of a
successor  Credit Risk Manager,  the Depositor shall give written notice thereof
to the Servicer, the Master Servicer, the Securities Administrator, the Trustee,
and each Rating Agency.  Notwithstanding  the foregoing,  the termination of the
Credit Risk Manager  pursuant to this Section shall not become  effective  until
the appointment of a successor Credit Risk Manager.

       SECTION 7.09.    Limitation Upon Liability of the Credit Risk Manager.

       Neither  the Credit Risk  Manager,  nor any of its  directors,  officers,
employees,  or  agents  shall  be  under  any  liability  to  the  Trustee,  the
Certificateholders, or the Depositor for any action taken or for refraining from
the  taking of any action  made in good faith  pursuant  to this  Agreement,  in
reliance  upon  information  provided  by the  Servicer  under the  Credit  Risk
Management Agreement,  or for errors in judgment;  provided,  however, that this
provision  shall not protect the Credit Risk Manager or any such person  against
liability  that would  otherwise be imposed by reason of willful  malfeasance or
bad faith in its  performance  of its duties.  The Credit  Risk  Manager and any
director,  officer,  employee,  or agent of the Credit Risk  Manager


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may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person  respecting any matters arising  hereunder,  and may
rely in good faith upon the  accuracy of  information  furnished by the Servicer
pursuant to the Credit  Risk  Management  Agreement  in the  performance  of its
duties thereunder and hereunder.

       SECTION 7.10.    Removal of the Credit Risk Manager.

       The  Credit  Risk  Manager  may be  removed  as Credit  Risk  Manager  by
Certificateholders  holding  not less than 66 2/3% of the  Voting  Rights in the
Trust   Fund,   in  the   exercise  of  its  or  their  sole   discretion.   The
Certificateholders  shall provide  written  notice of the Credit Risk  Manager's
removal to the Trustee.  Upon receipt of such notice,  the Trustee shall provide
written  notice to the  Credit  Risk  Manager  of its  removal,  which  shall be
effective upon receipt of such notice by the Credit Risk Manager, with a copy to
the Securities Administrator and the Master Servicer.


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                                  ARTICLE VIII

                                     DEFAULT

       SECTION 8.01.    Servicer Events of Default.

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

              (i)    any  failure  by the  Servicer  to remit to the  Securities
       Administrator  for  distribution  to the  Certificateholders  any payment
       (other than a P&I  Advance  required to be made from its own funds on any
       Servicer Remittance Date pursuant to Section 5.03) required to be made by
       the Servicer under the terms of the Certificates and this Agreement which
       continues unremedied for a period of one Business Day after the date upon
       which written notice of such failure,  requiring the same to be remedied,
       shall have been given to the Servicer by the Depositor or the Trustee (in
       which case notice shall be provided by telecopy), or to the Servicer, the
       Depositor,  the Trustee and by the Holders of Certificates entitled to at
       least 25% of the Voting Rights; or

              (ii)   any failure on the part of the Servicer  duly to observe or
       perform in any material  respect any other of the covenants or agreements
       on the part of the Servicer contained in this Agreement,  or the material
       breach by the Servicer of any  representation  and warranty  contained in
       Section 2.05,  which  continues  unremedied for a period of 30 days after
       the date on which written  notice of such failure,  requiring the same to
       be remedied,  shall have been given to the  Servicer by the  Depositor or
       the  Trustee or to the  Servicer,  the  Depositor  and the Trustee by the
       Holders of  Certificates  entitled to at least 25% of the Voting  Rights;
       provided,  however,  that in the case of a failure  that  cannot be cured
       within  thirty  (30)  days,  the  cure  period  may  be  extended  for an
       additional  thirty  (30) days if such  Servicer  can  demonstrate  to the
       reasonable  satisfaction  of the Trustee that the Servicer is  diligently
       pursuing remedial action; or

              (iii)  a  decree  or order of a court  or  agency  or  supervisory
       authority  having  jurisdiction  in the premises in an  involuntary  case
       under any present or future  federal or state  bankruptcy,  insolvency or
       similar law or the appointment of a conservator or receiver or liquidator
       in any  insolvency,  readjustment  of debt,  marshalling  of  assets  and
       liabilities or similar  proceeding,  or for the winding-up or liquidation
       of its  affairs,  shall have been  entered  against the Servicer and such
       decree or order shall have remained in force undischarged or unstayed for
       a period of 90 days; or

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

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


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              (vi)   failure  by  the  Servicer  to  duly  perform,  within  the
       required time period,  its  obligations  under Section 3.17, 3.18 or 3.19
       which failure  continues  unremedied  for a period of ten (10) days after
       the date on which written  notice of such failure,  requiring the same to
       be  remedied,  shall have been given to the Servicer by any party to this
       Agreement; or

              (vii)  any failure of the  Servicer to make any P&I Advance on any
       Servicer  Remittance Date required to be made from its own funds pursuant
       to Section 5.03 which continues  unremedied until 3:00 p.m. New York time
       on the Business Day immediately  following the Servicer  Remittance Date;
       or

              (viii) failure of the  Servicer to maintain at least an  "average"
       rating from the Rating Agencies.

       If a Servicer  Event of Default  described in clauses (i) through (vi) or
(viii) of this Section  shall occur,  then,  and in each and every such case, so
long as such  Servicer  Event of  Default  shall  not have  been  remedied,  the
Depositor  or the Trustee  may,  and at the written  direction of the Holders of
Certificates  entitled to at least 51% of Voting Rights,  the Trustee shall,  by
notice in writing to the  defaulting  Servicer (and to the Depositor if given by
the  Trustee  or to the  Trustee if given by the  Depositor)  with a copy to the
Master  Servicer  and  each  Rating  Agency,  terminate  all of the  rights  and
obligations  of the  defaulting  Servicer in its capacity as Servicer under this
Agreement,  to the extent  permitted by law, and in and to the related  Mortgage
Loans and the  proceeds  thereof.  If a Servicer  Event of Default  described in
clause (vii) hereof shall occur,  the Trustee shall, by notice in writing to the
defaulting Servicer, the Depositor and the Master Servicer, terminate all of the
rights and  obligations of the  defaulting  Servicer in its capacity as Servicer
under this  Agreement and in and to the related  Mortgage Loans and the proceeds
thereof.  Subject to Section  8.02,  on or after the  receipt by the  defaulting
Servicer of such  written  notice,  all  authority  and power of the  defaulting
Servicer under this Agreement,  whether with respect to the Certificates  (other
than as a Holder of any Certificate) or the related Mortgage Loans or otherwise,
shall pass to and be vested in the Master  Servicer  pursuant  to and under this
Section,  and, without limitation,  the Master Servicer is hereby authorized and
empowered,  as attorney-in-fact or otherwise,  to execute and deliver, on behalf
of and at the expense of the  defaulting  Servicer,  any and all  documents  and
other  instruments and to do or accomplish all other acts or things necessary or
appropriate  to effect the  purposes of such notice of  termination,  whether to
complete the transfer and  endorsement  or  assignment  of the related  Mortgage
Loans and related  documents,  or  otherwise.  The  defaulting  Servicer  agrees
promptly  (and in any event no later than ten Business  Days  subsequent to such
notice) to provide the Master Servicer with all documents and records  requested
by it to enable it to assume  the  defaulting  Servicer's  functions  under this
Agreement,   and  to  cooperate  with  the  Master  Servicer  in  effecting  the
termination of the defaulting Servicer's  responsibilities and rights under this
Agreement,  including,  without limitation, the transfer within one Business Day
to the Master Servicer for administration by it of all cash amounts which at the
time shall be or should  have been  credited by the  defaulting  Servicer to the
Collection Account held by or on behalf of the defaulting Servicer or thereafter
be  received  with  respect to the  related  Mortgage  Loans or any  related REO
Property (provided,  however,  that the defaulting Servicer shall continue to be
entitled to receive all amounts  accrued or owing to it under this  Agreement on
or prior to the date of such  termination,  whether in respect of P&I  Advances,
Servicing  Advances,  accrued and unpaid Servicing Fees or otherwise,  and shall
continue to be entitled to the  benefits of Section


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7.03,  notwithstanding  any such  termination,  with respect to events occurring
prior  to  such  termination).   Reimbursement  of  unreimbursed  P&I  Advances,
Servicing  Advances  and  accrued and unpaid  Servicing  Fees shall be made on a
first in, first out ("FIFO") basis no later than the related Servicer Remittance
Date. For purposes of this Section  8.01(a),  the Trustee shall not be deemed to
have knowledge of a Servicer  Event of Default  unless a Responsible  Officer of
the Trustee assigned to and working in the Trustee's  Corporate Trust Office has
actual knowledge  thereof or unless written notice of any event which is in fact
such a Servicer  Event of Default is received  by the  Trustee at its  Corporate
Trust  Office and such notice  references  the  Certificates,  the Trust or this
Agreement.  The Trustee shall promptly notify the Master Servicer and the Rating
Agencies  of the  occurrence  of a  Servicer  Event of  Default  of which it has
knowledge as provided above.

       The Master  Servicer shall be entitled to be reimbursed by the defaulting
Servicer  (or  from  amounts  on  deposit  in the  Distribution  Account  if the
defaulting  Servicer is unable to fulfill  its  obligations  hereunder)  for all
reasonable  out-of-pocket  or third party costs  associated with the transfer of
servicing  from the  defaulting  Servicer,  including  without  limitation,  any
reasonable  out-of-pocket  or third party costs or expenses  associated with the
complete  transfer  of all  servicing  data and the  completion,  correction  or
manipulation of such servicing data as may be required by the Master Servicer to
correct any errors or  insufficiencies  in the  servicing  data or  otherwise to
enable the Master  Servicer to service the related  Mortgage  Loans properly and
effectively,  upon  presentation of reasonable  documentation  of such costs and
expenses.

