<PAGE>   1
                                                                   EXHIBIT 10.71



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                 EXCESS YIELD AND SERVICING RIGHTS PURCHASE AND
                              ASSUMPTION AGREEMENT



                                     between



                         GREENWICH CAPITAL MARKETS, INC.
                                  as Purchaser



                                       and



                            MEGO MORTGAGE CORPORATION
                                    as Seller



                          Dated as of January 22, 1998




================================================================================



<PAGE>   2





                                TABLE OF CONTENTS


<TABLE>
<S>                                                                                         <C>
                                    ARTICLE I

Section 1.01.  Definitions...................................................................1

                                   ARTICLE II

 CONVEYANCE FROM SELLER TO PURCHASER AND ASSUMPTION BY PURCHASER; INTERIM SERVICING
                            OBLIGATIONS OF THE SELLER

Section 2.01.  Existing Conventional Loans...................................................5
Section 2.02.  Existing FHA Loans............................................................6

                                   ARTICLE III

                                 PURCHASE PRICE


                                   ARTICLE IV

                                SALES COMMISSION


                                    ARTICLE V

                               SELLER TO COOPERATE


                                   ARTICLE VI

                   REPRESENTATIONS, WARRANTIES AND AGREEMENTS

Section 6.01.  Representations, Warranties and Agreements of the Seller.....................10
Section 6.02.  Representations, Warranties and Agreements with respect to the
                  Existing Loans............................................................12
Section 6.03.  Remedies for Breach of Representations and Warranties........................13
Section 6.04.  Purchaser Dispositions.......................................................13
Section 6.05.  Representations and Warranties of the Purchaser..............................13
Section 6.06.  Indemnification..............................................................13

                                   ARTICLE VII

                                    SERVICING

Section 7.01.  Seller to Service Existing Loans Prior to the Servicing Termination
                  Date......................................................................14
</TABLE>



<PAGE>   3

<TABLE>
<S>                                                                                         <C>
Section 7.02.  Seller Has No Right or Obligation to Service Existing Loans After the
                  Servicing Expiration Date.................................................14
Section 7.03.  Purchaser May Extend Servicing Expiration Date...............................14

                                  ARTICLE VIII

                       INDEMNIFICATION; THIRD-PARTY CLAIMS


                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

Section 9.01.  Conventional Loan Closing....................................................15
Section 9.02.  FHA Loan Closing.............................................................17
Section 9.03.  Costs........................................................................18
Section 9.04.  Merger or Consolidation of the Seller........................................18
Section 9.05.  Protection of Confidential Information; No Solicitation......................18
Section 9.06.  Notices......................................................................19
Section 9.07.  Severability Clause..........................................................19
Section 9.08.  Counterparts.................................................................19
Section 9.09.  Place of Delivery and Governing Law..........................................19
Section 9.10.  Waiver Of Jury Trial.........................................................19
Section 9.11.  Further Agreements...........................................................20
Section 9.12.  Intention of the Parties.....................................................20
Section 9.13.  Successors and Assigns.......................................................20
Section 9.14.  Waivers......................................................................20
Section 9.15.  Exhibits.....................................................................20
Section 9.16.  General Interpretive Principles..............................................21
Section 9.17.  Reproduction of Documents....................................................21
Section 9.18.  Survival of Agreement........................................................21
Section 9.19.  Merger and Integration; Construction.........................................21

EXHIBIT A -  EXISTING LOAN AND PURCHASE PRICE SCHEDULE

EXHIBIT B -  SELLER'S OFFICER'S CERTIFICATE

EXHIBIT C -  SELLER'S OPINION OF COUNSEL

EXHIBIT D -  SCHEDULE OF LITIGATION AND PENDING INVESTIGATION

EXHIBIT E -  OTHER UNDERSTANDINGS

EXHIBIT F -  SERVICING ADDENDUM
</TABLE>



                                       ii

<PAGE>   4



                 EXCESS YIELD AND SERVICING RIGHTS PURCHASE AND
                              ASSUMPTION AGREEMENT

               This is an Excess Yield and Servicing Rights Purchase and
Assumption Agreement (the "Agreement"), dated as of January 22, 1998, by and
between Greenwich Capital Markets, Inc. having an office at 600 Steamboat Road,
Greenwich, Connecticut 06830 and Mego Mortgage Corporation having an office at
1000 Parkwood Circle, 5th Floor, Atlanta, Georgia 30339.

                               W I T N E S S E T H

               WHEREAS, pursuant to the Amended and Restated Master Loan
Purchase and Servicing Agreement dated as of October 1, 1996 between the
Purchaser and the Seller (the "Original Agreement"), the Seller services certain
existing loans which are set forth on the Existing Loan Schedule;

               WHEREAS, the Seller desires to sell and transfer the Excess Yield
with respect to the Existing Conventional Loans and the Servicing Rights with
respect to the Existing Conventional Loans (as all such terms are hereinafter
defined), and the Purchaser desires to purchase such Excess Yield and Servicing
Rights in connection with the Existing Conventional Loans;

               WHEREAS, the Seller desires to sell and transfer the Excess Yield
with respect to the Existing FHA Loans and the Servicing Rights with respect to
the Existing FHA Loans (as all such terms are hereinafter defined), and the
Purchaser desires to purchase such Excess Yield and Servicing Rights in
connection with the Existing FHA Loans;

               WHEREAS, the parties hereto have agreed to appoint the Seller as
the interim servicer with respect to the Existing Loans; and

               WHEREAS, the parties have reached certain other agreements
relating to the availability of the purchase facility under the Original
Agreement;

               NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Seller and the
Purchaser hereby agree as follows:

                                    ARTICLE I

               Section 1.01. Definitions

               The following terms are defined as follows:

               Agreement: This Excess Yield and Servicing Rights Purchase and
Assumption Agreement and all amendments hereof and supplements hereto.



                                       1

<PAGE>   5

               Business Day: Any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking and savings and loan institutions in the State of
New York are authorized or obligated by law or executive order to be closed.

               Conventional Loan Closing Date: The date on which the Purchaser
shall pay the Conventional Loan Purchase Price to the Seller, which date shall
be January 22, 1998, or such other date as shall be mutually agreed upon by the
parties hereto.

               Conventional Loan Purchase Price: The price paid by the Purchaser
to the Seller in exchange for the Excess Yield and the Servicing Rights with
respect to the Existing Conventional Loans as set forth in Article III.

               Cut-Off Date:  The close of business on December 31, 1997.

               Disposition Net Proceeds: With respect to any Existing Loan, the
excess of (a) the total cash and non-cash consideration paid to the Purchaser
(net of accrued interest) by a purchaser of the Existing Loans over (b) the sum
of (i) the aggregate purchase price paid to the Seller pursuant to Article III
hereof for the Excess Yield and Servicing Rights with respect to such Existing
Loan, plus (ii) the purchase price paid by the Purchaser to the Seller for such
Existing Loan under the Original Agreement minus (iii) any payments of principal
received by the Purchaser with respect to such Existing Loan from and after the
related cut-off date under the Original Agreement.

               Escrow Payments: With respect to any Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.

               Excess Yield:  As defined in the Original Agreement.

               Existing Conventional Loan: All Existing Loans other than such
Loans that are FHA Loans.

               Existing FHA Loan: Each Existing Loan that is an FHA Loan and
that remains unsold by the Purchaser to FNMA on the FHA Loan Closing Date.

               Existing Loan: The Loans sold by the Seller to the Purchaser
prior to the Cut-Off Date that have not been subject to a Purchaser Disposition
or repurchase.

               Existing Loan Schedule: The schedule setting forth information
with respect to each Existing Loan attached hereto as Exhibit A.

               FHA Loan:  As defined in the Original Agreement.



                                       2

<PAGE>   6

               FHA Loan Closing Date: The date and time on and as of which the
Purchaser shall pay the FHA Loan Purchase Price to the Seller, which date shall
be January 22, 1998 or such other date as shall be mutually agreed upon by the
parties hereto.

               FHA Loan Purchase Price: The price paid by the Purchaser to the
Seller in exchange for the Excess Yield and the Servicing Rights with respect to
the Existing FHA Loans as set forth in Article III.

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

               Interested Parties:  As defined in Article V.

               Loan:  As defined in the Original Agreement.

               Mortgage: The mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a lien on an estate in fee simple in
real property securing the Mortgage Note.

               Mortgage Note: The note or other evidence of the indebtedness of
a Mortgagor secured by a Mortgage.

               Mortgaged Property: The real property which is the subject of a
Mortgage securing repayment of the debt evidenced by a Mortgage Note.

               Mortgagor:  The obligor on a Mortgage Note.

               Officer's Certificate: A certificate signed by the Chairman of
the Board or the Vice Chairman of the Board or the President or an Executive
Vice President or a Vice President or an Assistant Vice President of the Seller
in the form of Exhibit B attached hereto, and delivered to the Purchaser as
required by this Agreement.

               Opinion of Counsel: A written opinion of counsel to the Seller,
in the form of Exhibit C attached hereto, and delivered to the Purchaser as
required by this Agreement.

               Original Agreement:  As defined in the first Recital hereto.

               Other Understandings: means those letter agreements and other
written understandings identified on Exhibit E hereto.

               PEC:  Preferred Equities Corporation.

               PEC Sub-Servicing Agreement: The Loan Program Sub-Servicing
Agreement, dated as of September 1, 1996 between PEC and the Seller, as amended,
supplemented or otherwise modified from time to time.

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



                                       3

<PAGE>   7

               Purchase Price Percentage: With respect to any Existing Loan, the
percentage of par specified in the related Pricing Letter plus the percentage of
par paid in respect of such Existing Loan under the Excess Yield and Servicing
Rights Agreement.

               Purchaser: Greenwich Capital Markets, Inc. or its successor in
interest or assigns or any successor to the Purchaser under this Agreement as
herein provided.

               Purchaser Disposition:  As defined in the Original Agreement.

               Recourse Limit:  As defined in Section 2.01(a).

               Repurchase Price: With respect to any Existing Loan, a price
equal to (i) the Stated Principal Balance (as defined in the Original Agreement)
of such Existing Loan multiplied by the Purchase Price Percentage for such
Existing Loan, plus (ii) that portion of the applicable Purchase Price
Percentage in excess of 100%, multiplied by the aggregate principal received
with respect to such Existing Loan by the Purchaser, from and after the Cut-Off
Date to the date of repurchase, plus (iii) interest on such Stated Principal
Balance at the Loan Interest Rate (as defined in the Original Agreement) from
and including the last Due Date (as defined in the Original Agreement) through
which interest has been paid by or on behalf o the Obligor (as defined in the
Original Agreement) to the date of repurchase.