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

              (i)    any  failure  on the part of the  Master  Servicer  duly to
       observe or perform in any material  respect any other of the covenants or
       agreements  on  the  part  of  the  Master  Servicer  contained  in  this
       Agreement, or the breach by the Master Servicer of any representation and
       warranty  contained in Section 2.04,  which  continues  unremedied  for a
       period of 30 days after the date on which written notice of such failure,
       requiring  the same to be  remedied,  shall have been given to the Master
       Servicer by the Depositor or the Trustee or to the Master  Servicer,  the
       Depositor and the Trustee by the Holders of  Certificates  entitled to at
       least 25% of the Voting Rights; or

              (ii)   a  decree  or order of a court  or  agency  or  supervisory
       authority  having  jurisdiction  in the premises in an  involuntary  case
       under any present or future  federal or state  bankruptcy,  insolvency or
       similar law or the appointment of a conservator or receiver or liquidator
       in any  insolvency,  readjustment  of debt,  marshalling  of  assets  and
       liabilities or similar  proceeding,  or for the winding-up or liquidation
       of its affairs,  shall have been entered  against the Master Servicer and
       such  decree  or order  shall  have  remained  in force  undischarged  or
       unstayed for a period of 90 days; or

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

              (iv)   the Master Servicer shall admit in writing its inability to
       pay its debts  generally  as they  become  due,  file a petition  to take
       advantage of any applicable


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       insolvency or reorganization  statute, make an assignment for the benefit
       of its creditors, or voluntarily suspend payment of its obligations.

       If a Master Servicer Event of Default shall occur,  then, and in each and
every such case, so long as such Master Servicer Event of Default shall not have
been remedied, the Depositor or the Trustee may, and at the written direction of
the  Holders of  Certificates  entitled  to at least 51% of Voting  Rights,  the
Trustee shall, by notice in writing to the Master Servicer (and to the Depositor
if given by the Trustee or to the Trustee if given by the Depositor) with a copy
to each Rating Agency, terminate all of the rights and obligations of the Master
Servicer in its capacity as Master Servicer under this Agreement,  to the extent
permitted by law, and in and to the Mortgage Loans and the proceeds thereof.  On
or after  the  receipt  by the  Master  Servicer  of such  written  notice,  all
authority and power of the Master  Servicer under this  Agreement,  whether with
respect to the  Certificates  (other than as a Holder of any Certificate) or the
Mortgage Loans or otherwise  including,  without  limitation,  the  compensation
payable to the Master Servicer under this Agreement, shall pass to and be vested
in the Trustee pursuant to and under this Section, and, without limitation,  the
Trustee is hereby authorized and empowered, as attorney-in-fact or otherwise, to
execute and deliver, on behalf of and at the expense of the Master Servicer, any
and all documents and other  instruments  and to do or accomplish all other acts
or things  necessary  or  appropriate  to effect the  purposes of such notice of
termination,  whether to complete the transfer and  endorsement or assignment of
the Mortgage  Loans and related  documents,  or otherwise.  The Master  Servicer
agrees  promptly (and in any event no later than ten Business Days subsequent to
such notice) to provide the Trustee with all documents and records  requested by
it to enable it to assume the Master Servicer's  functions under this Agreement,
and to cooperate  with the Trustee in effecting  the  termination  of the Master
Servicer's responsibilities and rights under this Agreement (provided,  however,
that the Master  Servicer  shall  continue to be entitled to receive all amounts
accrued  or  owing to it under  this  Agreement  on or prior to the date of such
termination  and shall  continue to be entitled to the benefits of Section 7.03,
notwithstanding any such termination,  with respect to events occurring prior to
such termination).  For purposes of this Section 8.01(b),  the Trustee shall not
be deemed to have  knowledge  of a Master  Servicer  Event of  Default  unless a
Responsible  Officer of the Trustee  assigned  to and  working in the  Trustee's
Corporate Trust Office has actual knowledge  thereof or unless written notice of
any event which is in fact such a Master  Servicer  Event of Default is received
by the Trustee and such notice  references the  Certificates,  the Trust or this
Agreement.  The  Trustee  shall  promptly  notify  the  Rating  Agencies  of the
occurrence  of a Master  Servicer  Event of Default of which it has knowledge as
provided above.

       To the extent that the costs and  expenses of the Trustee  related to the
termination of the Master  Servicer,  appointment of a successor Master Servicer
or  the  transfer  and  assumption  of  the  master  servicing  by  the  Trustee
(including,  without  limitation,  (i) all legal costs and  expenses and all due
diligence  costs and expenses  associated  with an  evaluation  of the potential
termination  of the Master  Servicer as a result of a Master  Servicer  Event of
Default and (ii) all costs and expenses associated with the complete transfer of
the master  servicing,  including all servicing files and all servicing data and
the  completion,  correction or  manipulation  of such  servicing data as may be
required   by  the   successor   Master   Servicer  to  correct  any  errors  or
insufficiencies  in the  servicing  data or  otherwise  to enable the  successor
Master  Servicer to master  service the Mortgage  Loans in accordance  with this
Agreement)  are  not  fully  and  timely  reimbursed  by the  terminated  Master
Servicer,  the  Trustee  shall be entitled  to  reimbursement  of such costs and
expenses from the Distribution Account.


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<PAGE>


       SECTION 8.02.    Master Servicer to Act; Appointment of Successor.

       (a)    On  and  after  the  time  the  Servicer   receives  a  notice  of
termination,  the Master  Servicer shall be the successor in all respects to the
Servicer in its capacity as Servicer under this  Agreement and the  transactions
set forth or  provided  for  herein,  and all the  responsibilities,  duties and
liabilities  relating  thereto  and arising  thereafter  shall be assumed by the
Master Servicer  (except for any  representations  or warranties of the Servicer
under this Agreement, the responsibilities,  duties and liabilities contained in
Section 2.03 and the obligation to deposit amounts in respect of losses pursuant
to  Section  3.10(b))  by the terms and  provisions  hereof  including,  without
limitation,  the Servicer's obligations to make P&I Advances pursuant to Section
5.03 of this  Agreement;  provided,  however,  that if the  Master  Servicer  is
prohibited  by law  or  regulation  from  obligating  itself  to  make  advances
regarding  delinquent  mortgage  loans,  then the Master  Servicer  shall not be
obligated to make P&I Advances  pursuant to Section 5.03 of this Agreement;  and
provided  further,  that any failure to perform such duties or  responsibilities
caused by such  Servicer's  failure to provide  information  required by Section
8.01 shall not be  considered  a default by the Master  Servicer as successor to
the  Servicer  hereunder;  provided,  however,  that  (1) it is  understood  and
acknowledged  by the parties  hereto  that there will be a period of  transition
(not to exceed  120 days)  before the actual  servicing  functions  can be fully
transferred  to the Master  Servicer  or any  successor  Servicer  appointed  in
accordance  with the  following  provisions  and (2) any failure to perform such
duties  or  responsibilities   caused  by  the  Servicer's  failure  to  provide
information required by Section 8.01 of this Agreement shall not be considered a
default by the Master  Servicer as successor to the  Servicer.  As  compensation
therefor,  the Master  Servicer  shall be entitled to the  Servicing Fee and all
funds relating to the related  Mortgage  Loans to which the terminated  Servicer
would have been entitled if it had continued to act  hereunder.  Notwithstanding
the above  and  subject  to the  immediately  following  paragraph,  the  Master
Servicer  may, if it shall be unwilling to so act, or shall,  if it is unable to
so act  promptly  appoint  or  petition  a court of  competent  jurisdiction  to
appoint, a Person that satisfies the eligibility criteria set forth below as the
successor to the  terminated  Servicer under this Agreement in the assumption of
all or any part of the responsibilities, duties or liabilities of the terminated
Servicer under this Agreement.

       Notwithstanding  anything  herein to the contrary,  in no event shall the
Trustee  or the  Master  Servicer  be liable  for any  Servicing  Fee or for any
differential  in the amount of the Servicing  Fee paid  hereunder and the amount
necessary to induce any successor  Servicer to act as successor  Servicer  under
this Agreement and the transactions set forth or provided for herein.

       Any successor  Servicer  appointed  under this  Agreement  must (i) be an
established mortgage loan servicing institution that is a Fannie Mae and Freddie
Mac  approved  seller/servicer,  (ii) be  approved  by each  Rating  Agency by a
written  confirmation  from each  Rating  Agency  that the  appointment  of such
successor  Servicer  would not result in the reduction or withdrawal of the then
current ratings of any outstanding Class of Certificates, (iii) have a net worth
of not less than $15,000,000 and (iv) assume all the responsibilities, duties or
liabilities  of the  related  Servicer  (other than  liabilities  of the related
Servicer  hereunder incurred prior to termination of such Servicer under Section
8.01  herein)  under this  Agreement as if  originally  named as a party to this
Agreement.

       (b)    (1) All servicing transfer costs (including,  without  limitation,
servicing  transfer costs of the type described in Section  8.02(a) and incurred
by the Trustee,  the Master


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Servicer and any successor  Servicer under paragraph (b)(2) below) shall be paid
by the terminated Servicer upon presentation of reasonable documentation of such
costs, and if such predecessor or initial Servicer,  as applicable,  defaults in
its obligation to pay such costs,  the successor  Servicer,  the Master Servicer
and the Trustee shall be entitled to  reimbursement  therefor from the assets of
the Trust Fund.

              (2)    No  appointment  of a successor to the Servicer  under this
Agreement shall be effective until the assumption by the successor of all of the
Servicer's  responsibilities,  duties and liabilities  hereunder.  In connection
with such appointment and assumption described herein, the Trustee may make such
arrangements  for the compensation of such successor out of payments on Mortgage
Loans as it and such  successor  shall agree;  provided,  however,  that no such
compensation  shall  be in  excess  of  that  permitted  the  Servicer  as  such
hereunder. The Depositor, the Trustee and such successor shall take such action,
consistent  with this  Agreement,  as shall be necessary to effectuate  any such
succession.  Pending  appointment  of a  successor  to the  Servicer  under this
Agreement,  the  Master  Servicer  shall  act in such  capacity  as  hereinabove
provided.

       SECTION 8.03.    Notification to Certificateholders.

       (a)    Upon  any  termination  of the  Servicer  or the  Master  Servicer
pursuant to Section  8.01(a) or (b) or any  appointment  of a  successor  to the
Servicer or the Master Servicer pursuant to Section 8.02, the Trustee shall give
prompt  written  notice thereof to the  Certificateholders  at their  respective
addresses appearing in the Certificate Register.

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

       SECTION 8.04.    Waiver of Servicer Events of Default.