               Seller: Mego Mortgage Corporation, in its capacity of the seller
of Loans and as the servicer of Loans under the Original Agreement, and its
successors in interest and assigns.

               Servicing Expiration Date: January 31, 1998, as such date may be
extended from time to time pursuant to Section 7.03 hereof.

               Servicing Fee: As defined in the Original Agreement, except that
as provided in Section 7.01, the percentage for purposes of the Servicing Fee
Rate (as defined in the Original Agreement) that is used to calculate such fee
shall be 1.00% instead of 1.25%.

               Servicing Rights: With respect to each Loan, all of the right,
title and interest of the Seller under the Original Agreement or otherwise in,
to and under any and all of the following: (a) any and all rights to service
such Loan; (b) any payments to or monies received by the Seller for servicing
such Loan; (c) any late fees, penalties or similar payments with respect to such
Loans; (d) all agreements or documents creating, defining or evidencing any such
servicing rights to the extent they relate to such servicing rights and all
rights of the Seller or the Seller's predecessor in interest thereunder; (e)
Escrow Payments or other similar payments with respect to such Loan and any
amounts actually collected by the Seller with respect thereto; (f) all accounts
and other rights to payment related to any of the property described in this
paragraph; and (g) any and all documents, files, records, servicing files,
servicing documents, servicing records, data tapes, computer records, or other
information pertaining to such Loan or pertaining to the past, present or
prospective servicing of such Loan.



                                       4

<PAGE>   8

               Servicing Termination Date: With respect to the servicing of the
Loans by the Seller under the Original Agreement, the earliest to occur of

                      (i)    the resignation of the Seller as servicer pursuant
                             to Section 13.04 of the Original Agreement;

                      (ii)   the termination of the Seller as servicer pursuant
                             to Section 13.04 of the Original Agreement; and

                      (iii)  the Servicing Expiration Date.

                                   ARTICLE II

    CONVEYANCE FROM SELLER TO PURCHASER AND ASSUMPTION BY PURCHASER; INTERIM
                      SERVICING OBLIGATIONS OF THE SELLER

               Section 2.01. Existing Conventional Loans.

               (a) On the Conventional Loan Closing Date, the Seller does hereby
sell, transfer, assign, set over and convey to the Purchaser (to the extent that
the following have not already been conveyed to the Purchaser under the Original
Agreement), without recourse, subject to the following sentence, but subject to
the terms of this Agreement, (i) all right, title and interest of the Seller in
and to the Excess Yield and the Servicing Rights with respect to the Existing
Conventional Loans as of the Cut-Off Date, and (ii) all of the Seller's rights
under the PEC Sub-Servicing Agreement with respect to Existing Conventional
Loans as of the Cut-Off Date. Notwithstanding the foregoing sentence, the Seller
shall upon demand of the Purchaser repurchase from the Purchaser, at the
Repurchase Price, any such Loan that thereafter becomes a Delinquent Loan (as
defined in the Original Agreement); provided, however, that the Seller's
liability pursuant to this sentence and the last sentence of Section 2.02(b)
shall not, in the aggregate, exceed the product of (i) 0.025 and (ii) the
aggregate "Cut-Off Date Principal Balance" as set forth on Exhibit A (such
product, the "Recourse Limit").

               (b) On the Conventional Loan Closing Date, the Purchaser does
hereby (to the extent that the following have not already been conveyed to the
Purchaser under the Original Agreement), (i) accept assignment of all right,
title and interest of the Seller in and to the Excess Yield, the Servicing
Rights with respect to the Existing Conventional Loans as of the Cut-Off Date
and (ii) assume, subject to the terms of this Agreement, all obligations of the
Seller with respect to the Servicing Rights and the PEC Sub-Servicing Agreement
relating to the Existing Conventional Loans as of the Cut-Off Date; provided,
however, that the Purchaser expressly does not assume any liability relating to
or in any way arising out of the foregoing obligations prior to the Cut-Off
Date.

               (c) Notwithstanding the foregoing and notwithstanding the
servicing provisions contained in the Original Agreement, for the period
beginning on the Conventional Loan Closing Date and ending on the Servicing
Termination Date, the Seller shall service the Existing Conventional Loans
pursuant to the revised Servicing Addendum, attached hereto as Exhibit F, as
described in Article VII hereof.



                                       5

<PAGE>   9

               (d) On the Conventional Loan Closing Date all funds on deposit in
the Spread Account in respect of the Existing Conventional Loans shall be
remitted to the Seller.

               (e) From and after the Conventional Loan Closing Date, and
notwithstanding the fact that certain documents, files, records or other
information which comprise a portion of the Servicing Rights may remain at the
Seller's premises until the Servicing Termination Date or thereafter, (i) the
Seller's right to service the Existing Conventional Loans shall absolutely and
irrevocably terminate (subject to Article VII hereof) and (ii) the Seller shall
have no property, contract, possessory or other right, title or interest of any
nature whatsoever in or to the Servicing Rights (including any such documents,
files, records or other information at the Seller's premises, all of which shall
be the sole property of the Purchaser) or the Excess Yield with respect to the
Existing Conventional Loans. The Purchaser and Seller agree that no termination
fee, liquidated damages or any other fee or monies triggered by the termination
of the Seller's right to service the Existing Conventional Loans shall be
payable to the Servicer as a result of the termination of such servicing and the
transactions contemplated by this Agreement, it being expressly understood that
the payment of the Purchase Price by the Purchaser shall constitute, in and of
itself, the full consideration payable to the Seller for its sale of the Excess
Yield and the Servicing Rights with respect to the Existing Conventional Loans
and the other transactions contemplated hereby; provided, however, that the
Seller shall be entitled to receive the Servicing Fee as and when contemplated
by the Original Agreement, as modified by Exhibit F, with respect to its
servicing of the Existing Conventional Loans for the Purchaser for the period
from the Cut-Off Date until the Servicing Termination Date.

               Section 2.02. Existing FHA Loans.

               (a) For the period beginning on the Conventional Loan Closing
Date and ending on the FHA Loan Closing Date, the Seller shall continue to
service each Existing Loan that is an FHA Loan pursuant to the terms and
conditions, mutatis mutandis, of the Original Agreement.

               (b) On the FHA Loan Closing Date, the Seller does hereby sell,
transfer, assign, set over and convey to the Purchaser (to the extent that the
following have not already been conveyed to the Purchaser under the Original
Agreement), without recourse, but subject to the terms of this Agreement, (i)
all right, title and interest of the Seller in and to the Excess Yield and the
Servicing Rights with respect to the Existing FHA Loans as of the Cut-Off Date
and (ii) all of the Seller's rights under the PEC Sub-Servicing Agreement with
respect to the Existing FHA Loans as of the Cut-Off Date. Notwithstanding the
foregoing sentence, the Seller shall upon demand of the Purchaser repurchase
from the Purchaser, at the Repurchase Price, any such Loan that thereafter
becomes a Delinquent Loan (as defined in the Original Agreement); provided,
however, that the Seller's liability pursuant to this sentence and the last
sentence of Section 2.01(a) shall not, in the aggregate, exceed the Recourse
Limit.

               (c) On the FHA Loan Closing Date, the Purchaser does hereby (to
the extent that the following have not already been conveyed to the Purchaser
under the Original Agreement), (i) accept assignment of all right, title and
interest of the Seller in and to the Excess Yield and the Servicing Rights with
respect to the Existing FHA Loans as of the Cut-Off Date



                                       6

<PAGE>   10

and (ii) assume, subject to the terms of this Agreement, all obligations of the
Seller with respect to the Servicing Rights and the PEC Sub-Servicing Agreement
relating to the Existing FHA Loans as of the Cut-Off Date; provided, however,
that the Purchaser expressly does not assume any liability or obligation
relating to, or in any way arising out of, the foregoing obligations prior to
the Cut-Off Date.

               (d) Notwithstanding the foregoing, for the period beginning on
the FHA Loan Closing Date and ending on the Servicing Termination Date, the
Seller shall continue to service the Existing FHA Loans pursuant to the Original
Agreement as described in Section 7.01 hereof.

               (e) On the FHA Loan Closing Date all funds on deposit in the
Spread Account in respect of the Existing FHA Loans shall be remitted to the
Seller.

               (f) From and after the FHA Loan Closing Date, and notwithstanding
the fact that certain documents, files, records or other information which
comprise a portion of the Servicing Rights may remain at the Seller's premises
until the Servicing Termination Date or thereafter, (a) the Seller's right to
service the Existing FHA Loans shall absolutely and irrevocably terminate
(subject to Article VII hereof) and (b) the Seller shall have no property,
contract, possessory or other right, title or interest of any nature whatsoever
in or to the Servicing Rights (including any such documents, files, records or
other information at the Seller's premises, all of which shall be the sole
property of the Purchaser) or the Excess Yield with respect to the Existing FHA
Loans. The Purchaser and Seller agree that no termination fee, liquidated
damages or any other fee or monies triggered by the termination of the Seller's
right to service the Existing FHA Loans shall be payable to the Servicer as a
result of the termination of such servicing and the transactions contemplated by
this Agreement, it being expressly understood that the payment of the Purchase
Price by the Purchaser shall constitute, in and of itself, the full
consideration payable to the Seller for its sale of the Excess Yield and the
Servicing Rights with respect to the Existing FHA Loans and the other
transactions contemplated hereby; provided, however, that the Seller shall be
entitled to receive the Servicing Fee as and when contemplated by the Original
Agreement with respect to its servicing of the Existing FHA Loans for the
Purchaser for the period from the Cut-Off Date until the Servicing Termination
Date.

               Section 2.03 Intention of the Parties.