       The Holders  representing at least 66% of the Voting Rights  evidenced by
all Classes of Certificates  affected by any default,  Servicer Event of Default
or Master Servicer Event of Default  hereunder may waive such default,  Servicer
Event of Default or Master Servicer Event of Default; provided,  however, that a
Servicer  Event of Default  under clause (i) or (vii) of Section  8.01(a) may be
waived  only by all of the Holders of the  Regular  Certificates.  Upon any such
waiver of a  default,  Servicer  Event of Default  or Master  Servicer  Event of
Default,  such default,  Servicer  Event of Default or Master  Servicer Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose  hereunder.  No such  waiver  shall  extend to any  subsequent  or other
default, Servicer Event of Default or Master Servicer Event of Default or impair
any right consequent thereon except to the extent expressly so waived.


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                                   ARTICLE IX

             CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

       SECTION 9.01.    Duties of Trustee and Securities Administrator.

       The  Trustee,  prior  to the  occurrence  of a Master  Servicer  Event of
Default and after the curing or waiver of all Master  Servicer Events of Default
which may have  occurred,  and the  Securities  Administrator  each undertake to
perform such duties and only such duties as are  specifically  set forth in this
Agreement   as  duties  of  the  Trustee  and  the   Securities   Administrator,
respectively.  During the continuance of a Master Servicer Event of Default, the
Trustee  shall  exercise  such of the  rights  and  powers  vested in it by this
Agreement,  and use the same  degree  of care and  skill  in its  exercise  as a
prudent person would exercise or use under the  circumstances  in the conduct of
such person's own affairs.  Any  permissive  right of the Trustee  enumerated in
this Agreement shall not be construed as a duty.

       Each of the Trustee and the Securities Administrator, upon receipt of all
resolutions,  certificates,  statements, opinions, reports, documents, orders or
other  instruments  furnished  to it,  which  are  specifically  required  to be
furnished  pursuant to any  provision of this  Agreement,  shall examine them to
determine  whether they conform to the  requirements of this  Agreement.  If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, the Trustee or the Securities Administrator,  as the case may
be,  shall  take such  action  as it deems  appropriate  to have the  instrument
corrected,  and if the  instrument  is not  corrected to its  satisfaction,  the
Securities  Administrator  will  provide  notice to the Trustee  thereof and the
Trustee will provide notice to the Certificateholders.

       The Trustee shall promptly  remit to the related  Servicer any complaint,
claim, demand, notice or other document (collectively,  the "Notices") delivered
to the Trustee as a consequence of the assignment of any Mortgage Loan hereunder
and  relating to the  servicing of the Mortgage  Loans;  provided  than any such
notice (i) is  delivered  to the Trustee at its  Corporate  Trust  Office,  (ii)
contains  information  sufficient to permit the Trustee to make a  determination
that the real property to which such document  relates is a Mortgaged  Property.
The  Trustee  shall  have no duty  hereunder  with  respect to any Notice it may
receive  or which may be  alleged to have been  delivered  to or served  upon it
unless such Notice is delivered to it or served upon it at its  Corporate  Trust
Office and such Notice contains the information required pursuant to clause (ii)
of the preceding sentence.

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

              (i)    Prior  to the  occurrence  of a  Master  Servicer  Event of
       Default,  and after the  curing  or  waiver of all such  Master  Servicer
       Events of Default which may have occurred with respect to the Trustee and
       at all times with respect to the Securities Administrator, the duties and
       obligations  of the  Trustee  shall be  determined  solely by the express
       provisions  of this  Agreement,  neither the  Trustee nor the  Securities
       Administrator  shall be liable except for the  performance of such duties
       and  obligations  as are  specifically  set forth in this  Agreement,  no
       implied  covenants  or  obligations  shall be read  into  this  Agreement
       against the Trustee or the Securities  Administrator  and, in the


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<PAGE>


       absence  of bad  faith  on the  part  of the  Trustee  or the  Securities
       Administrator, respectively, the Trustee or the Securities Administrator,
       respectively,  may  conclusively  rely, as to the truth of the statements
       and  the  correctness  of  the  opinions  expressed  therein,   upon  any
       certificates  or  opinions  furnished  to the  Trustee or the  Securities
       Administrator,  respectively,  that conform to the  requirements  of this
       Agreement;

              (ii)   Neither the Trustee nor the Securities  Administrator shall
       be liable for an error of  judgment  made in good faith by a  Responsible
       Officer or Responsible  Officers of the Trustee or an officer or officers
       of the Securities Administrator,  respectively, unless it shall be proved
       that the  Trustee  or the  Securities  Administrator,  respectively,  was
       negligent in ascertaining the pertinent facts; and

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

       SECTION 9.02.   Certain Matters Affecting Trustee and Securities
                       Administrator.

       (a)    Except as otherwise provided in Section 9.01:

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

              (ii)   The Trustee and the  Securities  Administrator  may consult
       with  counsel  of its  selection  and any  advice of such  counsel or any
       Opinion  of  Counsel  shall  be  full  and  complete   authorization  and
       protection  in respect of any action  taken or  suffered or omitted by it
       hereunder in good faith and in accordance  with such advice or Opinion of
       Counsel;

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


                                      159
<PAGE>


       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;

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

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

              (vi)   The  Trustee  may  execute  any of  the  trusts  or  powers
       hereunder  or  perform  any duties  hereunder  either  directly  or by or
       through agents or attorneys and the Trustee shall not be responsible  for
       any  misconduct  or  negligence  on the  part of any  agent  or  attorney
       appointed with due care by it hereunder;

              (vii)  The Trustee shall not be liable for any loss resulting from
       the  investment  of funds held in the  Collection  Account,  for any loss
       resulting  from the  investment  of funds held in the Reserve Fund or for
       any loss resulting from the redemption or sale of any such  investment as
       therein authorized;

              (viii) The  Trustee  shall  not be  deemed  to have  notice of any
       default,  Master  Servicer  Event of Default or Servicer Event of Default
       unless a Responsible  Officer of the Trustee has actual knowledge thereof
       or unless  written notice of any event which is in fact such a default is
       received by a Responsible  Officer of the Trustee at the Corporate  Trust
       Office of the Trustee,  and such notice  references the  Certificates and
       this Agreement; and

              (ix)   The  rights,   privileges,   protections,   immunities  and
       benefits given to the Trustee,  including,  without limitation, its right
       to be  indemnified,  are extended to, and shall be  enforceable  by, each
       agent, custodian and other Person employed to act hereunder.

       (b)    All  rights of action  under  this  Agreement  or under any of the
Certificates,  enforceable  by the  Trustee,  may be  enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other  proceeding  relating  thereto,  and any


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such suit,  action or  proceeding  instituted by the Trustee shall be brought in
its name for the benefit of all the Holders of such Certificates, subject to the
provisions of this Agreement.

       (c)    The Trustee is hereby directed by the Depositor to execute the Cap
Contracts  on  behalf  of the  Trust  Fund in the  form  presented  to it by the
Depositor  and  shall  have  no  responsibility  for  the  contents  of the  Cap
Contracts,  including,  without  limitation,  the representations and warranties
contained  therein.  Any funds payable by the Trustee under the Cap Contracts at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained  herein or in the Cap Contracts,  the Trustee shall not be required to
make any payments to the counterparty under the Cap Contracts.

       (d)    None of the Securities  Administrator,  the Master  Servicer,  the
Servicer,  the Seller,  the  Depositor,  the  Custodian or the Trustee  shall be
responsible  for the acts or omissions of the others,  it being  understood that
this Agreement  shall not be construed to render those partners joint  venturers
or agents of one another.

       SECTION 9.03.    Trustee and Securities  Administrator  not  Liable  for
                        Certificates or Mortgage Loans.

       The recitals  contained  herein and in the  Certificates  (other than the
signature of the Securities Administrator,  the authentication of the Securities
Administrator on the Certificates,  the acknowledgments of the Trustee contained
in Article II and the  representations  and warranties of the Trustee in Section
9.12) shall be taken as the  statements of the Depositor and neither the Trustee
nor  the  Securities   Administrator   assumes  any   responsibility  for  their
correctness.  Neither  the Trustee nor the  Securities  Administrator  makes any
representations  or  warranties  as to  the  validity  or  sufficiency  of  this
Agreement  (other  than as  specifically  set forth in  Section  9.12) or of the
Certificates  (other than the  signature  of the  Securities  Administrator  and
authentication  of the Securities  Administrator on the  Certificates) or of any
Mortgage Loan or related document. The Trustee and the Securities  Administrator
shall not be  accountable  for the use or application by the Depositor of any of
the  Certificates  or of the  proceeds of such  Certificates,  or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn  from any Collection  Account
by the related Servicer, other than with respect to the Securities Administrator
any funds held by it or on behalf of the Trustee in accordance with Section 3.23
and 3.24.

       SECTION 9.04.    Trustee and Securities Administrator May Own
                        Certificates.

       Each of the Trustee and the  Securities  Administrator  in its individual
capacity or any other  capacity may become the owner or pledgee of  Certificates
and may transact  business with other  interested  parties and their  Affiliates
with the same  rights it would  have if it were not  Trustee  or the  Securities
Administrator.

       SECTION 9.05.    Fees and Expenses of Trustee and Securities
                        Administrator.

       The fees of the Trustee and the Securities Administrator hereunder and of
Wells Fargo under the Custodial  Agreement  shall be paid in  accordance  with a
side letter  agreement  with the Master  Servicer and at the sole expense of the
Master Servicer.  In addition,  the Trustee, the Securities  Administrator,  the
Custodian  and any  director,  officer,  employee or agent of the


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Trustee, the Securities  Administrator and the Custodian shall be indemnified by
the Trust and held harmless  against any loss,  liability or expense  (including
reasonable  attorney's fees and expenses) incurred by the Trustee, the Custodian
or the Securities  Administrator in connection with any claim or legal action or
any pending or threatened  claim or legal action arising out of or in connection
with the acceptance or administration  of its respective  obligations and duties
under  this  Agreement,  including  the Cap  Contracts  and  any  and all  other
agreements  related  hereto,  other than any loss,  liability or expense (i) for
which the Trustee is  indemnified by the Master  Servicer or any Servicer,  (ii)
that  constitutes  a  specific  liability  of  the  Trustee  or  the  Securities
Administrator  pursuant  to Section  11.01(g)  or (iii) any loss,  liability  or
expense  incurred by reason of willful  misfeasance,  bad faith or negligence in
the   performance  of  duties   hereunder  by  the  Trustee  or  the  Securities
Administrator  or by reason of  reckless  disregard  of  obligations  and duties
hereunder.  In no event shall the  Trustee or the  Securities  Administrator  be
liable  for  special,  indirect  or  consequential  loss or  damage  of any kind
whatsoever  (including  but not  limited to lost  profits),  even if it has been
advised of the  likelihood of such loss or damage and  regardless of the form of
action. The Master Servicer agrees to indemnify the Trustee,  from, and hold the
Trustee harmless against, any loss,  liability or expense (including  reasonable
attorney's  fees and  expenses)  incurred by the Trustee by reason of the Master
Servicer's willful misfeasance, bad faith or gross negligence in the performance
of its  duties  under  this  Agreement  or by  reason of the  Master  Servicer's
reckless  disregard  of its  obligations  and duties  under this  Agreement.  In
addition,  the Seller  agrees to  indemnify  the  Trustee  for,  and to hold the
Trustee harmless against,  any loss,  liability or expense arising out of, or in
connection with, the provisions set forth in the last paragraph of Section 2.01,
including,  without limitation,  all costs,  liabilities and expenses (including
reasonable  legal fees and  expenses)  of  investigating  and  defending  itself
against any claim, action or proceeding, pending or threatened,  relating to the
provisions of such paragraph. The indemnities in this Section 9.05 shall survive
the termination or discharge of this Agreement and the resignation or removal of
the Master Servicer, the Trustee, the Securities Administrator or the Custodian.
Any payment  hereunder made by the Master  Servicer to the Trustee shall be from
the Master Servicer's own funds, without reimbursement from REMIC I therefor.

       SECTION 9.06.    Eligibility  Requirements for  Trustee  and  Securities
                        Administrator.

       The  Trustee  and the  Securities  Administrator  shall at all times be a
corporation or an association (other than the Depositor,  the Seller, the Master
Servicer or any Affiliate of the  foregoing)  organized and doing business under
the laws of any state or the United  States of  America,  authorized  under such
laws to exercise  corporate trust powers,  having a combined capital and surplus
of at least $50,000,000 (or a member of a bank holding company whose capital and
surplus is at least  $50,000,000)  and subject to  supervision or examination by
federal or state authority. If such corporation or association publishes reports
of conditions at least annually,  pursuant to law or to the  requirements of the
aforesaid  supervising  or  examining  authority,  then for the purposes of this
Section the  combined  capital and surplus of such  corporation  or  association
shall be deemed to be its combined  capital and surplus as set forth in its most
recent report of conditions so published. In case at any time the Trustee or the
Securities  Administrator,   as  applicable,  shall  cease  to  be  eligible  in
accordance  with the  provisions of this Section,  the Trustee or the Securities
Administrator,  as applicable,  shall resign  immediately in the manner and with
the effect specified in Section 9.07.


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       SECTION 9.07.    Resignation  and  Removal  of  Trustee  and  Securities
                        Administrator.

       The Trustee and the Securities  Administrator  may at any time resign and
be discharged  from the trust hereby created by giving written notice thereof to
the Depositor,  to the Master Servicer, to the Securities  Administrator (or the
Trustee, if the Securities Administrator resigns) and to the Certificateholders.
Upon receiving such notice of resignation,  the Depositor shall promptly appoint
a successor trustee or successor securities administrator by written instrument,
in duplicate,  which instrument  shall be delivered to the resigning  Trustee or
Securities  Administrator,  as  applicable,  and to  the  successor  trustee  or
successor  securities  administrator,  as applicable.  A copy of such instrument
shall be  delivered  to the  Certificateholders,  the  Trustee,  the  Securities
Administrator and the Master Servicer by the Depositor.  If no successor trustee
or successor  securities  administrator  shall have been so  appointed  and have
accepted  appointment  within  30  days  after  the  giving  of such  notice  of
resignation, the resigning Trustee or Securities Administrator,  as the case may
be,  may,  at the expense of the Trust  Fund,  petition  any court of  competent
jurisdiction for the appointment of a successor  trustee,  successor  securities
administrator, Trustee or Securities Administrator, as applicable.

       If at any time the Trustee or the Securities Administrator shall cease to
be eligible in accordance  with the provisions of Section 9.06 and shall fail to
resign after written  request  therefor by the Depositor,  or if at any time the
Trustee or the Securities  Administrator  shall become  incapable of acting,  or
shall be  adjudged  bankrupt or  insolvent,  or a receiver of the Trustee or the
Securities  Administrator  or of its property shall be appointed,  or any public
officer  shall  take  charge  or  control  of  the  Trustee  or  the  Securities
Administrator  or of its property or affairs for the purpose of  rehabilitation,
conservation  or  liquidation,  then the Depositor may remove the Trustee or the
Securities  Administrator,  as  applicable  and appoint a  successor  trustee or
successor securities  administrator,  as applicable,  by written instrument,  in
duplicate,  which instrument shall be delivered to the Trustee or the Securities
Administrator  so removed and to the successor  trustee or successor  securities
administrator.   A  copy  of  such   instrument   shall  be   delivered  to  the
Certificateholders,  the Trustee,  the Securities  Administrator  and the Master
Servicer by the Depositor.

       The Holders of Certificates entitled to at least 51% of the Voting Rights
may at any time remove the Trustee or the Securities Administrator and appoint a
successor trustee or successor securities administrator by written instrument or
instruments,  in triplicate,  signed by such Holders or their  attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Depositor,  one complete set to the Trustee or the Securities  Administrator  so
removed and one  complete  set to the  successor  so  appointed.  A copy of such
instrument  shall be  delivered to the  Certificateholders,  the Trustee (in the
case  of  the  removal  of  the   Securities   Administrator),   the  Securities
Administrator  (in the  case  of the  removal  of the  Trustee)  and the  Master
Servicer by the Depositor.

       Any resignation or removal of the Trustee or the Securities Administrator
and  appointment of a successor  trustee or successor  securities  administrator
pursuant to any of the  provisions  of this Section  shall not become  effective
until acceptance of appointment by the successor trustee or successor securities
administrator, as applicable, as provided in Section 8.08.


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       Notwithstanding  anything to the contrary  contained  herein,  the Master
Servicer and the Securities Administrator shall at all times be the same Person.

       SECTION 9.08.    Successor Trustee or Securities Administrator.

       Any successor trustee or successor securities  administrator appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Depositor
and  its  predecessor  trustee  or  predecessor   securities   administrator  an
instrument accepting such appointment  hereunder,  and thereupon the resignation
or removal of the predecessor  trustee or predecessor  securities  administrator
shall  become  effective  and such  successor  trustee or  successor  securities
administrator  without any further act, deed or  conveyance,  shall become fully
vested with all the rights,  powers,  duties and  obligations of its predecessor
hereunder,  with the like effect as if originally named as trustee or securities
administrator   herein.  The  predecessor  trustee  or  predecessor   securities
administrator  shall  deliver to the successor  trustee or successor  securities
administrator  all Mortgage Loan Documents and related  documents and statements
to the extent held by it hereunder, as well as all moneys, held by it hereunder,
and  the  Depositor  and  the  predecessor  trustee  or  predecessor  securities
administrator  shall  execute and  deliver  such  instruments  and do such other
things as may  reasonably be required for more fully and  certainly  vesting and
confirming in the successor  trustee or successor  securities  administrator all
such rights, powers, duties and obligations.

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

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

       SECTION 9.09.    Merger  or   Consolidation   of  Trustee  or  Securities
                        Administrator.

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


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       SECTION 9.10.    Appointment of Co-Trustee or Separate Trustee.

       Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal  requirements of any  jurisdiction in which any part of the
REMIC I or property  securing  the same may at the time be located,  the Trustee
shall have the power and shall  execute and deliver all  instruments  to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee,  or separate trustee or separate  trustees,  of all or
any part of REMIC I, and to vest in such  Person or Persons,  in such  capacity,
and for the benefit of the Holders of the  Certificates,  such title to REMIC I,
or any part thereof,  and, subject to the other provisions of this Section 9.10,
such powers, duties, obligations,  rights and trusts as the 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
9.06 hereunder and no notice to Holders of  Certificates  of the  appointment of
co-trustee(s)  or separate  trustee(s)  shall be  required  under  Section  8.08
hereof.

       In the  case of any  appointment  of a  co-trustee  or  separate  trustee
pursuant  to this  Section  9.10 all  rights,  powers,  duties  and  obligations
conferred  or imposed  upon the Trustee  shall be  conferred or imposed upon and
exercised or performed by the Trustee and such  separate  trustee or  co-trustee
jointly,  except to the extent that under any law of any  jurisdiction  in which
any  particular  act or acts are to be  performed  by the  Trustee  (whether  as
Trustee  hereunder or as successor to a defaulting  Master Servicer  hereunder),
the Trustee shall be  incompetent or unqualified to perform such act or acts, in
which event such rights,  powers, duties and obligations  (including the holding
of title to REMIC I or any portion  thereof in any such  jurisdiction)  shall be
exercised and performed by such separate  trustee or co-trustee at the direction
of the Trustee.

       Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then  separate  trustees and  co-trustees,  as
effectively  as if  given  to each of  them.  Every  instrument  appointing  any
separate  trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trust conferred,  shall be vested with the estates or property  specified in
its instrument of appointment,  either jointly with the Trustee,  or separately,
as may be provided  therein,  subject to all the  provisions of this  Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording  protection to, the Trustee.  Every
such instrument shall be filed with the Trustee.

       Any  separate  trustee or  co-trustee  may, at any time,  constitute  the
Trustee,  its agent or attorney-in-fact,  with full power and authority,  to the
extent not  prohibited  by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name.  If any separate  trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties,  rights,  remedies  and trusts shall vest in and be exercised by the
Trustee,  to the extent  permitted by law,  without the  appointment of a new or
successor trustee or co-trustee.

       SECTION 9.11.    Appointment of Office or Agency.

       The  Certificates  may be  surrendered  for  registration  of transfer or
exchange  at  the  Securities   Administrator's  office  located  at  Sixth  and
Marquette, Minneapolis, Minnesota 55479, and presented for final distribution at
the Corporate  Trust Office of the  Securities  Administrator


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<PAGE>


where notices and demands to or upon the Securities  Administrator in respect of
the Certificates and this Agreement may be served.