               It is the express intention of the parties hereto that the
transactions contemplated by this Agreement and the Original Agreement be, and
be construed as, a sale of rights and interests relating to the Existing Loans
by the Seller and not a pledge of the rights and interests relating to the
Existing Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller. However, in the event that the Existing Loans and
other rights transferred under this Agreement are held to be property of the
Seller, or if for any reason this Agreement is held or deemed to create a
security interest in the Existing Loans and related rights then it is intended
that (a) this Agreement shall also be deemed to be a security agreement within
the meaning of the Uniform Commercial Code of any applicable jurisdiction and
the Seller hereby grants to the Purchaser a security interest in all of Seller's
right, title and interest, whether now owned or hereafter acquired, in and to
the Existing Conventional Loans; (b) to the extent allowed under FHA Title I
rules and regulations, in order to secure the obligations of the Seller to the
Purchaser



                                       7

<PAGE>   11

hereunder with respect to the Existing FHA Loans, the Seller hereby shall be
deemed to have granted to the Purchaser a security interest in all of the
Seller's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to (A) the Existing
FHA Loans; (B) the FHA Insurance Reserves, all of the Seller's other contractual
rights against the FHA in relation to the Existing Loans, and all documents in
the possession or under the control of the Seller with respect thereto; (C) all
amounts payable pursuant to the FHA Insurance Contract in accordance with the
terms thereof; and (D) any and all general intangibles consisting of, arising
from or relating to any of the foregoing, and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property, including, without limitation, all amounts from time to time
held or invested in any REO Account or the Collection Accounts, whether in the
form of cash, instruments; securities or other property; (c) the possession by
the Purchaser of the related Notes or such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party", or possession by a purchaser or a person
designated by such secured party, for purposes of perfecting the security
interest pursuant to the Uniform Commercial Code of any applicable jurisdiction
(including, without limitations, Section 9-305, 8-313 or 8-321 thereof); (d)
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 Purchaser for the
purpose of perfecting such security interest under applicable law; and (e) for
purposes of this Agreement and the Pricing Letter, "Loan Documents' shall
include UCC-1 financing statements in form acceptable for filing in the
applicable jurisdictions in which are located the principal place of business
and the executive offices of the Seller and executed by the Seller in favor of
the Purchaser.

                                   ARTICLE III

                                 PURCHASE PRICE

               The Conventional Loan Purchase Price for the Seller to sell the
Servicing Rights for each Existing Conventional Loan shall be the product of (a)
the percentage set forth on Exhibit A hereto and identified as the Servicing
Rights Purchase Price Percentage for such Loan (the "Conventional Loan Servicing
Rights Purchase Price Percentage") and (b) the aggregate outstanding principal
balance of such Existing Conventional Loan as of the Cut-Off Date. The
Conventional Loan Purchase Price for the Seller to sell the Excess Yield for
each Existing Conventional Loan shall be the product of (a) the percentage set
forth on Exhibit A hereto and identified as the Excess Yield Purchase Price
Percentage for such Loan (the "Conventional Loan Excess Yield Purchase Price
Percentage") and (b) the aggregate outstanding principal balance of such
Existing Conventional Loan as of the Cut-Off Date.

               The FHA Loan Purchase Price for the Seller to sell the Servicing
Rights for each Existing FHA Loan shall be the product of (a) the percentage set
forth on Exhibit A hereto and identified as the Servicing Rights Purchase Price
Percentage for such Loan (the "FHA Loan Servicing Rights Purchase Price
Percentage") and (b) the aggregate outstanding principal balance of such
Existing FHA Loan as of the Cut-Off Date. The FHA Loan Purchase Price for the
Seller to sell the Excess Yield for each Existing FHA Loan shall be the product
of (a) the percentage set



                                       8

<PAGE>   12

forth on Exhibit A hereto and identified as the Excess Yield Purchase Price
Percentage for such Loan (the "FHA Loan Excess Yield Purchase Price Percentage")
and (b) the aggregate outstanding principal balance of such Existing FHA Loan as
of the Cut-Off Date.

                                   ARTICLE IV

                                SALES COMMISSION

               The Purchaser and the Seller understand that the Purchaser shall
have the right to sell the Existing Loans in whole or in part in its discretion
on a servicing released or servicing retained basis.

               The Purchaser acknowledges that the Seller has made certain
contacts and tentative arrangements with potential purchasers of the Existing
Loans, and agrees that it shall pay to the Seller a fee (such fee, the "Sales
Commission") equal to (a) in the case of Existing Conventional Loans, (i) 85% of
the Disposition Net Proceeds with respect to a sale to First Plus Financial
Group, Inc. ("First Plus") consummated on or before March 15, 1998, (ii) 85% of
the Disposition Net Proceeds with respect to a sale to any other third party
purchaser consummated on or before February 17, 1998, (iii) 66-2/3% of the
Disposition Net Proceeds with respect to a sale of the Existing Loans to First
Plus consummated after March 15, 1998, (iv) 75% of the Disposition Net Proceeds
with respect to a sale to any other third party purchaser consummated after
February 17, 1998 and on or before March 15, 1998, and (v) 66-2/3% of the
Disposition Net Proceeds with respect to a sale to any other third party
purchaser consummated after March 15, 1998, and (b) in the case of Existing FHA
Loans, (i) 85% of the Disposition Net Proceeds with respect to a sale to FNMA
pursuant to FNMA's mortgage-backed securities program arranged by the Seller at
any time, (ii) 50% of the Disposition Net Proceeds with respect to any other
sale to FNMA, and (iii) 66-2/3% of the Disposition Net Proceeds with respect to
a sale to any third party purchaser after the FHA Loan Closing Date.

                                    ARTICLE V

                               SELLER TO COOPERATE

               The Seller shall promptly execute and deliver all such
instruments and take all such action as the Purchaser may reasonably request
from time to time in order to effectuate the purposes and to carry out the terms
of this Agreement, including but not limited to, (i) accommodating the
Purchaser's reasonable due diligence requests, including, but not limited to,
(A) providing an area in the Seller's premises in which the Purchaser or its
designee or any Interested Party may review all items pertaining to the
servicing or origination of the Existing Loans including, but not limited to,
computer files, data disks, books, records, data tapes, credit files, pay
histories, notes, and all additional documents generated as a result of or
utilized in servicing each Existing Loan, (B) otherwise providing reasonable
working conditions for the Purchaser or its designee's or any Interested Party's
personnel during normal business hours of the Seller, and (C) allowing
reasonable access by the Purchaser or its designee or any Interested Party, to a
knowledgeable servicing officer of the Seller for the purposes of answering
questions concerning the Existing Loans, the Excess Yield or the Servicing
Rights and (ii) cooperating with



                                       9

<PAGE>   13

and assisting the Purchaser with respect to any meetings and/or other
communications with any prospective purchasers of the Existing Loans or the
Servicing Rights, and any other persons in connection with the marketing and
sale of the Existing Loans or the Servicing Rights (any such persons or
entities, "Interested Parties").

                                   ARTICLE VI

                           REPRESENTATIONS, WARRANTIES
                                 AND AGREEMENTS

               Section 6.01. Representations, Warranties and Agreements of the
Seller.

               The Seller, as a condition to the consummation of the
transactions contemplated hereby, hereby makes the following representations and
warranties to the Purchaser (i) as of the Conventional Loan Closing Date, with
respect to the Existing Conventional Loans, (ii) as of the FHA Loan Closing
Date, with respect to the Existing FHA Loans, and (iii) with respect to the
related Existing Loans, as of any date of a Purchaser Disposition (treating
Existing Conventional Loans and Existing FHA Loans as "Loans" under the Original
Agreement, giving effect to any changes in the performance of the underlying
loans and other changes that the Purchaser deems reasonably necessary to
consummate a Purchaser Disposition):

               (a) Due Organization and Authority. The Seller is a Delaware
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good standing
in each state where a Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Seller, and in any event the Seller is in compliance with the
laws of any such state to the extent necessary to ensure the enforceability of
the terms of this Agreement; the Seller has the full corporate power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Seller and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Seller; and all requisite corporate action has
been taken by the Seller to make this Agreement valid and binding upon the
Seller in accordance with its terms;

               (b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller;

               (c) No Conflicts. Neither the execution and delivery of this
Agreement, the sale of the Excess Yield or the Servicing Rights by the Seller,
or the transactions contemplated hereby, nor the fulfillment of or compliance
with the terms and conditions of this Agreement, will conflict with or result in
a breach of any of the terms, conditions or provisions of the Seller's charter
or by-laws or any legal restriction or any material agreement or instrument to
which the Seller is now a party or by which it is bound, or constitute a default
or result in an acceleration under any of the foregoing, or result in the
violation of any law, rule, regulation, order, judgment



                                       10

<PAGE>   14

or decree to which the Seller or its property is subject, or impair the value of
the Excess Yield or the Servicing Rights;

               (d) Ability to Perform. The Seller does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;

               (e) No Litigation Pending. There is no action, suit, proceeding
or investigation pending or threatened against the Seller which, either in any
one instance or in the aggregate, if adversely determined, may result in any
material adverse change in the business, operations, financial condition,
properties or assets of the Seller, or in any material impairment of the right
or ability of the Seller to carry on its business substantially as now
conducted, or in any material liability on the part of the Seller, or which
would draw into question the validity of this Agreement or of any action taken
or to be taken in connection with the obligations of the Seller contemplated
herein, or which would be likely to impair materially the ability of the Seller
to perform under the terms of this Agreement;

               (f) No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Seller of or compliance by the Seller with this
Agreement, or if required, such approval has been obtained prior to the
Conventional Loan Closing Date or FHA Loan Closing Date, as applicable;

               (g) No Untrue Information. Neither this Agreement nor any
statement, report or other document furnished or to be furnished pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained therein not misleading;

               (h) Commissions to Third Parties. The Seller has not dealt with
any broker or agent or anyone else who might be entitled to a fee or commission
in connection with this transaction other than the Purchaser;

               (i) Servicing Practices. From and after the date of origination
of each Existing Loan, the Seller or any predecessor in interest has serviced
such Existing Loan (i) in strict accordance with the terms and conditions set
forth in the Original Agreement, and (ii) in accordance with the requirements of
any federal, state or local law, including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to such Existing Loan;

               (j) Ownership. The Seller is the sole owner of the Excess Yield
and the Servicing Rights subject to this Agreement, as provided herein. Neither
the Excess Yield nor the Servicing Rights subject to this Agreement has been
assigned or pledged, and, the Seller has good and marketable interest therein,
and has the full right and authority to transfer and sell the Excess Yield and
the Servicing Rights to the Purchaser pursuant to this Agreement, free and clear
of any encumbrance, equity, interest, lien, pledge, charge, claim or security
interest, and has the full right and authority to sell and assign the Excess
Yield and the Servicing Rights pursuant to this



                                       11

<PAGE>   15

Agreement. No other agreements except the Original Agreement and the PEC
Sub-Servicing Agreement, which were delivered to the Purchaser, affect or
concern the Excess Yield or the Servicing Rights;

               (k) Applicable Agreements. Each of the Original Agreement and the
PEC Sub-Servicing Agreement is in full force and effect, and neither the Seller
nor any other party that has had an interest in such agreements has waived or
agreed to any waiver under, or agreed to any amendment or other modification of
any such agreements. The Seller has not received notices of, and has no
knowledge of, any offsets, counterclaims or other defenses available to any
party under any such agreement;

               (l) Compliance with Applicable Laws. Any and all requirements of
any federal, state or local law, including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to each Existing Loan
have been complied with, and the Seller shall make or cause to be made available
upon reasonable notice for the Purchaser's inspection, evidence of compliance
with all such requirements;

               (m) Servicing Fee. The Servicing Fee with respect to each
Existing Loan is accurately set forth on the Existing Loan Schedule; and

               (n) Fair Consideration. The Purchase Price received by the Seller
upon the sale under this Agreement of the Excess Yield and the Servicing Rights
with respect to the Existing Loans constitutes fair consideration and reasonably
equivalent value for the Excess Yield and the Servicing Rights.

               (o) The Seller is not entering into the transactions contemplated
by this Agreement with the intent to hinder, delay or defraud any of its
creditors.

               (p) The Seller, after giving effect to the transactions to occur
on the Conventional Loan Closing Date and the FHA Loan Closing Date hereunder,
shall have fully and effectively transferred to the Purchaser all of the
Seller's right, title and interest in, to and under the Excess Yield and the
Servicing Rights with respect to the Existing Conventional Loans and the
Existing FHA Loans, respectively, and shall retain no ownership or other
interest of any kind in any Existing Loan.

               Section 6.02. Representations, Warranties and Agreements with
respect to the Existing Loans.

               The Seller, as a condition to the consummation of the
transactions contemplated hereby, hereby makes the representations and
warranties set forth in Section 7.02 of the Original Agreement to the Purchaser
(treating Existing Conventional Loans and Existing FHA Loans as "Loans" under
the Original Agreement) (i) as of the Conventional Loan Closing Date, with
respect to the Existing Conventional Loans, (ii) as of the FHA Loan Closing
Date, with respect to the Existing FHA Loans, and (iii) with respect to the
related Existing Loans, as of any date of any Purchaser Disposition.



                                       12

<PAGE>   16

               Section 6.03. Remedies for Breach of Representations and
Warranties.

               The Purchaser shall be entitled to the benefit of the remedies
for breach of representations and warranties set forth in Section 7.03 of the
Original Agreement (treating Existing Conventional Loans and Existing FHA Loans
as "Loans" under the Original Agreement; provided, however, that the definition
of Repurchase Price shall be as set forth in this Agreement).

               Section 6.04. Purchaser Dispositions.

               In connection with any Purchaser Disposition, the Purchaser shall
be entitled to the benefits of Section 12 of the Original Agreement (treating
Existing Conventional Loans and Existing FHA Loans as "Loans" under the Original
Agreement).

               Section 6.05. Representations and Warranties of the Purchaser.

               The Purchaser, as a condition to the consummation of the
transactions contemplated hereby, makes the following representations and
warranties to the Seller as of the Conventional Loan Closing Date and the FHA
Loan Closing Date:

               (a) Purchaser has been duly organized and is validly existing as
a corporation under the laws of the State of Delaware;

               (b) Purchaser has the requisite power and authority and legal
right to execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of, this Agreement to be performed
by it;

               (c) This Agreement has been duly authorized and executed by
Purchaser, is valid, binding and enforceable against Purchaser in accordance
with its terms, and the execution, delivery and performance by Purchaser of this
Agreement does not conflict with any material term or provision of any other
agreement to which Purchaser is a party or any term or provision of the Charter
or By-laws of Purchaser, or any law, rule, regulation, order, judgment, writ,
injunction or decree applicable to Purchaser of any court, regulatory body,
administrative agency or governmental body having jurisdiction over Purchaser;

               (d) No consent, approval, authorization or order of, registration
or filing with, or notice to any governmental authority or court is required
under applicable law in connection with the execution and delivery by Purchaser
of this Agreement; and

               (e) There is no action, proceeding or investigation pending or to
the best knowledge of Purchaser, threatened against Purchaser before any court,
administrative agency or other tribunal (A) asserting the invalidity of this
Agreement, (B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or (C) which is likely to materially and
adversely affect the performance by Purchaser of its obligations under, or the
validity or enforceability of, this Agreement.

               Section 6.06. Indemnification.



                                       13

<PAGE>   17

               The Purchaser shall indemnify the Seller and hold it harmless
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and other costs and expenses
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a breach of the Purchaser representations and
warranties contained in this Agreement. It is understood and agreed that the
obligation of the Purchaser to indemnify the Seller set forth in this
subparagraph of Section 6.06 constitutes the sole remedy of the Seller
respecting a breach of the foregoing representations and warranties, except as
otherwise provided in this Agreement or in the Original Agreement.

               Any cause of action against the Purchaser relating to or arising
out of the breach of any representations and warranties made in Section 6.05
shall accrue upon (a) discovery of such breach by the Purchaser or written
notice thereof by the Seller to the Purchaser, (b) failures by the Purchaser to
cure such breach, and (c) written demand upon the Purchaser by the Seller for
compliance with this Agreement.

                                   ARTICLE VII

                                    SERVICING

               Section 7.01  Seller to Service Existing Loans Prior to the
                             Servicing Termination Date.

               From and after the date hereof until the Servicing Termination
Date, the Seller shall act as interim Servicer and service each Existing Loan in
compliance with all of the terms and conditions of the Servicing Addendum,
subject to the terms of this Article VII.

               From the Cut-Off Date until the Servicing Termination Date, the
Seller shall be entitled to all Servicing Fees paid with respect to the Existing
Loans pursuant to the Original Agreement, less the amount of fees payable to PEC
under the PEC Sub-Servicing Agreement with respect to the Existing Loans, which
fees shall, with respect to obligations arising from and after the Cut-Off Date,
be paid by the Purchaser directly to PEC. Notwithstanding anything to the
contrary contained herein or in the Original Agreement, it is expressly
understood that for all purposes from and after the Cut-Off Date, the percentage
for purposes of the Servicing Fee Rate (as defined in the Original Agreement)
that is used to calculate the Servicing Fee shall be 1.00% instead of 1.25%.

               Section 7.02. Seller Has No Right or Obligation to Service
                             Existing Loans After the Servicing Termination
                             Date.

               From and after the Servicing Termination Date, the Seller shall
have neither the right nor the obligation to service any Existing Loan that has
not been subject to a Purchaser Disposition whatsoever without the express
written agreement of Purchaser. Seller shall have no right to receive any
compensation in respect of servicing of any Existing Loan for any period on or
after the Servicing Termination Date without the express written agreement of
Purchaser. No act or omission by the Seller or Purchaser shall be deemed a
waiver of, or constructive agreement under, the preceding provisions of this
Section 7.02.

               Section 7.03. Purchaser May Extend Servicing Expiration Date.



                                       14

<PAGE>   18

               Subject to Section 13.04 of the Original Agreement, no later than
five Business Days prior to the then current Servicing Expiration Date, the
Purchaser may notify the Seller that the Purchaser has extended the Servicing
Expiration Date to the last day of the next calendar month by delivering a
notice thereof to the Seller in the form of Exhibit D hereto (an "Extension
Notice"), whereupon the Servicing Expiration Date shall be extended until such
date. The Purchaser may, at its sole option, but only until the date that is the
one-year anniversary of the Final Closing Date (as defined in the Original
Agreement), extend the Servicing Expiration Date by delivering consecutive
Extension Notices in accordance with the foregoing procedure. For the avoidance
of doubt, it is expressly agreed in the event that the Purchaser does not
deliver an Extension Notice in any particular month, the Servicing Expiration
Date shall be the last day of such month.

                                  ARTICLE VIII

                       INDEMNIFICATION; THIRD-PARTY CLAIMS

               The Seller shall indemnify the Purchaser and hold it harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable and necessary and reasonable legal fees and related costs, judgments,
and any other costs, fees and expenses that the Purchaser may sustain based
upon, arising out of or otherwise resulting from the failure of the Seller to
perform its duties in strict compliance with the terms of this Agreement or the
Original Agreement. The Seller immediately shall notify the Purchaser if a claim
is made by a third party with respect to this Agreement, or the Existing Loans,
and shall assume (with the prior written consent of the Purchaser) the defense
of any such claim and pay all expenses in connection therewith, including
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against it or the Seller in respect of such claim. The
Seller shall follow any written instructions received from the Purchaser in
connection with such claim.

               In the event a dispute arises between the parties with respect to
any of the rights and obligations of the parties pursuant to this Agreement, and
such dispute is adjudicated in a court of law by an arbitration panel or any
other judicial process, then the losing party shall indemnify and reimburse the
winning party for all attorneys fees and other costs and expenses related to the
adjudication of said dispute.

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

               Section 9.01. Conventional Loan Closing.

               (a) The closing for the purchase and sale of the Excess Yield and
the Servicing Rights with respect to the Existing Conventional Loans, shall take
place on the Conventional Loan Closing Date. At the Purchaser's option, the
closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree; or conducted in person, at such place as the parties shall
agree.

               (b) The closing shall be subject to the following conditions:



                                       15

<PAGE>   19

               (i)    all of the representations and warranties of the Seller
                      and the Purchaser under this Agreement shall be true and
                      correct as of the Conventional Loan Closing Date and no
                      event shall have occurred which, with notice or the
                      passage of time, would constitute a default under this
                      Agreement;

               (ii)   the Purchaser shall have received, or the Purchaser's
                      attorneys shall have received in escrow, all Closing
                      Documents as specified in Section 9.01(c) of this
                      Agreement, in such forms as are agreed upon and acceptable
                      to the Seller and the Purchaser, duly executed by all
                      signatories other than the Purchaser as required pursuant
                      to the respective terms thereof;

               (iii)  the Seller shall have received the amount of the
                      Conventional Loan Purchase Price by wire transfer of
                      immediately available federal funds to the account
                      designated by the Seller;

               (iv)   the Seller shall have received all funds on deposit in the
                      Spread Account (as established under the Original
                      Agreement) as of such date to the extent such funds relate
                      to any Existing Conventional Loans;

               (v)    PEC shall have consented to the assignment of the PEC
                      Sub-Servicing Agreement with respect to the Existing Loans
                      on such terms and conditions as shall be acceptable to the
                      Purchaser in its sole discretion, including without
                      limitation terms and conditions relating to the
                      Purchaser's ability to terminate PEC as subservicer of the
                      PEC Sub-Servicing Agreement with respect to the Existing
                      Loans as contemplated hereunder;

               (vi)   the Purchaser shall have received advice from counsel to
                      the Seller as to the qualification of the transfer of
                      Existing Conventional Loans and Existing FHA Loans
                      contemplated hereby as "true sales", which advice shall be
                      satisfactory to the Purchaser in its sole discretion, it
                      being understood that such advice must include, without
                      limitation, such counsel's commitment to deliver a written
                      legal opinion to the Purchaser addressing such issue;

               (vii)  the "Collection Account" and the "REO Account" referenced
                      in the Original Agreement shall be retitled in the name of
                      the Purchaser; and

               (viii) all other terms and conditions of this Agreement to be
                      performed or satisfied on or before the Conventional Loan
                      Closing Date shall have been complied with.