       SECTION 9.12.    Representations and Warranties.

       The Trustee hereby  represents and warrants to the Master  Servicer,  the
Securities  Administrator,  the Servicer and the Depositor as applicable,  as of
the Closing Date, that:

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

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

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

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

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

              (vi)   No litigation is pending or, to the best of its  knowledge,
       threatened  against it, which would  prohibit it from  entering into this
       Agreement  or,  in its good  faith  reasonable  judgment,  is  likely  to
       materially  and adversely  affect either the ability of it to perform its
       obligations under this Agreement or its financial condition.


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                                   ARTICLE X

                                   TERMINATION

       SECTION 10.01.    Termination Upon Repurchase or Liquidation of All
                         Mortgage Loans.

       (a)    Subject  to  Section  10.02,   the  respective   obligations   and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Securities  Administrator,   the  Servicer  and  the  Trustee  (other  than  the
obligations of the Master  Servicer to the Trustee  pursuant to Section 9.05 and
of the Servicer to make  remittances  to the  Securities  Administrator  and the
Securities  Administrator  to make  payments  in  respect of the REMIC I Regular
Interests,  REMIC  I  Regular  Interests  or  the  Classes  of  Certificates  as
hereinafter  set forth) shall  terminate upon payment to the  Certificateholders
and the deposit of all amounts  held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date coinciding with or
following the earlier to occur of (i) the purchase by the Master Servicer of all
Mortgage  Loans and each REO  Property  remaining  in REMIC I and (ii) the final
payment or other  liquidation (or any advance with respect  thereto) of the last
Mortgage Loan or REO Property remaining in REMIC I; provided,  however,  that in
no event shall the trust created hereby  continue  beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy,  the late ambassador of the United States to the Court of St.
James, living on the date hereof and (ii) the Last Scheduled  Distribution Date.
The purchase by the Master  Servicer of all Mortgage Loans and each REO Property
remaining in REMIC I shall be at a price (the "Termination  Price") equal to the
sum of (i) the greater of (A) the aggregate  Purchase  Price of all the Mortgage
Loans  included in REMIC I, plus the appraised  value of each REO  Property,  if
any,  included  in REMIC I,  such  appraisal  to be  conducted  by an  appraiser
mutually agreed upon by the Master Servicer and the Trustee in their  reasonable
discretion and (B) the aggregate fair market value of all of the assets of REMIC
I (as  determined  by the Master  Servicer and the  Trustee,  as of the close of
business on the third  Business Day next preceding the date upon which notice of
any such  termination is furnished to  Certificateholders  pursuant to the third
paragraph of this Section  10.01) plus (ii) any amounts due the Servicer and the
Master Servicer in respect of unpaid  Servicing Fees,  Master Servicing Fees and
outstanding P&I Advances and Servicing Advances.

       (b)    The Master  Servicer  shall have the right to purchase  all of the
Mortgage Loans and each REO Property remaining in REMIC I pursuant to clause (i)
of the  preceding  paragraph no later than the  Determination  Date in the month
immediately  preceding the Distribution  Date on which the Certificates  will be
retired;  provided,  however, that the Master Servicer may elect to purchase all
of the  Mortgage  Loans and each REO  Property  remaining in REMIC I pursuant to
clause (i) above only if the aggregate Stated Principal  Balance of the Mortgage
Loans and each REO  Property  remaining  in the  Trust  Fund at the time of such
election  is  reduced  to less  than or  equal  to 10% of the  aggregate  Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date. By acceptance of
the Residual  Certificates,  the Holder of the Residual  Certificates agrees, in
connection with any termination hereunder, to assign and transfer any portion of
the Termination Price in excess of par, and to the extent received in respect of
such  termination,  to pay any  such  amounts  to the  Holders  of the  Class CE
Certificates.


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<PAGE>


       (c)    Notice  of the  liquidation  of the  Certificates  shall  be given
promptly by the  Securities  Administrator  by letter to the  Certificateholders
mailed (a) in the event such notice is given in connection  with the purchase of
the  Mortgage  Loans and each REO Property by the Master  Servicer,  not earlier
than the 15th day and not later  than the 25th day of the month  next  preceding
the month of the final  distribution on the Certificates or (b) otherwise during
the month of such final distribution on or before the Determination Date in such
month,  in each case specifying (i) the  Distribution  Date upon which the Trust
Fund will  terminate  and the final  payment  in  respect of the REMIC I Regular
Interests,  REMIC I  Regular  Interests  or the  Certificates  will be made upon
presentation  and  surrender  of the related  Certificates  at the office of the
Securities  Administrator therein designated,  (ii) the amount of any such final
payment,  (iii) that no interest  shall accrue in respect of the REMIC I Regular
Interests, REMIC I Regular Interests or Certificates from and after the Interest
Accrual Period  relating to the final  Distribution  Date therefor and (iv) that
the  Record  Date  otherwise   applicable  to  such  Distribution  Date  is  not
applicable,  payments  being made only upon  presentation  and  surrender of the
Certificates  at the office of the Securities  Administrator.  In the event such
notice is given in connection with the purchase of all of the Mortgage Loans and
each REO  Property  remaining  in REMIC I by the  Master  Servicer,  the  Master
Servicer  shall  deliver  to the  Securities  Administrator  for  deposit in the
Distribution  Account not later than the Business Day prior to the  Distribution
Date  on  which  the  final  distribution  on  the  Certificates  an  amount  in
immediately available funds equal to the above-described  Termination Price. The
Securities  Administrator shall remit to the Servicer,  the Master Servicer, the
Trustee and the Custodian from such funds deposited in the Distribution  Account
(i) any amounts  which the  Servicer  would be  permitted to withdraw and retain
from the Collection  Account  pursuant to Section 3.09 as if such funds had been
deposited  therein  (including all unpaid Servicing Fees and all outstanding P&I
Advances and Servicing Advances) and (ii) any other amounts otherwise payable by
the Securities  Administrator to the Master Servicer, the Trustee, the Custodian
and the Servicer from amounts on deposit in the Distribution Account pursuant to
the terms of this Agreement prior to making any final distributions  pursuant to
Section  10.01(d)  below.  Upon  certification  to the Trustee by the Securities
Administrator  of the making of such final  deposit,  the Trustee shall promptly
release or cause to be released to the Master  Servicer the  Mortgage  Files for
the  remaining  Mortgage  Loans,  and Trustee  shall  execute  all  assignments,
endorsements and other  instruments  delivered to it and necessary to effectuate
such transfer.

       (d)    Upon presentation of the Certificates by the Certificateholders on
the final  Distribution Date, the Securities  Administrator  shall distribute to
each  Certificateholder  so presenting and  surrendering  its  Certificates  the
amount  otherwise  distributable  on such  Distribution  Date in accordance with
Section 5.01 in respect of the  Certificates so presented and  surrendered.  Any
funds not distributed to any Holder or Holders of Certificates  being retired on
such  Distribution  Date  because of the  failure  of such  Holder or Holders to
tender their  Certificates  shall,  on such date, be set aside and held in trust
and credited to the account of the appropriate  non-tendering Holder or Holders.
If any  Certificates  as to which notice has been given pursuant to this Section
10.01 shall not have been surrendered for  cancellation  within six months after
the time  specified in such notice,  the Securities  Administrator  shall mail a
second notice to the  remaining  non-tendering  Certificateholders  to surrender
their  Certificates for cancellation in order to receive the final  distribution
with  respect  thereto.  If within  one year  after the  second  notice all such
Certificates  shall not have been surrendered for  cancellation,  the Securities
Administrator  shall,  directly or through an agent,  mail a final notice to the
remaining  non-tendering   Certificateholders   concerning  surrender  of  their
Certificates.  The costs and


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expenses   of   maintaining   the  funds  in  trust  and  of   contacting   such
Certificateholders shall be paid out of the assets remaining in the trust funds.
If within one year after the final notice any such  Certificates  shall not have
been surrendered for cancellation, the Securities Administrator shall pay to the
Depositor all such amounts,  and all rights of non-tendering  Certificateholders
in or to such amounts  shall  thereupon  cease.  No interest  shall accrue or be
payable to any  Certificateholder  on any amount held in trust by the Securities
Administrator as a result of such  Certificateholder's  failure to surrender its
Certificate(s)  on the final  Distribution  Date for final  payment  thereof  in
accordance  with  this  Section  10.01.  Any such  amounts  held in trust by the
Securities Administrator shall be held uninvested in an Eligible Account.

       SECTION 10.02.    Additional Termination Requirements.

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

              (i)    The  Trustee  shall  specify  the first  day in the  90-day
       liquidation  period in a statement  attached to each Trust  REMIC's final
       Tax Return  pursuant to Treasury  regulation  Section  1.860F-1 and shall
       satisfy all requirements of a qualified liquidation under Section 860F of
       the Code and any  regulations  thereunder,  as evidenced by an Opinion of
       Counsel obtained by and at the expense of the Master Servicer;

              (ii)   During such 90-day  liquidation  period and, at or prior to
       the time of making of the final payment on the Certificates,  the Trustee
       shall sell all of the assets of REMIC I to the Master  Servicer for cash;
       and

              (iii)  At the  time of the  making  of the  final  payment  on the
       Certificates, the Securities Administrator shall distribute or credit, or
       cause to be  distributed  or  credited,  to the  Holders of the  Residual
       Certificates all cash on hand in the Trust Fund (other than cash retained
       to meet claims), and the Trust Fund shall terminate at that time.

       (b)    At the  expense of the Master  Servicer  (or, if the Trust Fund is
being  terminated as a result of the occurrence of the event described in clause
(ii) of the first paragraph of Section 10.01, at the expense of the Trust Fund),
the Master  Servicer  shall  prepare or cause to be prepared  the  documentation
required in connection  with the adoption of a plan of liquidation of each Trust
REMIC pursuant to this Section 10.02.

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


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                                   ARTICLE XI

                                REMIC PROVISIONS

       SECTION 11.01.    REMIC Administration.

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

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

       (c)    The Securities  Administrator  shall be reimbursed for any and all
expenses relating to any tax audit of the Trust Fund (including, but not limited
to, any professional  fees or any  administrative  or judicial  proceedings with
respect to each Trust REMIC that involve the Internal  Revenue  Service or state
tax authorities),  including the expense of obtaining any tax related Opinion of
Counsel except as specified herein. The Securities  Administrator,  as agent for
each Trust REMIC's tax matters  person shall (i) act on behalf of the Trust Fund
in relation to any tax matter or controversy  involving any Trust REMIC and (ii)
represent the Trust Fund in any administrative or judicial  proceeding  relating
to an examination  or audit by any  governmental  taxing  authority with respect
thereto. The holder of the largest Percentage Interest of each Class of Residual
Certificates  shall  be  designated,  in  the  manner  provided  under  Treasury
regulations    section    1.860F-4(d)   and   Treasury    regulations    section
301.6231(a)(7)-1,  as the  tax  matters  person  of the  related  REMIC  created
hereunder.  By their acceptance  thereof,  the holder of the largest  Percentage
Interest of the Residual  Certificates  hereby agrees to irrevocably appoint the
Securities  Administrator  or an  Affiliate  as its agent to perform  all of the
duties of the tax matters person for the Trust Fund.

       (d)    The  Securities  Administrator  shall  prepare  and  file  and the
Trustee  shall sign all of the Tax  Returns  in  respect  of each REMIC  created
hereunder.  The expenses of preparing  and filing such returns shall be borne by
the Securities Administrator without any right of reimbursement therefor.

       (e)    The Securities Administrator shall perform on behalf of each Trust
REMIC all reporting and other tax compliance duties that are the  responsibility
of such REMIC under the Code, the REMIC Provisions or other compliance  guidance
issued by the Internal  Revenue Service or any state or local taxing  authority.
Among its other duties,  as required by the Code, the REMIC  Provisions or other
such compliance guidance, the Securities  Administrator


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<PAGE>


shall provide (i) to any Transferor of a Residual  Certificate  such information
as is  necessary  for the  application  of any tax relating to the transfer of a
Residual  Certificate  to any  Person  who is not a  Permitted  Transferee  upon
receipt of additional reasonable  compensation,  (ii) to the  Certificateholders
such  information or reports as are required by the Code or the REMIC Provisions
including  reports  relating to  interest,  original  issue  discount and market
discount or premium (using the  Prepayment  Assumption as required) and (iii) to
the Internal  Revenue Service the name,  title,  address and telephone number of
the  person  who will  serve as the  representative  of each  Trust  REMIC.  The
Depositor shall provide or cause to be provided to the Securities Administrator,
within ten (10) days after the Closing Date,  all  information  or data that the
Securities  Administrator  reasonably determines to be relevant for tax purposes
as to the valuations and issue prices of the  Certificates,  including,  without
limitation,  the price, yield,  prepayment assumption and projected cash flow of
the Certificates.

       (f)    To the  extent in the  control of the  Trustee  or the  Securities
Administrator,  each such Person (i) shall take such action and shall cause each
REMIC  created  hereunder to take such action as shall be necessary to create or
maintain the status  thereof as a REMIC under the REMIC  Provisions,  (ii) shall
not take any action, cause the Trust Fund to take any action or fail to take (or
fail to cause to be taken) any action that, under the REMIC Provisions, if taken
or not taken,  as the case may be,  could (A)  endanger the status of each Trust
REMIC as a REMIC or (B)  result in the  imposition  of a tax upon the Trust Fund
(including but not limited to the tax on prohibited  transactions  as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set forth
in Section  860G(d) of the Code) (either such event,  an "Adverse  REMIC Event")
unless such action or inaction is permitted  under this Agreement or the Trustee
and the Securities Administrator have received an Opinion of Counsel,  addressed
to the them (at the  expense of the party  seeking to take such action but in no
event at the  expense of the  Trustee or the  Securities  Administrator)  to the
effect that the  contemplated  action will not, with respect to any Trust REMIC,
endanger such status or result in the  imposition of such a tax, nor (iii) shall
the  Securities  Administrator  take or fail to take any action  (whether or not
authorized  hereunder) as to which the Trustee has advised it in writing that it
has  received  an Opinion of Counsel to the effect  that an Adverse  REMIC Event
could  occur  with  respect  to  such  action;   provided  that  the  Securities
Administrator  may conclusively  rely on such Opinion of Counsel and shall incur
no liability for its action or failure to act in accordance with such Opinion of
Counsel. In addition, prior to taking any action with respect to any Trust REMIC
or the respective assets of each, or causing any Trust REMIC to take any action,
which is not  contemplated  under the terms of this  Agreement,  the  Securities
Administrator  will consult with the Trustee or its designee,  in writing,  with
respect to whether such action could cause an Adverse  REMIC Event to occur with
respect to any Trust REMIC, and the Securities  Administrator shall not take any
such  action or cause any  Trust  REMIC to take any such  action as to which the
Trustee has advised it in writing that an Adverse  REMIC Event could occur.  The
Trustee may consult with counsel to make such  written  advice,  and the cost of
same shall be home by the party seeking to take the action not permitted by this
Agreement, but in no event shall such cost be an expense of the Trustee.

       (g)    In the event that any tax is imposed on "prohibited  transactions"
of any REMIC created hereunder as defined in Section  860F(a)(2) of the Code, on
the "net income from  foreclosure  property" of such REMIC as defined in Section
860G(c) of the Code,  on any  contributions  to any such REMIC after the Startup
Day  therefor  pursuant  to  Section  860G(d)  of the Code,  or any other tax is
imposed  by the Code or any  applicable  provisions  of state or local


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<PAGE>


tax laws,  such tax shall be  charged  (i) to the  Trustee  pursuant  to Section
11.03,  if such tax arises out of or results from a breach by the Trustee of any
of its obligations  under this Article XI, (ii) to the Securities  Administrator
pursuant to Section 11.03, if such tax arises out of or results from a breach by
the Securities  Administrator  of any of its obligations  under this Article XI,
(iii) to the Master  Servicer  pursuant to Section 11.03, if such tax arises out
of or results  from a breach by the Master  Servicer  of any of its  obligations
under  Article IV or under this  Article  XI, (iv) to the  Servicer  pursuant to
Section  11.03,  if such tax  arises  out of or  results  from a  breach  by the
Servicer of any of its  obligations  under Article III or under this Article XI,
or (v) in all other  cases,  against  amounts  on  deposit  in the  Distribution
Account and shall be paid by withdrawal therefrom.

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

       (i)    Following the Startup Day,  neither the  Securities  Administrator
nor the  Trustee  shall  accept any  contributions  of assets to any Trust REMIC
other than in connection with any Qualified  Substitute  Mortgage Loan delivered
in  accordance  with  Section  2.03 unless it shall have  received an Opinion of
Counsel to the effect that the  inclusion  of such assets in the Trust Fund will
not cause the  related  REMIC to fail to qualify as a REMIC at any time that any
Certificates  are  outstanding  or subject such REMIC to any tax under the REMIC
Provisions or other  applicable  provisions  of federal,  state and local law or
ordinances.

       (j)    Neither  the  Trustee  nor  the  Securities   Administrator  shall
knowingly enter into any arrangement by which any Trust REMIC will receive a fee
or other compensation for services nor permit either REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or  "permitted  investments"  as defined in Section  860G(a)(5)  of the
Code.

       (k)    The   Securities   Administrator   shall  apply  for  an  employer
identification number with the Internal Revenue Service via a Form SS-4 or other
comparable  method  for  each  REMIC.  In  connection  with the  foregoing,  the
Securities  Administrator  shall  provide the name and address of the person who
can be contacted to obtain information required to be reported to the holders of
Regular Interests in each REMIC as required by IRS Form 8811.

       SECTION 11.02.    Prohibited Transactions and Activities.

       None of the Depositor,  the Servicer, the Securities  Administrator,  the
Master  Servicer or the Trustee shall sell,  dispose of or substitute for any of
the Mortgage Loans (except in connection  with (i) the foreclosure of a Mortgage
Loan,  including  but not  limited  to, the  acquisition  or sale of a Mortgaged
Property  acquired by deed in lieu of foreclosure,  (ii) the bankruptcy of REMIC
I, (iii) the  termination  of REMIC I pursuant  to Article X of this  Agreement,
(iv) a  substitution  pursuant to Article II of this Agreement or (v) a purchase
of Mortgage  Loans  pursuant to Article II of this  Agreement),  nor acquire any
assets for any Trust  REMIC  (other than REO  Property  acquired in respect of a
defaulted  Mortgage  Loan),  nor  sell  or  dispose  of any  investments  in the
Collection  Account  or the  Distribution  Account  for  gain,  nor  accept  any
contributions  to any Trust REMIC after the Closing Date (other than a Qualified
Substitute  Mortgage Loan delivered in accordance with Section 2.03),  unless it
has received an Opinion of Counsel,  addressed to the Trustee and the Securities
Administrator  (at  the  expense  of


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<PAGE>


the party seeking to cause such sale, disposition,  substitution, acquisition or
contribution  but in no event at the  expense  of the  Trustee)  that such sale,
disposition,  substitution,  acquisition  or  contribution  will not (a)  affect
adversely  the status of any Trust REMIC as a REMIC or (b) cause any Trust REMIC
to be subject to a tax on "prohibited  transactions" or "contributions" pursuant
to the REMIC Provisions.

       SECTION 11.03.    Indemnification.

       (a)    The Trustee  agrees to be liable for any taxes and costs  incurred
by  the  Trust  Fund,  the  Depositor,   the  Master  Servicer,  the  Securities
Administrator  or the Servicer  including,  without  limitation,  any reasonable
attorneys  fees  imposed on or incurred by the Trust Fund,  the  Depositor,  the
Master Servicer, the Securities Administrator or the Servicer as a result of the
Trustee's  failure  to perform  its  covenants  set forth in this  Article XI in
accordance with the standard of care of the Trustee set forth in this Agreement.

       (b)    The Servicer  agrees to indemnify the Trust Fund,  the  Depositor,
the Master Servicer, the Securities  Administrator and the Trustee for any taxes
and costs including any reasonable attorneys' fees imposed on or incurred by the
Trust Fund, the Depositor,  the Master Servicer, the Securities Administrator or
the Trustee,  as a result of the Servicer's failure to perform its covenants set
forth in Article III in accordance with the standard of care of the Servicer set
forth in this Agreement.