               (c) The closing documents to be delivered on the Conventional
Loan Closing Date shall consist of fully executed originals of the following
documents:

               (i)     this Agreement;



                                       16

<PAGE>   20

               (ii)   an Officer's Certificate from the Seller in the form
                      attached hereto as Exhibit B; and

               (iii)  an Opinion of Counsel from the Seller in the form attached
                      hereto as Exhibit C.

               Section 9.02  FHA Loan Closing.

               The closing for the purchase and sale of the Excess Yield and the
Servicing Rights with respect to the Existing FHA Loans shall take place on the
FHA Loan Closing Date. At the Purchaser's option, such closing shall be either:
by telephone, confirmed by letter or wire as the parties shall agree; or
conducted in person, at such place as the parties shall agree.

               (a) The closing shall be subject to the following conditions:

               (i)    all of the representations and warranties of the Seller
                      and the Purchaser under this Agreement shall be true and
                      correct as of the FHA Loan Closing Date and no event shall
                      have occurred which, with notice or the passage of time,
                      would constitute a default under this Agreement or the
                      Original Agreement;

               (ii)   the Purchaser shall have received, or the Purchaser's
                      attorneys shall have received in escrow, all Closing
                      Documents as specified in Section 9.02(b) of this
                      Agreement, in such forms as are agreed upon and acceptable
                      to the Seller and the Purchaser, duly executed by all
                      signatories other than the Purchaser as required pursuant
                      to the respective terms thereof;

               (iii)  the Seller shall have received the amount of the FHA Loan
                      Purchase Price by wire transfer of immediately available
                      federal funds to the account designated by the Seller;

               (iv)   the Seller shall have received all funds on deposit in the
                      Spread Account (as established under the Original
                      Agreement) as of such date to the extent such funds relate
                      to any Existing FHA Loans;

               (v)    all other terms and conditions of this Agreement to be
                      performed or satisfied on or before the Conventional Loan
                      Closing Date or the FHA Loan Closing Date shall have been
                      complied with.

               (b) The closing documents shall consist of fully executed
originals of the following documents:

               (i)    an Officer's Certificate from the Seller in the form
                      attached hereto as Exhibit B; and

               (ii)   an Opinion of Counsel from the Seller in the form attached
                      hereto as Exhibit C.



                                       17

<PAGE>   21

               Section 9.03. Costs.

               All reasonable costs and expenses incurred in connection with the
transfer and delivery of the Excess Yield and the Servicing Rights with respect
to the Existing Loans and otherwise in connection with this Agreement or the
Original Agreement shall be paid by the Seller, including without limitation the
reasonable legal fees and expenses of the Purchaser's counsel.

               Section 9.04. Merger or Consolidation of the Seller.

               The Seller shall keep in full effect its existence, rights and
franchises as a corporation, and shall 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 or any of the Existing Loans and to perform its
duties under this Agreement.

               Any Person into which the Seller may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Seller shall be a party, or any Person succeeding to the business of
the Seller, shall be the successor of the Seller 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 the successor or surviving Person shall (i) have a net worth of
not less than $25,000,000, and (ii) be an FNMA-approved company in good
standing.

               Section 9.05. Protection of Confidential Information; No
Solicitation.

               From and after the earlier to occur of the Conventional Loan
Closing Date and the FHA Loan Closing Date, the Seller hereby agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on the Seller's behalf,
to personally, by telephone or mail, solicit the borrower or obligor under any
Existing Loan for any purpose whatsoever, including to refinance an Existing
Loan, in whole or in part, without the prior written consent of the Purchaser.
It is understood and agreed that all rights and benefits relating to the
solicitation of any Mortgagors and the attendant rights, title and interest in
and to the list of such Mortgagors and data relating to their Mortgages
(including insurance renewal dates) shall be transferred to the Purchaser
pursuant hereto on the Conventional Loan Closing Date or the FHA Loan Closing
Date, as applicable, and the Seller shall take no action to undermine these
rights and benefits. Notwithstanding the foregoing, it is understood and agreed
that offers to refinance an Existing Loan made within 30 days following receipt
by the Seller of a pay-off request from the Mortgagor and promotions undertaken
by the Seller or any affiliate of the Seller which are directed to the general
public at large, including, without limitation, mass mailing based on
commercially acquired mailing lists, newspaper, radio and television
advertisements shall not constitute solicitation under this Section 9.05.



                                       18

<PAGE>   22

               Section 9.06. Notices.

               All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address shown on the first page hereof, or such other
address as may hereafter be furnished to the other party by like notice. Any
such demand, notice or communication hereunder shall be deemed to have been
received on the date delivered to or received at the premises of the addressee
(as evidenced, in the case of registered or certified mail, by the date noted on
the return receipt).

               Section 9.07. Severability Clause.

               Any part, provision, representation or warranty of this Agreement
which is prohibited or which is held to be void or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Existing Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close as
possible to the economic effect of this Agreement without regard to such
invalidity.

               Section 9.08. Counterparts.

               This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.

               SECTION 9.09. PLACE OF DELIVERY AND GOVERNING LAW.

               THIS AGREEMENT SHALL BE DEEMED IN EFFECT WHEN A FULLY EXECUTED
COUNTERPART THEREOF IS RECEIVED BY THE PURCHASER IN THE STATE OF NEW YORK AND
SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK. THE 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 THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
PREEMPTED BY FEDERAL LAW.

               SECTION 9.10. WAIVER OF JURY TRIAL



                                       19

<PAGE>   23

               THE SELLER AND THE PURCHASER, EACH WITH RESPECT TO THE OTHER,
HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE ORIGINAL
AGREEMENT, ANY DOCUMENT EXECUTED BY THE SELLER OR THE PURCHASER PURSUANT TO THIS
AGREEMENT OR THE ORIGINAL AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR
THEREUNDER.

               Section 9.11. Further Agreements.

               The Seller and the Purchaser each agree to execute and deliver to
the other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.

               Section 9.12. Intention of the Parties.

               It is the intention of the parties that by virtue of the sale of
the Excess Yield and Servicing Rights being sold hereunder, the Seller is
selling, and the Purchaser is purchasing, all of the right, title and interest
of the Seller in, to and under each and every Existing Conventional Loan and
Existing FHA Loan to the extent not previously sold to the Purchaser pursuant to
the Original Agreement. The Purchaser and the Seller hereby acknowledge that the
Seller shall remain liable in respect of all obligations of the Seller with
respect to any representations, warranties or covenants of the Seller under any
agreement which relate to the Seller as "seller" of the Existing Loans or relate
to the characteristics of the Existing Loans individually or in the aggregate.

               Section 9.13. Successors and Assigns.

               This Agreement shall bind and inure to the benefit of and be
enforceable by the Purchaser and the Seller and their respective successors and
permitted assigns. The Seller shall not assign this Agreement without the prior
written consent of the Purchaser, which may be granted or withheld in the sole
discretion of such other party.

               Section 9.14. Waivers.

               No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.

               Section 9.15. Exhibits.

               The exhibits to this Agreement are hereby incorporated and made a
part hereof and are an integral part of this Agreement.



                                       20

<PAGE>   24

               Section 9.16. General Interpretive Principles.

               For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

               (a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;

               (b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;

               (c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;

               (d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;

               (e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and

               (f) the term "include" or "including" shall mean by reason of
enumeration.

               Section 9.17. Reproduction of Documents.

               This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications which may hereafter
be executed, (b) documents received by any party at the closing, and (c)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

               Section 9.18. Survival of Agreement.

               It is intended that each and every representation, warranty,
indemnity and covenant shall survive the Conventional Loan Closing Date and the
FHA Loan Closing Date, and shall inure to the benefit of, and continue to bind,
the parties hereto.

               Section 9.19. Merger and Integration; Construction.

               This Agreement, together with the Original Agreement and the
Other Understandings, sets forth the entire understanding of the parties hereto
with respect to the



                                       21

<PAGE>   25

subject matter hereof, and except as set forth herein and therein, all prior
understandings, written or oral, are superseded hereby and thereby.

               In the case of any conflict between the terms of this Agreement
and the Original Agreement, on the one hand, and the Other Understandings, on
the other hand, the terms of this Agreement and the Original Agreement shall
govern.

               In the case of any conflict between the terms of this Agreement
and the Original Agreement, the terms of this Agreement shall control.



                                       22

<PAGE>   26




               IN WITNESS WHEREOF, the Purchaser and the Seller have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the date first above written.

                                            MEGO MORTGAGE CORPORATION
                                                      (Seller)


                                            By:_________________________________
                                            Name:_______________________________
                                            Title:______________________________



                                            GREENWICH CAPITAL MARKETS, INC.
                                                      (Purchaser)


                                            By:_________________________________
                                            Name:_______________________________
                                            Title:______________________________



                                       23

<PAGE>   27



                                    EXHIBIT A

                    EXISTING LOAN AND PURCHASE PRICE SCHEDULE



[To include fields for description, outstanding balance conventional/FHA loan
type, Conventional Loan Servicing Rights Purchase Price Percentage, Conventional
Loan Excess Yield Purchase Price Percentage, Cut-Off Date Principal Balance, FHA
Loan Servicing Rights Purchase Price Percentage, and FHA Loan Excess Yield
Purchase Price Percentage]



                                      A-1

<PAGE>   28

                                    EXHIBIT B

                         SELLER'S OFFICER'S CERTIFICATE

               I, ____________________, hereby certify that I am the duly
elected [Vice] President of Mego Mortgage Corporation, a corporation organized
under the laws of the state of New York (the "Company") and further as follows:

               1. Attached hereto as Exhibit 1 is a true, correct and complete
        copy of the charter of the Company which is in full force and effect on
        the date hereof and which has been in effect without amendment, waiver,
        rescission or modification since ____________.

               2. Attached hereto as Exhibit 2 is a true, correct and complete
        copy of the bylaws of the Company which are in effect on the date hereof
        and which have been in effect without amendment, waiver, rescission or
        modification since ____________.

               3. Attached hereto as Exhibit 3 is an original certificate of
        good standing of the Company, issued within ten days of the date hereof,
        and no event has occurred since the date thereof which would impair such
        standing.

               4. Attached hereto as Exhibit 4 is a true, correct and complete
        copy of the corporate resolutions of the Board of Directors of the
        Company authorizing the Company to execute and deliver the Excess Yield
        and Servicing Rights Purchase and Assumption Agreement, dated as of
        January 22, 1998 (the "Agreement"), by and between the Company and
        Greenwich Capital Markets, Inc. (the " Purchaser"), and such resolutions
        are in effect on the date hereof and have been in effect without
        amendment, waiver rescission or modification since ____________.