       (c)    The  Master  Servicer  agrees to  indemnify  the Trust  Fund,  the
Depositor,  the Servicer and the Trustee for any taxes and costs  including  any
reasonable  attorneys'  fees  imposed  on or  incurred  by the Trust  Fund,  the
Depositor,  the  Servicer or the Trustee,  as a result of the Master  Servicer's
failure to perform its covenants set forth in Article IV in accordance  with the
standard of care of the Master Servicer set forth in this Agreement.

       (d)    The Securities Administrator agrees to be liable for any taxes and
costs  incurred by the Trust Fund,  the  Depositor,  the Servicer or the Trustee
including  any  reasonable  attorneys'  fees imposed on or incurred by the Trust
Fund, the  Depositor,  the Servicer or the Trustee as a result of the Securities
Administrator's failure to perform its covenants set forth in this Article XI in
accordance with the standard of care of the Securities  Administrator  set forth
in this Agreement.


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                                  ARTICLE XII

                            MISCELLANEOUS PROVISIONS

       SECTION 12.01.    Amendment.

       This  Agreement  may be amended from time to time by the  Depositor,  the
Servicer, the Master Servicer, the Securities Administrator and the Trustee, but
without the consent of any of the Certificateholders,  (i) to cure any ambiguity
or  defect,  (ii)  to  correct,  modify  or  supplement  any  provisions  herein
(including to give effect to the expectations of  Certificateholders),  or (iii)
to make any other provisions with respect to matters or questions  arising under
this  Agreement  which shall not be  inconsistent  with the  provisions  of this
Agreement  and that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Trustee, adversely affect in any material respect the interests
of any  Certificateholder;  provided that any such amendment shall be deemed not
to   adversely   affect  in  any   material   respect  the   interests   of  the
Certificateholders  and no such  Opinion of  Counsel  shall be  required  if the
Person  requesting  such  amendment  obtains a letter  from each  Rating  Agency
stating that such amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates.  No amendment shall be
deemed  to  adversely  affect  in any  material  respect  the  interests  of any
Certificateholder  who shall have consented  thereto,  and no Opinion of Counsel
shall be  required  to  address  the  effect of any such  amendment  on any such
consenting Certificateholder.

       This  Agreement  may also be amended from time to time by the  Depositor,
the Servicer, the Master Servicer, the Securities  Administrator and the Trustee
with the consent of the Holders of Certificates  entitled to at least 66% of the
Voting  Rights for the  purpose of adding any  provisions  to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments  received on Mortgage Loans which are required to be distributed on
any  Certificate  without  the consent of the Holder of such  Certificate,  (ii)
adversely  affect in any  material  respect the  interests of the Holders of any
Class of Certificates in a manner,  other than as described in (i),  without the
consent of the Holders of Certificates of such Class  evidencing at least 66% of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the  immediately  preceding  clauses (i) and (ii)  without the consent of the
Holders  of  all  Certificates  then  outstanding.   Notwithstanding  any  other
provision  of this  Agreement,  for  purposes  of the giving or  withholding  of
consents pursuant to this Section 12.01,  Certificates registered in the name of
the  Depositor or the  Servicer or any  Affiliate  thereof  shall be entitled to
Voting  Rights with  respect to matters  affecting  such  Certificates.  Without
limiting the  generality  of the  foregoing,  any  amendment  to this  Agreement
required in connection  with the  compliance  with or the  clarification  of any
reporting  obligations  described  in Section  5.06 hereof shall not require the
consent of any Certificateholder and without the need for any Opinion of Counsel
or Rating Agency confirmation.

       Notwithstanding  any contrary  provision of this  Agreement,  the Trustee
shall not consent to any amendment to this Agreement  unless it shall have first
received an Opinion of Counsel to the effect that such  amendment  is  permitted
hereunder  and will not result in the  imposition  of any tax on any Trust REMIC
pursuant to the REMIC  Provisions or cause any Trust


                                      174
<PAGE>


REMIC  to fail to  qualify  as a REMIC at any time  that  any  Certificates  are
outstanding  and  that  such  amendment  is  authorized  or  permitted  by  this
Agreement.

       Promptly  after the  execution of any such  amendment  the Trustee  shall
furnish a copy of such amendment to each Certificateholder.

       It shall not be  necessary  for the consent of  Certificateholders  under
this Section 12.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.  The
manner of obtaining  such consents and of evidencing  the  authorization  of the
execution  thereof by  Certificateholders  shall be  subject to such  reasonable
regulations as the Trustee may prescribe.

       The cost of any  Opinion  of  Counsel to be  delivered  pursuant  to this
Section 12.01 shall be borne by the Person seeking the related amendment, but in
no event shall such Opinion of Counsel be an expense of the Trustee.

       The Trustee may,  but shall not be obligated to enter into any  amendment
pursuant to this Section that affects its rights,  duties and  immunities  under
this Agreement or otherwise.

       SECTION 12.02.    Recordation of Agreement; Counterparts.

       To the extent  permitted by applicable  law, this Agreement is subject to
recordation in all appropriate  public offices for real property  records in all
the  counties  or other  comparable  jurisdictions  in  which  any or all of the
properties  subject to the Mortgages are situated,  and in any other appropriate
public  recording  office or elsewhere,  such  recordation to be effected by the
Depositor at the expense of the  Certificateholders,  but only upon direction of
the  Trustee  accompanied  by an Opinion  of  Counsel  to the  effect  that such
recordation   materially   and   beneficially   affects  the  interests  of  the
Certificateholders.

       For the purpose of  facilitating  the  recordation  of this  Agreement as
herein  provided  and  for  other  purposes,  this  Agreement  may  be  executed
simultaneously in any number of counterparts,  each of which  counterparts shall
be deemed to be an original,  and such counterparts shall constitute but one and
the same instrument.

       SECTION 12.03.    Limitation on Rights of Certificateholders.

       The death or  incapacity  of any  Certificateholder  shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal  representatives  or heirs to claim an accounting or to take any action or
proceeding  in any court for a partition  or winding up of the Trust  Fund,  nor
otherwise  affect the rights,  obligations and liabilities of the parties hereto
or any of them.

       No  Certificateholder  shall have any right to vote  (except as expressly
provided  for  herein) or in any manner  otherwise  control  the  operation  and
management  of the Trust Fund, or the  obligations  of the parties  hereto,  nor
shall  anything  herein  set  forth,  or  contained  in the  terms of any of the
Certificates,  be construed so as to constitute the Certificateholders from time
to  time  as   partners   or   members   of  an   association;   nor  shall  any
Certificateholder  be under any  liability  to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.


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<PAGE>


       No  Certificateholder  shall have any right by virtue of any provision of
this  Agreement to institute any suit,  action or proceeding in equity or at law
upon or under or with respect to this Agreement,  unless such Holder  previously
shall  have  given  to the  Trustee  a  written  notice  of  default  and of the
continuance  thereof, as hereinbefore  provided,  and unless also the Holders of
Certificates  entitled  to at least 25% of the  Voting  Rights  shall  have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee  hereunder  and shall have  offered to the Trustee  such
reasonable  indemnity  as  it  may  require  against  the  costs,  expenses  and
liabilities  to be incurred  therein or thereby,  and the  Trustee,  for 15 days
after its receipt of such  notice,  request and offer of  indemnity,  shall have
neglected or refused to institute  any such action,  suit or  proceeding.  It is
understood and intended, and expressly covenanted by each Certificateholder with
every other  Certificateholder.  and the Trustee, that no one or more Holders of
Certificates  shall  have any right in any  manner  whatsoever  by virtue of any
provision of this  Agreement to affect,  disturb or prejudice  the rights of the
Holders  of any  other of such  Certificates,  or to  obtain  or seek to  obtain
priority over or  preference  to any other such Holder,  or to enforce any right
under this  Agreement,  except in the manner herein  provided and for the equal,
ratable and common  benefit of all  Certificateholders.  For the  protection and
enforcement of the provisions of this Section, each and every  Certificateholder
and the Trustee  shall be entitled to such relief as can be given  either at law
or in equity.

       SECTION 12.04.    Governing Law.

       This  Agreement  shall be  construed in  accordance  with the laws of the
State  of New York and the  obligations,  rights  and  remedies  of the  parties
hereunder  shall be determined in  accordance  with such laws without  regard to
conflicts of laws principles thereof.

       SECTION 12.05.    Notices.

       All  directions,  demands and notices  hereunder  shall be in writing and
shall be deemed to have been duly  given  when  received  if sent by  facsimile,
receipt  confirmed,  if  personally  delivered at or mailed by first class mail,
postage prepaid, or by express delivery service or delivered in any other manner
specified  herein,  to (a) in the case of the Depositor,  ACE Securities  Corp.,
AMACAR GROUP,  6525 Morrison  Boulevard,  Suite 318,  Charlotte,  North Carolina
28211,  Attention:  Juliana Johnson (telecopy  number:(704)  365-1362),  or such
other address or telecopy  number as may hereafter be furnished to the Servicer,
the Master Servicer, the Securities  Administrator and the Trustee in writing by
the Depositor,  (b) in the case of the Servicer,  Saxon Mortgage Services, Inc.,
4708  Mercantile  Drive,  Fort Worth,  Texas 76137,  Attention:  Mr. David Dill,
President  (telecopy  number:  (817) 655-7509) or such other address or telecopy
number as may hereafter be furnished to the Trustee,  the Master  Servicer,  the
Securities  Administrator  and the Depositor in writing by the Servicer,  (c) in
the case of the Master Servicer and the Securities  Administrator,  P.O. Box 98,
Columbia,  Maryland 21046 and for overnight delivery to 9062 Old Annapolis Road,
Columbia,  Maryland 21045,  Attention:  Ace Securities Corp., 2005-RM1 (telecopy
number:  (410)  715-2380),  or such  other  address  or  telecopy  number as may
hereafter be furnished to the Trustee, the Depositor and the Servicer in writing
by the Master  Servicer or the Securities  Administrator  and (d) in the case of
the Trustee,  at the  Corporate  Trust Office or such other  address or telecopy
number as the  Trustee  may  hereafter  be furnish to the  Servicer,  the Master
Servicer,  the  Securities  Administrator  and the  Depositor  in writing by the
Trustee.  Any notice  required or permitted  to be given to a


                                      176
<PAGE>


Certificateholder  shall be given by first class mail,  postage prepaid,  at the
address  of such  Holder as shown in the  Certificate  Register.  Any  notice so
mailed  within  the time  prescribed  in this  Agreement  shall be  conclusively
presumed   to  have  been  duly   given   when   mailed,   whether  or  not  the
Certificateholder  receives  such  notice.  A copy of any notice  required to be
telecopied hereunder also shall be mailed to the appropriate party in the manner
set forth above.

       SECTION 12.06.    Severability of Provisions.

       If any one or more of the covenants,  agreements,  provisions or terms of
this  Agreement  shall be for any  reason  whatsoever  held  invalid,  then such
covenants,  agreements,  provisions or terms shall be deemed  severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or  enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.

       SECTION 12.07.    Notice to Rating Agencies.

       The Trustee shall use its best efforts  promptly to provide notice to the
Rating  Agencies  with respect to each of the  following of which a  Responsible
Officer has actual knowledge:

              1.     Any material change or amendment to this Agreement;

              2.     The  occurrence of any Servicer  Event of Default or Master
       Servicer Event of Default that has not been cured or waived;

              3.     The resignation or termination of the Servicer,  the Master
       Servicer or the Trustee;

              4.     The repurchase or  substitution  of Mortgage Loans pursuant
       to or as contemplated by Section 2.03;

              5.     The  final   payment  to  the   Holders  of  any  Class  of
       Certificates;

              6.     Any change in the location of the Distribution Account; and

              7.     Any event that would result in the inability of the Trustee
       as successor  Servicer to make  advances  regarding  delinquent  Mortgage
       Loans.

       In addition,  the Securities  Administrator shall promptly make available
to each Rating Agency copies of each report to  Certificateholders  described in
Section 5.02.

       The Servicer  shall make  available to each Rating  Agency  copies of the
following:

              8.     Each annual statement as to compliance described in Section
       3.17; and

              9.     Each  annual  independent  public  accountants'   servicing
       report described in Section 3.18.

       Any such notice  pursuant to this  Section  12.07 shall be in writing and
shall be deemed to have been duly given if personally  delivered at or mailed by
first class mail, postage


                                      177
<PAGE>


prepaid,  or by express delivery service to Standard & Poor's, a division of the
McGraw-Hill Companies, Inc., 55 Water Street, New York, New York 10041; to DBRS,
Dominion Bond Rating Service, 55 Broadway, 15th Floor, New York, New York 10006;
and to Moody's  Investors  Service,  Inc., 99 Church Street,  New York, New York
10007 or such other addresses as the Rating Agencies may designate in writing to
the parties hereto.

       SECTION 12.08.    Article and Section References.

       All  article  and  section  references  used  in this  Agreement,  unless
otherwise provided, are to articles and sections in this Agreement.

       SECTION 12.09.    Grant of Security Interest.

       It is the express intent of the parties hereto that the conveyance of the
Mortgage  Loans by the Depositor to the Trustee,  on behalf of the Trust and for
the benefit of the  Certificateholders,  be, and be construed  as, a sale of the
Mortgage Loans by the Depositor and not a pledge of the Mortgage Loans to secure
a debt or  other  obligation  of the  Depositor.  However,  in the  event  that,
notwithstanding the aforementioned intent of the parties, the Mortgage Loans are
held to be property of the Depositor,  then, (a) it is the express intent of the
parties that such  conveyance  be deemed a pledge of the  Mortgage  Loans by the
Depositor  to the  Trustee,  on behalf of the Trust and for the  benefit  of the
Certificateholders,  to secure a debt or other  obligation  of the Depositor and
(b)(1) this Agreement shall also be deemed to be a security agreement within the
meaning of  Articles 8 and 9 of the  Uniform  Commercial  Code as in effect from
time to time in the  State  of New  York;  (2) the  conveyance  provided  for in
Section 2.01 shall be deemed to be a grant by the  Depositor to the Trustee,  on
behalf of the Trust and for the benefit of the Certificateholders, of a security
interest  in all of the  Depositor's  right,  title and  interest  in and to the
Mortgage  Loans and all amounts  payable to the holders of the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion,  voluntary
or  involuntary,  of the foregoing into cash,  instruments,  securities or other
property,  including  without  limitation  all  amounts,  other than  investment
earnings,  from time to time held or invested in the Collection  Account and the
Distribution Account,  whether in the form of cash,  instruments,  securities or
other property;  (3) the obligations secured by such security agreement shall be
deemed to be all of the Depositor's obligations under this Agreement,  including
the  obligation  to  provide  to the  Certificateholders  the  benefits  of this
Agreement   relating  to  the  Mortgage  Loans  and  the  Trust  Fund;  and  (4)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property,  shall be deemed notifications
to,   or   acknowledgments,    receipts   or   confirmations   from,   financial
intermediaries, bailees or agents (as applicable) of the Trustee for the purpose
of perfecting  such security  interest under  applicable law.  Accordingly,  the
Depositor  hereby  grants  to the  Trustee,  on  behalf of the Trust and for the
benefit of the Certificateholders, a security interest in the Mortgage Loans and
all other property  described in clause (2) of the preceding  sentence,  for the
purpose of  securing  to the Trustee the  performance  by the  Depositor  of the
obligations  described in clause (3) of the preceding sentence.  Notwithstanding
the foregoing, the parties hereto intend the conveyance pursuant to Section 2.01
to be a true,  absolute and unconditional  sale of the Mortgage Loans and assets
constituting  the Trust Fund by the  Depositor to the Trustee,  on behalf of the
Trust and for the benefit of the Certificateholders.


                                      178
<PAGE>


       SECTION 12.10.    Survival of Indemnification.

       Any and all  indemnities  to be provided  by any party to this  Agreement
shall  survive  the  termination  and  resignation  of any party  hereto and the
termination of this Agreement.

       SECTION 12.11.    Servicing Agreements.

       With respect to the ResMae  Mortgage Loans and Litton  Mortgage Loans, in
the event of any  conflict  between the  provisions  of this  Agreement  and the
provisions of the related  Servicing  Agreement,  the  provisions of the related
Servicing Agreement shall control.


                                      179
<PAGE>


       IN WITNESS WHEREOF, the Depositor, the Servicer, the Master Servicer, the
Securities  Administrator  and the Trustee  have caused their names to be signed
hereto by their respective  officers thereunto duly authorized,  in each case as
of the day and year first above written.

                                  ACE SECURITIES CORP.,
                                  as Depositor

                                  By: __________________________________________
                                  Name:
                                  Title:

                                  By: __________________________________________
                                  Name:
                                  Title:

                                  SAXON MORTGAGE SERVICES, INC.
                                  as Servicer

                                  By: __________________________________________
                                  Name:
                                  Title:

                                  HSBC BANK USA, NATIONAL ASSOCIATION
                                  not in its individual capacity but solely as
                                  Trustee

                                  By: __________________________________________
                                  Name:
                                  Title:


<PAGE>


                                 WELLS FARGO BANK, N.A.
                                 as Master Servicer and Securities Administrator

                                 By: __________________________________________
                                 Name:
                                 Title:

                                 ACKNOWLEDGED AND AGREED FOR PURPOSES OF
                                 SECTION 9.05:

                                 DB STRUCTURED PRODUCTS, INC

                                 By: __________________________________________
                                 Name:
                                 Title:

                                 By: __________________________________________
                                 Name:
                                 Title:

                                 ACKNOWLEDGED AND AGREED FOR PURPOSES OF
                                 SECTION 7.08 AND 7.09:

                                 THE MURRAYHILL COMPANY

                                 By: __________________________________________
                                 Name:
                                  Title:


<PAGE>


STATE OF             )
                     ) ss.:
COUNTY OF            )

       On the ___ day of February  2005,  before me, a notary  public in and for
said  State,  personally  appeared  _____________________  known  to  me to be a
_____________________  of ACE Securities  Corp.,  one of the  corporations  that
executed  the  within  instrument,  and also  known to me to be the  person  who
executed  it on behalf of said  corporation,  and  acknowledged  to me that such
corporation executed the within instrument.

       IN WITNESS  WHEREOF,  I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                  ______________________________
                                                          Notary Public

[Notarial Seal]                                   My commission expires


<PAGE>


STATE OF             )
                     ) ss.:
COUNTY OF            )

       On the ___ day of February  2005,  before me, a notary  public in and for
said  State,  personally  appeared  _____________________  known  to  me to be a
_____________________  of ACE Securities  Corp.,  one of the  corporations  that
executed  the  within  instrument,  and also  known to me to be the  person  who
executed  it on behalf of said  corporation,  and  acknowledged  to me that such
corporation executed the within instrument.

       IN WITNESS  WHEREOF,  I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                  ______________________________
                                                          Notary Public

[Notarial Seal]                                   My commission expires


<PAGE>


STATE OF             )
                     ) ss.:
COUNTY OF            )

       On the ___ day of February  2005,  before me, a notary  public in and for
said  State,  personally  appeared  _____________________  known  to  me to be a
_____________________  of Saxon Mortgage Services, Inc., one of the corporations
that executed the within  instrument,  and also known to me to be the person who
executed  it on behalf of said  corporation,  and  acknowledged  to me that such
corporation executed the within instrument.

       IN WITNESS  WHEREOF,  I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                  ______________________________
                                                          Notary Public

[Notarial Seal]                                   My commission expires


<PAGE>


STATE OF             )
                     ) ss.:
COUNTY OF            )

       On the ___ day of February  2005,  before me, a notary  public in and for
said  State,  personally  appeared  _____________________  known  to  me to be a
_____________________  of Wells Fargo Bank, N.A., one of the  corporations  that
executed  the  within  instrument,  and also  known to me to be the  person  who
executed  it on behalf of said  corporation,  and  acknowledged  to me that such
corporation executed the within instrument.

       IN WITNESS  WHEREOF,  I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                  ______________________________
                                                          Notary Public

[Notarial Seal]                                   My commission expires


<PAGE>


STATE OF             )
                     ) ss.:
COUNTY OF            )

       On the ___ day of February  2005,  before me, a notary  public in and for
said  State,  personally  appeared  _____________________  known  to  me to be a
_____________________  of  HSBC  Bank  USA,  National  Association,  one  of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said  corporation,  and  acknowledged  to me
that such corporation executed the within instrument.

       IN WITNESS  WHEREOF,  I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                  ______________________________
                                                          Notary Public

[Notarial Seal]                                   My commission expires