               5. Either (i) no consent, approval, authorization or order of any
        court or governmental agency or body is required for the execution,
        delivery and performance by the Company of or compliance by the Company
        with the Agreement or the consummation of the transactions contemplated
        by the Agreement; or (ii) any required consent, approval, authorization
        or order has been obtained by the Company.

               6. Neither the consummation of the transactions contemplated by,
        nor the fulfillment of the terms of the Agreement, conflicts or will
        conflict with or results or will result in a breach of or constitutes or
        will constitute a default under the charter or by-laws of the Company,
        the terms of any indenture or other agreement or instrument to which the
        Company is a party or by which it is bound or to which it is subject, or
        any statute or order, rule, regulations, writ, injunction or decree of
        any court, governmental authority or regulatory body to which the
        Company is subject or by which it is bound.

               7. There is no action, suit, proceeding or investigation pending
        or threatened against the Company which, in my judgment, either in any
        one instance or in the aggregate, may result in any material adverse
        change in the business, operations, financial



                                      B-1

<PAGE>   29

        condition, properties or assets of the Company or in any material
        impairment of the right or ability of the Company to carry on its
        business substantially as now conducted or in any material liability on
        the part of the Company or which would draw into question the validity
        of the Agreement or of any action taken or to be taken in connection
        with the transactions contemplated hereby, or which would be likely to
        impair materially the ability of the Company to perform under the terms
        of the Agreement, except as set forth on Exhibit 6 attached hereto.

               8. Each person listed on Exhibit 5 attached hereto who, as an
        officer or representative of the Company, signed the Agreement and any
        other document delivered prior hereto or on the date hereof in
        connection with the Agreement, was, at the respective times of such
        signing and delivery, and is now, a duly elected or appointed, qualified
        and acting officer or representative of the Company, who holds the
        office set forth opposite his or her name on Exhibit 5, and the
        signatures of such persons appearing on such documents are their genuine
        signatures.

               9. The Company is duly authorized to engage in the transactions
        described and contemplated in the Agreement.



                                      B-2

<PAGE>   30




               IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Company.

Dated: _______________________          By:_____________________________________
                                             Name:______________________________
        [Seal].                              Title:  [Vice] President



               I, ________________________, an [Assistant] Secretary of Mego
Mortgage Corporation, hereby certify that ____________ is the duly elected,
qualified and acting [Vice] President of the Company and that the signature
appearing above is [her] [his] genuine signature.

               IN WITNESS WHEREOF, I have hereunto signed my name.



Dated: _______________________          By:_____________________________________
                                             Name:______________________________
                                             Title:  [Assistant] Secretary



                                      B-3


<PAGE>   31




                                                 EXHIBIT 5 to
                                                 Company's Officer's Certificate



Name                     Title                      Signature

                                                 _______________________________

                                                 _______________________________

                                                 _______________________________

                                                 _______________________________

                                                 _______________________________

                                                 _______________________________



                                      B-4

<PAGE>   32


                                    EXHIBIT C

                           SELLER'S OPINION OF COUNSEL


                                     (date)

Greenwich Capital Markets, Inc..
600 Steamboat Road
Greenwich, Connecticut 06830

Dear Sirs:

               You have requested [our] [my] opinion, as [Assistant] General
Counsel to Mego Mortgage Corporation (the "Company"), with respect to certain
matters in connection with the sale by the Company of certain excess yield,
servicing rights and recourse obligations pursuant to that certain Excess Yield
and Servicing Rights Purchase and Assumption Agreement, by and between the
Company and Greenwich Capital Markets, Inc. (the "Purchaser"), dated as of
January 22, 1998, (the "Agreement"). Capitalized terms not otherwise defined
herein have the meanings set forth in the Agreement.

               [We] [I] have examined the following documents:

               1.     the Agreement;

               2.     the Original Agreement; and

               3.     such other documents, records and papers as [we] [I] have
                      deemed necessary and relevant as a basis for this opinion.

               To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Company contained in
the Agreement. [We] [I] have assumed the authenticity of all documents submitted
to me as originals, the genuineness of all signatures, the legal capacity of
natural persons and the conformity to the originals of all documents.

               Based upon the foregoing, it is [our] [my] opinion that:

               1.     The Company is a duly organized, validly existing federal
                      savings bank in good standing under the laws of the United
                      States of America and is qualified to service and
                      administer the Existing Loans in the states where the
                      Mortgaged Properties are located.

               2.     The Company has the power to engage in the transactions
                      contemplated by the Agreement and all requisite power,
                      authority and legal right to execute and deliver the
                      Agreement, and to perform and observe the terms and
                      conditions of such Agreement.



                                      C-1

<PAGE>   33

               3.     The Agreement has been duly authorized, executed and
                      delivered by the Company and is a legal, valid and binding
                      agreement enforceable in accordance with its respective
                      terms against the Company, subject to bankruptcy laws and
                      other similar laws of general application affecting rights
                      of creditors and subject to the application of the rules
                      of equity, including those respecting the availability of
                      specific performance, none of which will materially
                      interfere with the realization of the benefits provided
                      thereunder.

               4.     Either (i) no consent, approval, authorization or order of
                      any court or governmental agency or body is required for
                      the execution, delivery and performance by the Company of
                      or compliance by the Company with the Agreement, or the
                      transfer of excess yield, servicing rights and recourse
                      obligations of the Existing Loans or the consummation of
                      the transactions contemplated by the Agreement; or (ii)
                      any required consent, approval, authorization or order has
                      been obtained by the Company.

               5.     Neither the consummation of the transactions contemplated
                      by, nor the fulfillment of the terms of, the Agreement
                      conflicts or will conflict with or results or will result
                      in a breach of, or constitutes or will constitute a
                      default under, the charter or by-laws of the Company, the
                      terms of any indenture or other agreement or instrument to
                      which the Company is a party or by which it is bound or to
                      which it is subject, or violates any statute or order,
                      rule, regulations, writ, injunction or decree of any
                      court, governmental authority or regulatory body to which
                      the Company is subject or by which it is bound.

               6.     There is no action, suit, proceeding or investigation
                      pending or, to the best of [our] [my] knowledge,
                      threatened against the Company which, in [our] [my]
                      judgment, either in any one instance or in the aggregate,
                      may result in any material adverse change in the business,
                      operations, financial condition, properties or assets of
                      the Company or in any material impairment of the right or
                      ability of the Company to carry on its business
                      substantially as now conducted or in any material
                      liability on the part of the Company or which would draw
                      into question the validity of the Agreement or of any
                      action taken or to be taken in connection with the
                      transactions contemplated thereby, or which would be
                      likely to impair materially the ability of the Company to
                      perform under the terms of Agreement.

               This opinion is given to you for your sole benefit, and no other
person or entity is entitled to rely hereon except that the purchaser or
purchasers to which you resell the Existing Loans may rely on this opinion as if
it were addressed to them as of its date.

                                            Very truly yours,



                                      C-2

<PAGE>   34

                                            ____________________________________
                                                          [Name]
                                            [Assistant] General Counsel




                                      C-3

<PAGE>   35


                                    EXHIBIT D

                                EXTENSION NOTICE

Mego Mortgage Corporation
1000 Parkwood Circle, 5th Floor
Atlanta, GA 30339 Attention:
FAX:

Please refer to the Excess Yield Servicing Rights Purchase and Assumption
Agreement, dated as of January 22, 1998, as amended, between Greenwich Capital
Markets, Inc. (together with its permitted assigns, the "Purchaser") and Mego
Mortgage Corporation (the "Seller").

The current Servicing Expiration Date is ___________ [insert date]. The
undersigned hereby extends the Servicing Expiration Date to __________ [insert
last day of the calendar month following the current Servicing Expiration Date].

                                            GREENWICH CAPITAL MARKETS, INC.

                                            By:_________________________________
                                               Name:
                                               Title:

                                            Date:_______________________________



                                      D-1

<PAGE>   36


                                    EXHIBIT E

                              OTHER UNDERSTANDINGS


1.   Tri-Party Agreement dated as of June 20, 1997 by and among Mego Mortgage
     Corporation, Greenwich Capital Markets, Inc. and The First National Bank of
     Chicago.


2.   Letter Agreement, dated September 17, 1996 between Greenwich Capital
     Markets, Inc. and Mego Mortgage Corporation.


3.   Promissory Note, dated April 17, 1997, made by Mego Mortgage Corporation to
     Greenwich Capital Financial Products, Inc., amended.


4.   Pledge and Security Agreement, dated as of April 17, 1997, between Mego
     Mortgage Corporation and Greenwich Capital Financial Products, Inc.


5.   Master Repurchase Agreement, dated as of September 4, 1996, between Mego
     Mortgage Corporation and Greenwich Capital Markets, Inc.


6.   Letter Agreement, dated September 19, 1997, between Greenwich Capital
     Markets, Inc., and Mego Mortgage Corporation.


7.   Letter Agreement, dated December 29, 1997, among Greenwich Capital Markets,
     Inc. and Mego Mortgage Corporation.


8.   Letter Agreement, dated August 22, 1997, between Greenwich Capital Markets,
     Inc. and Mego Mortgage Corporation.


9.   Engagement Letter, dated October 1, 1996, between Mego Mortgage Corporation
     and Greenwich Capital Markets, Inc., as amended.



                                      E-1

<PAGE>   37


                                    EXHIBIT F

                               SERVICING ADDENDUM




                                      F-1
<PAGE>   38


                                    EXHIBIT F

                               SERVICING ADDENDUM

               SECTION 11.          Servicing.

               Subsection 11.01             Seller to Act as Servicer.

               Mego Mortgage Corporation (in its capacity as servicer, the
"Servicer") shall administer and service the Existing Loans in accordance with
this Agreement and customary servicing procedures, and shall have full power and
authority to do or cause to be done any and all things in connection with such
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement, including, in the case of each FHA Loan,
taking all actions that an FHA Approved Mortgagee is permitted or required to
take by the FHA.

               Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Existing Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Obligor if in the Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Purchaser; provided, however, that the Servicer shall
not permit any modification with respect to any Existing Loan that would change
the Loan Interest Rate, defer or forgive the payment thereof or of any principal
or interest payments, reduce the outstanding principal amount (except for actual
payments of principal), make additional advances, extend the final maturity date
or adversely affect any FHA Insurance Contract with respect to such Existing
Loan. Without limiting the generality of the foregoing, the Servicer shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself, and the Purchaser , all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Existing Loans and, in the case of a Mortgage
Loan, with respect to the Improved Property. If reasonably required by the
Servicer, the Purchaser shall furnish the Servicer with any powers of attorney
and other documents necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties under this Agreement.

               In servicing and administering the Existing Loans, the Servicer
shall employ procedures including collection procedures and exercise the same
care that it customarily employs and exercises in servicing and administering
loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Purchaser's reliance
on the Servicer.

               It is understood and agreed that the Servicer may delegate
certain servicing duties to qualified sub-servicers with the Purchaser's prior
written approval; provided, however, that the Servicer shall remain responsible
to the Purchaser for all servicing activities notwithstanding such delegation.

               The Servicer hereby acknowledges that the Purchaser has assumed
its rights and obligations under the PEC Sub-Servicing Agreement with respect to
the Existing Loans as of the



<PAGE>   39

Cut-Off Date. Pursuant to the PEC Sub-Servicing Agreement, PEC has agreed to
perform certain servicing functions with respect to the Existing Loans. The
Servicer agrees to provide information to PEC (on behalf of the Purchaser)
pursuant to Section 2 of the PEC Sub-Servicing Agreement. The Servicer hereby
agrees to take all necessary actions to enable PEC or any other appointed
servicer to fulfill such servicer's obligations under this or any other
agreement.

               The Servicer shall make such inspections of an Improved Property,
if any, as are consistent with standard servicing procedures customary to the
applicable loan type and, in the case of each FHA Loan, as required by FHA
Regulations if the Servicer has actual notice of any related condition which
materially and adversely affects such Improved Property. Such inspection shall
be conducted in accordance with customary servicing procedures and, in the case
of each FHA Loan, FHA servicing requirements for delinquent mortgages.

               The Servicer shall take all actions necessary to assure that a
case number is assigned to each FHA Loan by the FHA.

               Subsection 11.02             Collection of Loan Payments.

               Continuously from the Cut-Off Date until the earlier of (i) the
principal and interest on all Existing Loans are paid in full and (ii) the
Servicing Termination Date, the Servicer shall proceed diligently to collect all
payments due under each Existing Loan when the same shall become due and
payable; and shall, to the extent such procedures shall be consistent with this
Agreement, follow such collection procedures as it follows with respect to loans
comparable to the Existing Loans held for its own account.

               Subsection 11.03             Realization Upon Defaulted Existing
                                            Loans.

               (a) The Servicer shall use all reasonable efforts, consistent
with the procedures that the Servicer would use in servicing loans for its own
account and, in the case of each FHA Loan, the requirements of FHA, with respect
to any Existing Loan as comes into and continues in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Subsection 11.01, either (i) in the case of an FHA Loan, to assign
the Existing Loan to the FHA and obtain FHA Insurance Proceeds with respect
thereto or (ii) in the case of a Mortgage Loan, with Purchaser's consent, which
will not be unreasonably withheld or delayed, to foreclose upon or otherwise
comparably convert the ownership of the related Improved Property, and, in the
case of an Existing Loan that is not a Mortgage Loan, to collect from the
Obligor amounts that are due and unpaid. The Servicer shall use all reasonable
efforts to realize upon defaulted Existing Loans in such a manner as will
maximize the receipt of principal and interest at the Loan Interest Rate by the
Purchaser, taking into account, among other things, the timing of foreclosure
proceedings, if applicable.

               (b) Notwithstanding the foregoing provisions of this Subsection
11.03, 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 Improved Property, the Servicer shall not
either (i) obtain title to such Improved Property as a result of or in lieu of
foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any
other action



                                      -2-

<PAGE>   40

with respect to, such Improved Property if, as a result of any such action, the
Purchaser would be considered to hold title to, to be a mortgagee-in-possession
of, or to be an owner or operator of such Improved 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 a Person who regularly conducts environmental audits using
customary industry standards, that:

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

               (2) there are no circumstances present at such Improved 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 Purchaser to take such actions with respect to the affected
        Improved Property.

               The cost of the environmental audit report contemplated by this
Subsection 11.03 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Subsection 11.05(iv).

               If the Servicer determines, as described above, that it is in the
best economic interest of the Purchaser to take such actions as are necessary to
bring any such Improved 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 Improved Property, then the
Servicer shall take such action as it deems to be in the best economic interest
of the Purchaser. 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 Subsection
11.05(iv).

               (c) 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 Existing Loan, will
be applied in the following order of priority: first, to accrued and unpaid
interest on the Existing Loan, pursuant to Subsection 11.09, 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; second, to any related unreimbursed Servicing Advances
and other advances pursuant to Subsection 11.05(iv); and third, as a recovery of
principal on the Existing Loan.



                                      -3-

<PAGE>   41

               Subsection 11.04         Establishment of Collection Accounts;
                                        Deposits in Collection Accounts.

               The Servicer shall segregate and hold all funds collected and
received pursuant to each Existing Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Collection
Accounts, in the form of time deposit or demand accounts. The creation of any
Collection Account shall be evidenced by a Collection Account Letter Agreement
at the request of the Purchaser.

               The Servicer shall deposit in the Collection Account on a daily
basis, and retain therein the following payments and collections received by it
subsequent to the Cut-off Date, or received by it prior to the Cut-off Date but
allocable to a period subsequent thereto, on the Existing Loans received on or
before the Cut-off Date:

               (i)    all payments on account of principal on the Existing
Loans;

               (ii)   all payments on account of interest on the Existing Loans;

               (iii)  all Impound Payments received on the Existing Loans;

               (iv)   all Liquidation Proceeds;

               (v)    all Insurance Proceeds including amounts required to be
deposited pursuant to Subsection 11.07 other than proceeds to be applied to the
restoration or repair of the Improved Property or released to the Obligor in
accordance with the Servicer's normal servicing procedures, the Loan Documents
or applicable law;

               (vi)   all Condemnation Proceeds affecting any Improved Property
which are not released to the Obligor in accordance with the Servicer's normal
servicing procedures, the Loan Documents or applicable law;

               (vii)  the Repurchase Price of any Existing Loan repurchased in
accordance with Subsections 2.01(a) and 2.02(b), and all amounts required to be
deposited by the Seller in connection with shortfalls in principal amount of
Qualified Substitute Existing Loans pursuant to Subsection 7.03 of the Original
Agreement;

               (viii) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Subsection 11.08;

               (ix)   any amounts required to be deposited in the Collection
Account pursuant to Subsection 11.14; and

               (x)    any late charges and assumption fees.

  The foregoing requirements for deposit in the Collection Account shall be
  exclusive. Such Collection Account shall be an Eligible Account. Any interest
  or earnings on funds deposited in the Collection Account by the depository
  institution shall accrue to the benefit of the Servicer



                                      -4-

<PAGE>   42

and the Servicer shall be entitled to payment of such interest from the
Collection Account pursuant to Subsection 11.05(ii). The Servicer shall give
notice to the Purchaser of the location of the Collection Account when
established and prior to any change thereof.

               Subsection 11.05       Requesting Withdrawals From the Collection
                                      Account.

               Subject to the order of priorities set forth in Subsection
11.03(c), the Purchaser shall and the Servicer may, from time to time, request
the Purchaser to, withdraw from the Collection Account and remit to the
Servicer, the Seller or the Purchaser, as applicable, for the following
purposes:

               (i) to reimburse the Servicer for premiums paid under the FHA
Insurance Contract, to the extent that the Servicer has received Impound
Payments with respect thereto;

               (ii) to pay the Servicer pursuant to Subsection 11.18 as
servicing compensation (a) any interest earned on funds in the Collection
Account (all such interest to be paid monthly not later than each Distribution
Date); (b) the Servicing Fee from that portion of any payment or recovery as to
interest on a particular Existing Loan; and (c) any payments in the nature of
late payment charges and assumption fees and other charges, to the extent
permitted by Subsection 11.18;

               (iii) to pay the Servicer with respect to each Existing Loan that
has been repurchased pursuant to Subsection 2.01(a) or 2.01(b) all amounts
received thereon and not distributed as of the date on which the related
Repurchase Price is determined;

               (iv) to reimburse the Servicer for unreimbursed Servicing
Advances, including Servicing Advances previously made which the Servicer has
determined to be a Nonrecoverable Advance, the Servicer's right to reimburse
itself pursuant to this subclause (iv) with respect to any Existing Loan being
limited to related Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds and such other amounts as may be collected by the Servicer from the
Obligor or otherwise relating to the Existing Loan, it being understood that, in
the case of such reimbursement, the Servicer's right thereto shall be prior to
the rights of the Purchaser, except that, where the Seller is required to
repurchase an Existing Loan, pursuant to Subsection 2.01(a) or 2.02(b), the
Servicer's right to such reimbursement shall be subsequent to the payment to the
Purchaser of the Repurchase Price pursuant to Subsection 2.01(a) or 2.02(b), and
all other amounts required to be paid to the Purchaser with respect to such
Existing Loans;

               (v) to make distributions to the Purchaser of all amounts
distributable to the Purchaser pursuant to this Agreement in the manner provided
for in Subsection 11.09, such amounts allocated first to interest and then to
principal; and

               (vi) to clear and terminate the Collection Account on the
termination of this Agreement.



                                      -5-

<PAGE>   43

               Subsection 11.06        Transfer of Accounts.

               The Servicer may not transfer the Collection Account and/or any
REO Account to a different depository institution from time to time without the
prior written consent of the Purchaser. In any case, the Collection Account and
any REO Account shall be an Eligible Account.

               Subsection 11.07        Collection of FHA Insurance Proceeds;
                                       Other Remedies.

               In the event of a default by the Obligor with respect to any FHA
Loan, the Servicer shall, subject to the Servicer's rights under Subsection
11.03, consistent with the provisions of Subsection 11.01 and all requirements
of the FHA, and provided that adequate FHA Insurance Reserves exist, use all
reasonable efforts to assign the related FHA Loan to the FHA and to collect the
related FHA Insurance Proceeds. In the event that the FHA Insurance Reserves are
inadequate to permit the FHA to pay the FHA Insurance Proceeds with respect to
such FHA Loan, or in the event that the FHA denies the Servicer's claim for FHA
Insurance Proceeds for reasons other than reasons that would constitute a breach
of the Servicer's representations and warranties under Subsection 6.01 or
Subsection 6.02, the Servicer shall proceed to foreclose upon or otherwise
comparably convert the ownership of the related Improved Property with respect
to any Existing Loan that is an FHA Loan, and, with respect to any FHA Loan that
is not an Existing Loan, to undertake such actions as necessary and appropriate
to collect amounts due and owing under the related Note, consistent with the
related Loan Documents, FHA Regulations and all other applicable laws and
regulations. The Servicer shall deposit all FHA Insurance Proceeds into the
Collection Account within one Business Day upon receipt thereof.

               Subsection 11.08        Title, Management and Disposition of REO
                                       Property.


               In the event that title to the Improved Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Person designated by the Purchaser, or in the
event such Person is not authorized or permitted to hold title to real property
in the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or Persons
as shall be consistent with an Opinion of Counsel obtained by the Servicer from
an attorney duly licensed to practice law in the state where the REO Property is
located. Any Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the benefit
of the Purchaser.

               The Servicer shall either itself or through an agent selected by
the Servicer, manage, conserve, protect and operate each REO Property (and may
with the prior written consent of the Purchaser temporarily rent the same) in
the same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. The Servicer shall
use all reasonable efforts to dispose of the REO Property as soon as possible.



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<PAGE>   44

               With respect to each REO Property, the Servicer shall segregate
and hold all funds collected and received in connection with the operation of
the REO Property separate and apart from its own funds or general assets and
shall establish and maintain a separate REO Account for each REO Property in the
form of a non-interest bearing demand Eligible Account. The creation of any REO
Account shall be evidenced by a letter agreement in the form shown in Exhibit 8
of the Original Agreement. An original of such letter agreement shall be
furnished to the Purchaser upon request.

               The Servicer shall deposit or cause to be deposited, on a daily
basis in each REO Account all revenues received with respect to the related REO
Property and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of the REO Property, including the fees of any
managing agent acting on behalf of the Servicer. The Servicer shall not be
entitled to retain interest paid or other earnings, if any, on funds deposited
in such REO Account. On or before each Determination Date, the Servicer shall
withdraw from each REO Account and deposit into the Collection Account the net
income from the REO Property on deposit in the REO Account.

               The Servicer shall furnish to the Purchaser on each Distribution
Date, an operating statement for each REO Property covering the operation of
each REO Property for the previous month. Such operating statement, shall be
accompanied by such other information as the Purchaser shall reasonably request.

               Each REO Disposition shall be carried out by the Servicer at such
price and upon such terms and conditions as the Servicer deems to be in the best
interest of the Purchaser. If as of the date title to any REO Property was
acquired by the Servicer there were outstanding unreimbursed Servicing Advances
with respect to the REO Property, the Servicer, upon an REO Disposition of such
REO Property, shall be entitled to reimbursement for any related unreimbursed
Servicing Advances from proceeds received in connection with such REO
Disposition. The proceeds from the REO Disposition, net of any payment to which
the Servicer is entitled as provided herein, shall be deposited in the REO
Account and shall be transferred to the Collection Account on the Determination
Date in the month following receipt thereof for distribution on the succeeding
Distribution Date in accordance with Subsection 11.09.

               Subsection 11.09             Distributions.

               On each Distribution Date, the Purchaser shall, pursuant to
Section 11.05(v) hereof, or the Servicer shall request the Purchaser to withdraw
funds from the Collection Account and distribute to the Purchaser all amounts
credited to the Collection Account during the related Due Period which are
attributable to principal and interest collected with respect to each Existing
Loan (including Liquidation Proceeds, Condemnation Proceeds and Insurance
Proceeds) minus all amounts that the Servicer is entitled to reimbursement from
the Collection Account pursuant to Subsection 11.05(i) through (iv).

               With respect to any remittance received by the Purchaser on or
after the second Business Day following the Business Day on which such payment
was due, the Servicer shall pay to the Purchaser, as applicable, interest on any
such late payment at an annual rate equal to the



                                      -7-

<PAGE>   45

rate of interest as is publicly announced from time to time at its principal
office by Chemical Bank, New York, New York, as its prime lending rate, adjusted
as of the date of each change, plus three percentage points, but in no event
greater than the maximum amount permitted by applicable law. Such interest shall
be paid by the Servicer to the Purchaser, as applicable, on the date such late
payment is made and shall cover the period commencing with the day following
such second Business Day and ending with the Business Day on which such payment
is made, both inclusive. Such interest shall be remitted along with such late
payment. The payment by the Servicer of any such interest shall not be deemed an
extension of time for payment or a waiver by the Purchaser of any Event of
Default by the Servicer.

               Subsection 11.10             Remittance Reports.

               On the Distribution Date, the Servicer shall furnish to the
Purchaser or its designees a computer tape containing, and a hard copy of, the
Remittance Report, in such form as the Purchaser may reasonably request.

               Subsection 11.11             Statements to the Purchaser.

               Not more than sixty days after the end of each calendar year
until the Servicing Termination Date, the Servicer shall furnish to each Person
who was the Purchaser at any time during such calendar year, (i) as to the
aggregate of remittances for the applicable portion of such year, an annual
statement in accordance with the requirements of applicable federal income tax
law, and (ii) listing of the principal balances of the Existing Loans
outstanding at the end of such calendar year.

               The Servicer shall prepare and file any and all tax returns,
information statements or other filings required to be delivered to any
governmental taxing authority or to any Purchaser pursuant to any applicable law
with respect to the Existing Loans and the transactions contemplated hereby. In
addition, the Servicer shall provide the Purchaser with such information
concerning the Existing Loans as is necessary for the Purchaser to prepare its
federal income tax return as any Purchaser may reasonably request from time to
time.

               Subsection 11.12             Real Estate Owned Reports.

               Together with the statement furnished pursuant to Subsection
11.08, with respect to any REO Property, the Servicer shall furnish to the
Purchaser a statement covering the Servicer's efforts in connection with the
sale of such REO Property and any rental of such REO Property incidental to the
sale thereof for the previous month, together with the operating statement. Such
statement shall be accompanied by such other information as the Purchaser shall
reasonably request.

               Subsection 11.13             Liquidation Reports.

               Upon the foreclosure sale of any Improved Property or the
acquisition thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure,
the Servicer shall submit to the Purchaser a liquidation report with respect to
such Improved Property.



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<PAGE>   46

               Subsection 11.14    Satisfaction of Mortgages and Release of Loan
                                   Files.

               In the event the Servicer satisfies or releases a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or should it otherwise prejudice any right the Purchaser may have under
the mortgage instruments, the Servicer, upon written demand, shall remit to the
Purchaser the then outstanding principal balance of the related Existing Loan by
deposit thereof in the Collection Account.

               From time to time and as appropriate in connection with the
servicing, assignment to the FHA, foreclosure or other enforcement of an
Existing Loan, the Purchaser shall, upon request of the Servicer and delivery to
the Purchaser of a servicing receipt signed by a servicing officer of the
Servicer (a "Servicing Officer"), release the requested portion of the Loan File
held by the Purchaser to the Servicer, together with any assignments necessary
to enable the Servicer to perform its obligations. Such servicing receipt shall
obligate the Servicer to return the related Loan Documents to the Purchaser when
the need therefor by the Servicer no longer exists, unless (a) the Existing Loan
has been liquidated and the Liquidation Proceeds relating to the Existing Loan
have been deposited in the Collection Account, or (b) the Loan File or such
document has been delivered to (i) the FHA in connection with an assignment of
the Existing Loan to the FHA and collection of FHA Insurance Proceeds, or (ii)
an attorney, for purposes of initiating or pursuing legal action or other
proceedings to collect amounts due under the Existing Loan (if such Existing
Loan is not a Mortgage Loan), or (iii) with respect to a Mortgage Loan, an
attorney or a public trustee or other public official as required by law for
purposes of initiating or pursuing legal action or proceedings for the
foreclosure of the Improved Property either judicially or non-judicially, and
the Servicer has delivered to the Purchaser a certificate of a Servicing Officer
certifying as to the name and address of the Person to which such Loan File or
such document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such Existing Loan
was liquidated, or the FHA Insurance Proceeds received, the servicing receipt
shall be returned by the Purchaser to the Servicer.

               Subsection 11.15    [intentionally omitted]

               Subsection 11.16    [intentionally omitted]

               Subsection 11.17    [intentionally omitted]

               Subsection 11.18    Servicing Compensation.

               As compensation for its services hereunder the Servicer shall be
entitled to the Servicing Fee. Additional servicing compensation in the form of
any assumption fees and late payment charges or other charges shall be retained
by the Servicer to the extent not required to be deposited in the Collection
Account. 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 for.



                                      -9-

<PAGE>   47

               Subsection 11.19        Statement as to Compliance.

               The Servicer will deliver to the Purchaser not later than 120
days following the end of each fiscal year of the Servicer, which as of the
Closing Date ends on the last day in December, in each calendar year, beginning
with the four month period beginning on September 1, 1997 and ending December
31, 1997, an Officers' Certificate 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 officers' 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 such statement shall be provided by the Purchaser
to any Person identified as a prospective purchaser of the Existing Loans.

               Subsection 11.20        Independent Public Accountants' Servicing
                                       Report.

               Not later than 90 days following the end of each fiscal year of
the Servicer, beginning with the four month period beginning September 1, 1997
and ending December 31, 1997, the Servicer at its expense shall cause a firm of
independent public accountants (which may also render other services to the
Servicer) which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Purchaser or its designee to the
effect that such firm has examined certain documents and records relating to the
servicing of the Existing Loans under this Agreement or of Existing Loans under
servicing agreements (including the Existing Loans and this Agreement)
substantially similar one to another (such statement to have attached thereto a
schedule setting forth the, servicing agreements covered thereby) and that, on
the basis of such examination conducted substantially in compliance with the
Audit Guide for Use by Independent Public Accountants in Audits of HUD-approved
Non-Supervised Mortgagees, Loan Correspondents and Coinsuring Mortgagees (the
"Audit Guide"), such firm confirms that such servicing has been conducted in
compliance with such servicing agreements except for such significant exceptions
or errors in records that, in the opinion of such firm, the Audit Guide requires
it to report. Copies of such statement shall be provided by the Purchaser to any
Person identified as a prospective purchaser of the Existing Loans.

               Subsection 11.21        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 the Purchaser access to the
documentation regarding the Existing Loans serviced by the Servicer 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. In addition, access to the documentation will be provided to
the Purchaser, the Excess Yield Holder or any agent thereof identified to the
Servicer by the Purchaser without charge, upon reasonable request during normal
business hours at the offices of the Servicer.



                                      -10-

<PAGE>   48

               Subsection 11.22             Status of Completion Certificates.

               Upon the request of the Purchaser from time to time, the Servicer
shall identify to the Purchaser the Existing Loans as to which the Servicer has
not received a completion certificate, in the case of any FHA Loan, in the form
required by FHA, whether or not the deadline for delivery of such certificate by
the Obligor has passed, together with the status of such deadline.



                                      -11-